Pakistan Cement_Debt relief much welcome, (AKD Daily, Jun 29, 2020)
AKD Daily
Pakistan Cement: Debt relief much welcome
- In a bid to provide relief to corporates in times of slowdown induced by COVID-19, SBP announced a principal deferral scheme whereby principal to be repaid in FY21 could be deferred for an year with repayment to resume after, cushioning cement sector profitability for the year.
- Amongst levered players, DGKC has already been granted approval to defer principal repayment for FY21 (having a positive EPS impact of PkR0.72/sh for FY21) while according to our estimates, PIOC and CHCC are slated to repay PkR4.3bn and PkR2.4bn, respectively for FY21.
- MLCF on the other hand already opted for complete restructuring of its debt after repaying PkR5.8bn during 9MFY20 (utilizing proceeds from right issue) while repayment tenure of remaining debt has been extended, resulting in positive EPS impact of PkR0.45/sh for FY21—already incorporated.
- We maintain LUCK (TP: PkR635.9/sh—40.5% upside), DGKC (TP: PkR105.0/sh—24.6% upside) and MLCF (TP: PkR39.9/sh—53.8% upside) as our preferred play from the sector with LUCK being the safest play with a diversified portfolio, while MLCF and DGKC have manageable debt levels where cost saving measures are expected to significantly improve efficiency.
Maple Leaf Cement Factory is engaged in the production and sale of white cement, grey cement and clinker. Co. is a subsidiary of Kohinoor Textile Mills Limited.
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