Revising Target price to PKR 197 upon revision in assumptions
D.G Khan Cement Company Limited (DGKC) announced earnings of PKR 1.2 bn (EPS: PKR 2.82) for 3QFY18, reporting a decline of 36.6% YoY despite an increase in its total dispatches. The decline in earnings was mainly because of lower cement price during the quarter along with expensive coal which reduced margins down to 25.2% during the quarter against 36.2% in the SPLY. Going forward in 4QFY18, we expect earnings to increase by 2.6x times YoY due to a one off tax impact on DGKC’s expansion plant. We have increased our December-18 target price to PKR 197/share from our previous target price of 186/share after revising some assumptions. Our new target price still offers an upside of 55%; hence, we are maintaining positive stance on the scrip. Please note that we have not taken implication of Katas Raj case decision into our model as we await further information of the case which will be available once formal order of the case is released.
Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.
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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