Topline up by 3% YoY upon Higher Dispatches and Better Sales Mix
Attock Cement Pakistan Limited (ACPL) posted earnings of PKR 548 million (EPS: PKR 4.78) in 2QFY18, which is 20% lower than the SPLY. The company’s gross profit margin for 2QFY18 declined to 34.9% from 37.5% in 2QFY17 because of higher cost of sales which increased due to higher coal price during the period under review. Going forward, we expect the company’s gross margin to remain under pressure in the short run as cement prices are expected to decline following commencement of DGKC’s new cement plant in South. During 2QFY18, the company’s topline rose by 3% YoY due to higher dispatches and concentration in local sales, which carry a higher retention price compared to export sales. As per our discussion with the management, they are still struggling to get tax holiday under Circular 2 of 2015 (Income Tax) ‘Clause 126 L’, consequently we have removed this assumption from our estimates. We have trimmed down our June-18 target price to PKR 256.1/share from previous TP of PKR 299.5/share. Our new target price is still offering an upside of 37% to company’s last closing share price; hence, we are maintaining our positive stance on the scrip.
Attock Cement Pakistan Ltd. Attock Cement Pakistan Limited is principally engaged in manufacturing and sale of cement. The Company is also engaged in exporting clinker and cement both in bags and bulk to the United Arab Emirates (UAE), South Africa, Iraq, Sri Lanka and many other countries. The Company also has the facility of supply of cement in bulk and also produces the low alkali cement for some of its market. Its products include Ordinary Portland Cement (OPC), which is a product under the Falcon Brand used in all types of general construction. OPC can be used in concretes, mortars, grouts and premix concrete. It also offers Sulfate Resistant Cement (SRC), which is sold under falcon Brand and is used in sea and coastal areas and provides resistance to chemical attack from sulfates and dissolved salts present in sea and saline waters. The Company's Falcon Block Cement product is offered for block and precast slab makers.
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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