LUCK announces expansion of 2.6m MT/annum in Pezu, KPK.
Lucky Cement Company Limited (LUCK) has announced a brown field expansion of 2.6m MT/annum on its existing site in Pezu, Khyber Pakhtunkhwa at an estimated cost of PKR 17.5 bn. The project will take the company’s existing capacity in Pezu to 6.38m MT/annum. In our view the announcement is of no surprise as the company had already reported possibility of green field expansion at its existing site in Pezu, KPK considering continuous delays in getting necessary approval from Punjab Government for its previously announced green field expansion in Punjab. However, yesterday’s announcement regarding expansion of 2.6m MT/annum is higher than its previously planned expansion of 2.3m MT/annum in Punjab. We expect that the expansion will take 2.5 to 3 years to complete hence we expect plant to be commercially operational late in FY21 or in FY22. We also expect it to have an EPS impact of ~PKR 10.94 in FY22 if it operates at 80% of its capacity. We have not yet incorporated this in our valuation assumption.
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.
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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