D. G.

Khan Cement
30-Jan-10

BUY 3rd QUARTER ENDED RESEARCH REPORT FOR MAR 2010

SECTOR OVERVIEW
Pakistan cement industry has shown volumetric growth
of 17% in the local market and 3.55 increases in exports.
Industry has face many economical, political and energy
crisis. The price of cement is also decrease and cost of
production has increased which has effect the
profitability of companies. Industry is now expecting
that the local demand will be increase because of
activities in housing sector and commercial activities.
Exports are also going to be increases because of
government subsidiary for the exports through sea
routes.
FINANCIAL OVERVIEW
CURRENT STATISTICS
D.G khan cement has a decline in its sales from 3893 M to 4514 M Share Price 23.81
and increase in the cost of production from 3485 M to 3374 M. EPS (3rd Quarter) 1.28
These both factors have put a negative effect in gross profit, which Fair Value 30
is reduced from 1139 M to 407 M. D.G khan has recorded a Company P/E 14
negative profit margin(2.101%). Company has a very good liquidity Sector P/E 8
ratio that is, “for every one rupee of its debt company has 1.1056
rupees to pay off it. Debt-to-equity ratio of D.G khan cement has FINANCIAL DATA
shown that company has more debt financing with 79.04% of ratio Quarter ended March 31,, March 31,
(Rs. in millions) 2010 2009
OPERATION'S OVERVIEW Sales-Net 3,893 4,514
Gross Profit 408 1,139
D.G khan cement has an increase in local sales by 245 and decrease Opt. Profit 434 774
in the exports by 34% because it has recorded almost no demand PAT (818) 194
from Gulf States. The less export makes company to focus more on EPS (0.27) 0.64
local market. The net sales declined by 10%. Gross profit during March 31, June 30,
period is decline because reduced sales prices and cost is 2010 2009
increased. D.G khan has earned net profit of 388.170 million Property, Plant & Equipment 23,406 24,345
because of gain on sale of shares. The power generation project C.Assets 17,431 13,287
from waste heat will start its trail operation from April 2010. The C.Liabilities 15,766 15,834
project is expected to generate about 10.4MW power. For L.T. Liabilities 5,473 5,969
supporting this project D.G khan has decided to issue right shares Paid up cap. 3,042 3,042
of 20% of capital at price of 20/- per share.
RECOMMENDATIONS
(Note: Calculations are based on P/E model)
Prepared by: It is recommended to have buying position in the
Ahmed Faraz (Research Analyst) D.G. Khan cement company at the current levels.
Rafi Securities (Pvt.) Limited
UAN : 111 - 159 - 111 , Email: research@rafionline.com
1004, 10th Floor Al - Rahim Tower , I. I. Chundrigar Road - Karachi
DISCLAIMER:This report has been prepared by Rafi Securities (Pvt) Ltd. for
information purpose only. Under no circumstances the contents of the report
are to be used or considered as an offer to sell or a solicitation of any offer to
buy.
Pakistan cement industry has shown volumetric growth
increases in exports.
Industry has face many economical, political and energy

the