Sie sind auf Seite 1von 2

R e s e a r c h

P a k i s t a n

Morning Pulse Feb 3, 2011
Morning Pulse
Feb 3, 2011

Cement Sector: LUCK missing luck as volumes remain doomed…

Synopsis…

Lucky Cement Limited (LUCK) has recently announced its 1HFY11 results. The bottom line of the company posted sharp decline of 23.45% Y-o-Y as company recorded Profit after Tax (PAT) of PRs1.46bn translating into an EPS of PRS4.52 in 1HFY11, against corresponding period of last year when the company had recorded PAT of PRs1.91bn and EPS of PRs5.90 respectively. In our today’s report we present detailed analysis of the financial performance of the company and future outlook.

Export dispatches declined sharply…

During the period under review, top line of the company witnessed marginal decline of 0.73% to PRs12.03bn against PRs12.12bn in 1HFY10. This drop in top line was mainly because of the lower volumetric sales. Even though the company has shown growth in its local dispatches of 13.16% over the same period of last year however this impact was mitigated by massive decline in export dispatches. Luck posted about 30.01% decline in its export sales which led to witness decline of 11.86% to 2.81m tons against 3.18m tons last year in its total dispatches. This plunge in export volumetric sales was mainly due to sluggish construction activities abroad.

Per ton Cost of Sale recorded much higher…

On the other hand, cost of sales of the company increased by 6.17% to PRs8.06n against PRs7.60bn in 1HFY10 even though production was recorded 9.07% lower than last year. Higher cost was owing to rising electricity and gas tariffs as per ton cost rose by 20.46% Y-o-Y. In addition to this, per ton coal prices in international market have shown significant upsurge in recent past months as December closing prices of coal

were seen at US$130.79. The devastating floods in Australia have shuttered coal mines throughout Queensland. In our view, this interruption may last for months which seems to a major reason behind huge

upsurge in international coal prices. In addition to this, rising demand is pushing up prices drastically as there is

a significant coal shortage in China which is a major consumer of coal. We believe mounting demand from

china which is world’s second largest economy in terms

of GDP will push prices further up.

Coal per ton prices (US$)

135 2009 2010 115 95 75 55 35 15 Jan Feb Mar April May June
135
2009
2010
115
95
75
55
35
15
Jan
Feb
Mar
April
May
June
July
Aug
Sept
Oct
Nov
Dec

Source: Global coal NEWC Index, Atlas research

Mild operating costs well supported bottom line…

During the period under review, distribution cost of the company went up by 5.16% to PRs1.82bn against PRs1.73bn in 1HFY10. However, Per ton distribution cost has increased by 19.30% Y-o-Y. In our view this upsurge

in distribution was mainly driven by higher fuel charges

and freights. On the other hand, other expenses went

down by 27.50% to PRs119.26m in comparison of the same period last year when company had recorded

other expenses of 164.47m. In addition to this, financial charges of the company were recorded lower by 1.25% to PRs294.15m in 1HFY11 against PRs297.89 in 1HFY10. This slight decline in financial charges was mainly because of lower long term debt on balance sheet as

its leverage has declined by PRs867.61m since June ‘10.

Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Atlas Capital Markets (Pvt.) Limited accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty and Atlas Capital Markets (Pvt.) Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.

Analyst:

Muhammad Sarfraz Abbasi sarfraz.abbasi@atlascapital.com.pk (+92-21)-111-226-100 (Ext.403)

BUY

Market Snapshot Index

Chg

%

KSE 30

11851.88

-31.5

-0.27

KSE 100

12242.39

-30.99

-0.25

KSE ALL

8482.67

-21.67

-0.25

Key Data Market Cap(PRs bn)

22.64

Shares Outstanding (m)

323.38

Bloomberg

LUCK PA

12M Avg. Volume (m)

1.56

143%

121%

99%

77%

55%

12M LUCK's relative performance LUCK KSE-100 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
12M LUCK's relative performance
LUCK
KSE-100
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11

Atlas Capital Markets (Pvt.) Ltd

B-209, Park Towers, Clifton, Karachi

Equity Research:

Equity Sales:

Tel: 92 (21) 5376125 Fax: 92 (21) 5376126

Tel: 92 (21) 5368261-8 Fax: 92 (21) 5376122

Money Market:

Corporate Finance:

Tel: 92 (21) 5376128 Fax: 92 (21) 5376129

Tel: 92 (21) 5824991 Fax: 92 (21) 5376122

Financial Products Distribution:

Tel: 92 (21) 5376125 Fax: 92 (21) 5376126

Atlas Research is available on Bloomberg and Thomson Financial

R e s e a r c h

P a k i s t a n

ATLAS CAPITAL MARKETS (PVT.) LIMITED

(PRs m)

1H/FY10

1H/FY11

Chg

Net Sales Cost of Sales Gross Profit Distribution exp Operating Profit Other Expenses EBIT Finance Cost Profit Befor Tax Taxation Profit After Tax EPS (PRs)

12,116

12,028

-1%

7,592

8,060

6%

4,525

3,968

-12%

1,727

1,816

5%

2,640

1,994

-24%

164

119

-27%

2,477

1,875

-24%

298

294

-1%

2,179

1,581

-27%

271

120

-56%

1,908

1,461

-23%

5.90

4.52

-23%

Gross Margin

37%

33%

Operating Margin

22%

17%

Net Margin

16%

12%

Source: Company Accounts, Atlas Research

Future Outlook and recommendation…

We expect cement dispatches to pick up from 3QFY11. 2HFY11 seems to be a recovery phase for the sector as construction activities have started picking up. We believe with retention prices are much improved than last year, however, we believe, further augment in retention prices would bode well given demand bounces back timely. However, we do not see any big miracle happening at export front as no excitement has shown in construction activities of GCC countries and other key destinations. We downgrade our Target price on LUCKY from PRs90 to PRs85, however our BUY stance is maintained as the scrip is currently trading at a discount of 21.52% to our revised fair value.

UPDATE

2