Lucky Cement Limited (LUCK): 4QFY20 EPS at Rs4.58, down 28% YoY (higher-than-expectations)
- Lucky Cement Limited (LUCK) reported consolidated 4QFY20 earnings of Rs1.5bn (EPS: Rs4.58), down by 28% YoY. The earnings came in slightly above our estimates due to higher-than-expected income from Joint Ventures.
- Core cement operations (unconsolidated) earning clocked in at Rs1.26 per share for the quarter, in line with our expectations.
- Gross Margin for cement business eroded by 9.4ppts YoY to 16.5% (though up 4.9ppts QoQ) on the back of lower retention prices in both North and South regions and higher input costs. In FY20, Gross Margin of Cement operations clocked in at 14.5%, down 14.6ppts YoY.
- Net sales of Cement business declined by 10% YoY to Rs9.4bn despite increase in total volumetric sales by 4% YoY to 1.78mn tons (cement and clinker both) as cement prices both locally and internationally (for exports) declined.
- ICI Pakistan (LUCK’s listed subsidiary) also recorded a decline in earnings by 81% YoY in 4QFY20 due to decline in sales by 31% YoY attributed to COVID-19 outbreak.
Key risks include (1) intense pricing competition between the manufacturers, (2) lower-than-anticipated domestic demand and (3) higher-than-expected coal prices.
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.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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