Flash Note: Lucky Cement Limited - Lower Retention Prices Drag Down FY18 EPS to PKR37.7
- Lucky Cement Limited (LUCK) announced its 4QFY18 financial result where it posted earnings of PKR2.4bn (EPS: PKR7.4), down 27%YoY/26%QoQ on the back of decline in GMs to 33%, down 9pptYoY/1pptQoQ.
- During FY18, earnings declined by 11%YoY to PKR12.2bn (EPS: PKR37.7) as GMs declined by 11pptYoY to 36%. The result was slightly below our EPS forecast of PKR39.05 – likely due to lower than expected Export prices and/or higher than estimated discounts in local market.
- During 4QFY18 / FY18, topline grew by 14%YoY / 4%YoY, led by 18%YoY / 12%YoY growth in total offtakes. However it fell by 4%QoQ owing to lower offtakes (down 3%QoQ) during the quarter. Cement prices in North also recovered by 4%YoY and 8%QoQ to absorb the impact of surge in coal prices, FED hike and PKR depreciation.
- Cost of sales jumped by 31%YoY/25%YoY in 4QFY18/FY18 owing to 19%YoY/21%YoY surge in average coal prices and 11%YoY/5%YoY average PKR depreciation against USD. Resultantly, Gross Margin contracted by 9pptYoY/1pptQoQ in 4QFY18 and 11pptYoY in FY18, to stand at 33% in the outgoing quarter and 36% in FY18.
Lucky Cement is a cement manufacturing and distribution company which is based in Pakistan. Co. is engaged in the manufacture and sale of Ordinary Portland, Sulphate Resistant, and Slag Cement. Co.'s brand names included Lucky Cement, Lucky Star, Lucky Gold, Chairman, and Lucky Sulphate Resistant Cement. Co. maintains production facilities in Pezu (Production capacity: 13,000 tons per day) as well as in Karachi (Production capacity: 8,000 tons per day). In addition, Co. is engaged in developing export markets for bulk loose cement from Pakistan to the Gulf Countries, African Markets, and Far East Region including Nepal & Sri Lanka.
Elixir Securities Pakistan is a Corporate Member of the Pakistan Stock Exchange & Pakistan Mercantile Exchange and is one of the leading securities brokerage & investment banking firms in Pakistan, established since 1994. Our principal business activities include all aspects of Pakistan’s Capital Markets covering Securities Brokerage (Equities, Fixed Income and Commodities), Corporate Finance & Capital Markets Advisory (M&A, ECM, DCM) and Investment Research (Economics & Securities). We are one of the most active & aggressive Broker-Dealers in Pakistan executing trades for most of the Top 20 Global Brokers with unmatched corporate access credentials and have successfully advised and closed on some landmark ECM transactions in the history of Pakistan including the largest deal in frontier Asia (USD 1.02 billion). Our Clients include foreign and domestic financial institutions (Banks, Asset Managers, Insurance Companies, Pension Funds) corporates, HNWI’s and retail investors. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media.
Elixir Securities Pakistan is the proud recipient of many awards & recognitions including AsiaMoney’s Brokers Poll 2017, FinanceAsia’s Pakistan Best Investment Bank and Best Broker 2017, The Asset’s Best Brokerage House in Pakistan 2016, Asiamoney’s “Best Domestic Equity House 2015 in Pakistan”, The Asset Triple A Country Awards 2015 - Pakistan “Deal of the Year” and “Deal of the Year-Highly Commended”, CFA Society of Pakistan Awards for Year 2015 “Best Research Analyst (1st Rank), CFA Society of Pakistan Awards for Year 2014 “Best Research Analyst (1st Rank)”, “Best Trader” 2nd Runner-up (3rd Rank), The Asset Triple A Country Awards 2014’s “Best Deal in Pakistan” and Capital Finance International’s nomination for “Best Equity Research in Pakistan 2010”.
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