Intermarket Securities Limited - Lucky Cement Ltd. (LUCK) Lucky Cement- Best exposure to Pakistanâ€™s construction upcycle more; Buy! 16-06-2016

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Intermarket Securities Limited

Abdul Samad Khanani

EUR 23.10 For Business Accounts Only

Lucky Cement- Best exposure to Pakistanâ€™s construction upcycle & more; Buy! 16-06-2016

We reinstate coverage on Lucky Cement (LUCK) â€“ the second largest cement producer in Pakistan â€“ with a Buy rating and a Target Price of PkR756/share (15% upside). With a 5yr EPS CAGR of 21%, LUCK offers the best exposure to construction up-cycle in Pakistan; its international ventures and diversifications are unmatched by peers.

Superior core operations, expansion, and international cement ventures place LUCK alongside the best cements players in the EM space. Additionally, diversification in non-cement-related avenues through ICI and LEPL allows LUCK with high ROE exposures in Chemical, Consumer, Pharmaceutical and Power sectors.

Our valuation incorporates core operations (PkR506/sh), 2.3mn tons expansion (PkR39/sh), ICI (PkR70/sh), Iraq operation (PkR19/sh), DRC venture (PkR41/sh), Yunus Wind Energy (PkR7/sh), and Lucky Electric Power (PkR74/sh). We believe commencement of DR Congo plant in Octâ€™16 and 2.3mn tons expansion in Punjab at end of FY18 are key upcoming triggers.

16/06/2016 18 EN

Underlying

Lucky Cement Ltd.

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.

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PK0071501016 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

Abdul Samad Khanani

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