Intermarket Securities Limited - Maple Leaf Cement Factory Ltd. (MLCF) Intermarket Pulse: MLCF: Earnings growth can support premium valuations; Buy

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Intermarket Securities Limited

Abdul Samad Khanani

EUR 4.64 For Business Accounts Only

Intermarket Pulse: MLCF: Earnings growth can support premium valuations; Buy

We upgrade our stance on MLCF to Buy with Decâ€™17 TP of PkR149/sh. We have included upcoming 2.3mn tpa expansion and consolidated estimates to account for potential tax benefits of MLCF Power. Our consolidated EPS estimates for FY17/18/19F are PkR10.6/13.3/15.9.

Upcoming projects including 40MW coal CPP and 2.3mn tpa expansion are expected to come online by 1QFY18F and 3QFY19F. While half of capex is already done on Coal CPP, further progress on expansion will keep the stock in the limelight.

MLCF is currently trading at FY17/18F P/E of 11.8x/9.4x, which drops to 7.9x in FY19F due to expansion in 2H. We believe the company can sustain premium valuations given 20% 3yr EPS CAGR vs. 17% for peers, clarity on expansion and benefits emanating from power & taxation mix.

09/03/2017 4 EN

Underlying

Maple Leaf Cement Factory Ltd.

Maple Leaf Cement Factory is engaged in the production and sale of white cement, grey cement and clinker. Co. is a subsidiary of Kohinoor Textile Mills Limited.

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PK0066201010 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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Intermarket Pulse: MLCF: Earnings growth can support premium valuations; Buy

Maple Leaf Cement: 3QFY23 Review - Earnings decline on higher expenses and lower margins

Pakistan Cements: 3QFY23 Result Previews

Maple Leaf Cement: 2QFY23 Review - Impressive margins and lower finance cost lead to earnings beat

Intermarket Pulse: Pakistan Food producers: 1QCY18- Another weak quarter for consumers

Pakistan IPPs: Favor NPL over NCPL in a tougher macro environment

Intermarket Pulse: Pakistan Banks: Valuation anomaly warrants switch to large banks

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