MLCF_2QFY23 Result Review,(AKD Off the Analyst's Desk Feb 22, 2023)
AKD, Off the Analyst's Desk
MLCF: 2QFY23 Result Review
Maple Leaf Cement Factory Limited (MLCF) announced its 2QFY23 result today, where the company posted unconsolidated NPAT of PkR2.35bn (EPS: PkR2.2), an increase of 94%/27% QoQ/YoY. The result was above market expectations as margins increased by 1.6pps where we expect that cost efficiencies and optimal procurement of coal elevated the margins.
- Net Sales clocked in at PkR17.2bn for 2QFY23, up by 34%/41% QoQ/YoY because of an increase in the company offtakes (up by 25%QoQ). The increase in the offtakes is mainly attributed by demand recovery over the course of quarter where industry total offtakes in the north have increase by 27%QoQ, further aided by commissioning of the new line-IV to maintain the market share in the region (~13% for north domestic market).
- Gross margins clocked in at 29.4% against 27.8%/31.1% for 1QFY23/2QFY22, margins have elevated on quarterly basis where we believe low cost coal procurement played role. Furthermore, the company’s Line-III and Line-IV have the ability to process high percentage of Pet coke and local coal (High Sulphur content). Moreover, company has procured Mozambique coal (~25-30% cheaper than Richards Bay) and have benefited from the low-cost railway contract.
- Finance costs for the company have been reported at PkR607mn vs. PkR643mn in the previous quarter, down by 6%QoQ, while the said decline in the finance costs is despite the 100bps increase in SBP’s target rate on the back of less reliance on short-term borrowing and having a subsidized loan (~45% of long-term loans).
- Furthermore, other income witnessed increase of 5.8xQoQ to clock in at PkR52mn vs. PkR8mn in the previous quarter.
- Overall, this takes 1HFY23 unconsolidated PAT to PkR3.6bn against PkR2.4bn, up by 48%YoY. The said increase is mainly attributed to ~49% increase in the cement prices despite of a ~12.3%YoY decline in the company offtakes.
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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