MLCF_2QFY24 Result Review — Lower ETR bolsters earnings (AKD Off the Analyst's Desk Feb 21, 2024)
MLCF_2QFY24 Result Review — Lower ETR bolsters earnings
Maple Leaf Cement Factory Limited (MLCF) announced their 2QFY24 result where the company posted earnings of PkR2.2bn (EPS: PkR2.1) vs. PkR1.6bn (EPS: PkR1.5) in the preceding quarter, up 38%QoQ. The result surpassed our expectations primarily due to a lower-than-expected tax charge, with an effective tax rate (ETR) of 23% against the expected 35%.
- Topline of the company clocked in at PkR18.1bn vs. PkR16.7bn in the quarter before (↑8%QoQ). The increase was driven by a 5.3% QoQ rise in retention prices albeit sales volumes remained flat at 1.06mn tons during the period.
- Gross margins improved to 35.3% vs. 31.3% in 1QFY24, where we believe company reclassified transport charges from COGS to distribution cost, leading to a 43%QoQ increase in distribution costs to PkR1.6bn.
- Finance costs decreased by 3%QoQ to PkR916mn, attributed to a decline in effective interest rates, with the avg. KIBOR at 21.5% in 2QFY24 compared to 23.0% in 1QFY24.
- Taxation charge for the quarter clocked in at PkR682mn (ETR: 23% vs. 34% in 1QFY24), lower than expected, likely due to an adjustment of deferred tax assets.
- Overall, this takes 1HFY24 PAT to PkR3.9bn (PkR3.6/sh) against PkR4.3bn (PkR4.0/sh) in SPLY, down 10%YoY. The said decline is mainly attributed to a 72%YoY increase in finance costs amid higher effective interest rates.
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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