D.G.Khan Cement Company Limited: Estimates revised on change in sales mix; reiterate Buy!
DGKC’s 4QFY18 earnings of PKR8.83/sh were largely dominated by both positive and negative one-offs including PKR1.3bn impairment charge, PKR250mn exchange loss and PKR3.2bn tax income. Along with the result, the company also announced a dividend of PKR4.25/sh.
The negative surprise in earnings and dividend generated negative market reaction as the stock closed at its lower circuit in the last trading session.
Given the one-off nature of negatives and based on our stress test on possible worst- case scenario for DGKC earnings (see here), we see current price level as an opportunity.
Incorporating the latest results and tweaking our sales mix assumption we have revised our earnings estimates for DGKC by -15%/-4%/+7% over FY19-21E.
We maintain our liking for the scrip and reiterate our Buy call with a revised TP of PKR160/sh, offering 57% upside from current levels along with dividend yield of 3%
Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.
BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.
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