Intermarket Securities Limited - Kohat Cement Co. Ltd. (KOHC) Intermarket Intel - KOHC 2QFY18 Result Review: Result mostly in-line except for a jump in admin costs

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Intermarket Securities Limited

Syed Waqas Imam

EUR 4.36 For Business Accounts Only

Intermarket Intel - KOHC 2QFY18 Result Review: Result mostly in-line except for a jump in admin costs

Kohat Cement (KOHC) announced NPAT of PRs741mn (EPS: PRs4.80) in 2QFY18, vs. our expected NPAT of PRs767mn (EPS: PRs4.96). The slight deviance was on account of higher than expected admin expenses and ETR.
During 2QFY18, GMs clocked in at 34% in-line with our estimates. The GMs were down 12ppt YoY due to decline in local retention prices amid stiff competition in KPK region, and uptick in international coal prices.
Net sales were recorded at PRs3.45bn in 2QFY18 in-line with our estimates. The local dispatches for the company were flat while exports recorded a 42% YoY decline.
In other highlights: (i) Admin expenses were up 38% each QoQ/YoY and (ii) ETR clocked in at 31% vs our estimate of 29%
Completion of grinding mill is expected by April’18 while upcoming 7800tpd expansion is underway as per schedule.
Our base case TP of PRs190/sh does not incorporate the announced expansion, which would serve as an upside trigger to our estimates.

26/02/2018 2 EN

Underlying

Kohat Cement Co. Ltd.

Kohat Cement Company Limited. Kohat Cement Company Limited is a Pakistan-based company, which is engaged in the production and sale of cement. The Company's products include Grey Cement and White Cement. The Company offers Ordinary Portland Grey Cement under the brand name KOHAT CEMENT. The Company produces and sells White Portland Cement under the brand name KOHAT SUPER WHITE. The Company also offers white canvas for various architectural applications. The Company's white canvas is used for concreting and ornamental applications, terrazzo floorings, fixing of tiles and marbles, and others. The Company's White Portland Cement is available in all local markets in Pakistan and Afghanistan. The Company has an annual production capacity of 2.8 million tons of Grey Cement and 150,000 tons of White Cement. The Company produces both Grey and White Cements at its plants located in Rawalpindi Road, Kohat.

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PK0075001013 Pakistan Stock Exchange Pakistan

Provider

Intermarket Securities Limited

Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.

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Analysts

Syed Waqas Imam

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