ACPL - Attock Cement Pakistan Limited

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Apr 11, 2017
Attock Cement Pakistan Limited (ACPL): Exports spearheading growth

10 April 2018
BIPL Securities Limited

  • With the commencement of its new line, ACPL’s exports have significantly improved registering a growth of 52%YoY in 3QFY18.
  • The company would be eligible to avail tax credit of PKR924mn on the new line where the major portion would be recorded in FY19
  • The prices are expected to come under pressure with the entry of new players in south where the company’s local capacity based market share would decrease to 17% in FY20 from 22% in FY18
  • ACPL has incurred USD12mn as at Dec’17 on its international project where the management expects to initiate it by Dec’18. Our calculation suggests the project to have a TP impact of PKR35/sh.
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Apr 11, 2017
Attock Cement Pakistan Limited (ACPL): Earnings to decline despite higher dispatches

12 April 2018
Ismail Iqbal Securities (Pvt.) Limited

  • Attock Cement Pakistan Limited (ACPL) is scheduled to announce its 3QFY18 result on April 16, 2018. We expect the company to post earnings of PKR 772 million (EPS: PKR 6.74) reporting a decline of 10% YoY owing to higher coal price and greater Federal Excise Duty (FED) compared to SPLY. We expect the company’s topline to increase by 25% YoY owing to higher dispatches during the quarter which increased after commencement of commercial operations of its expansion plant in January. Further, the company under section 65 (B) of the income tax ordinance 2001 is entitled to claim 10% tax credit on its investment in expansion plant but as per the management the tax credit will most likely be claimed in 4QFY18; hence, following the management’s guidance we have not incorporated the tax impact in our earnings estimation for 3QFY18, which as per our calculation will have an impact of PKR 5.61/share in 4QFY18
  • Although average cement price of PKR 568/bag in South during 3QFY18 remained only slightly (PKR 6/bag) below the average price in the SPLY, the retention price of ACPL declined by PKR ~22/bag mainly because of 25% YoY higher FED charge during the period. Other than this, the average coal price during the quarter also remained robust, reporting an increase of almost 23% YoY. Therefore, we expect ACPL to report a gross margin of 35.6%, 7.5% lower than that reported in the corresponding period last year. Further, we expect the company’s selling expenses for the quarter to increase by 13% YoY due to increase in total dispatches and higher sales mix of export dispatches, which normally lead to higher selling expenses. As per the provisional cement dispatches data, ACPL’s export sales for 3QFY18 increased by 2.1x times YoY, whereas local dispatches increased by only 12% leading to decline in the contribution of local dispatches towards total sales to 70% from 81% in the SPLY
Apr 11, 2017

Attock Cement Pakistan Limited (ACPL): Result Preview

13 April 2018
Aba Ali Habib Securities (Private) Limited

  • ACPL is scheduled to announce its 9MFY18 result on 16th Apr’18. We expect the company to post 3QFY18 EPS of PKR 6.41, down by 15% YoY. ACPL’s 9MFY18 EPS is likely clock in at PKR16.48, down 16% YoY
  • The decline in 3QFY18 earnings can be attributed to higher production cost owing to 8% YoY increase in coal prices compared to SPLY. As a result, gross margins of the company is likely to shrink by 9.6pps to clock in at 33.5%. Moreover, 3QFY18 top line is expected to grow significantly by 20% YoY due to higher dispatches and stable cement prices in the south region during the period.
  • Selling and Distribution expense is likely to jump by 17% YoY due to increase in export dispatches. Finance cost is likely to witness an increase of 6.2x on account of increase in interest bearing liabilities. Moreover, we expect effective tax rate to clock in around 32% during 9MFY18. We highlight that we have not incorporated incremental impact of PKR924mn tax credit in our earnings estimates which we expect to be recognized from the next quarter.


Apr 11, 2017
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Attock Cement Pakistan Limited (ACPL): Gross margin slips to 30.1% owing to numerous drivers

03 May 2018
Ismail Iqbal Securities (Pvt.) Limited

  • Attock Cement Pakistan Limited (ACPL) announced earnings of PKR 674 million (EPS: PKR 5.88) reporting a decline of 22% YoY as coal prices for the quarter remained robust along with higher FED compared to SPLY. For 3QFY18, the company reported a growth of 14% YoY in its topline. However cost of sales increased by 40% YoY for the same period, taking gross margin down to 30.1% from 43.1% in the corresponding period last year.
  • Please note that owing to commencement of its expansion plant, ACPL’s cement capacity utilization level dropped to 82% in 3QFY18 which normally remains around 100%.Going forward, after discussion with management we expect company to claim tax credits on its expansion plant in 4QFY18. After incorporating 3QFY18 financials and adjustments for the proposed increase in FED in FY19, we have trimmed ACPL’s target price for December 2018 to PKR 258 from previous target price of PKR 277. Our new target price is still offering an upside of 47% to the company’s last closing share price; hence, we are maintaining positive stance on the scrip.
  • ACPL’s gross margin for the quarter declined to 30.1% from 43.1% in the SPLY owing to rise in coal prices in international market which increased by almost 22% YoY. The situation further worsened due to PKR devaluation against USD, which made the imported coal further expensive for the company. Other than this, like its peers ACPL remained unable to pass on the impact of 25% higher Fed as compared to SPLY. Going forward, although we expect coal prices to slightly settle down we do not expect the company’s margin to improve sharply as for FY19, the federal government has proposed to further increase Federal Excise Duty (FED) on cement by 20% from its current level of PKR 1.25/kg (PKR 62.5/bag) to PKR 1.5/kg (PKR 75/bag) which we expect will be atleast partially absorbed by the company.
Apr 11, 2017
Attock Cement Pakistan Limited (ACPL): Earning drop amid higher costs

12 June 2018
Azee Securities (Pvt.) Ltd.

  • In our today's morning report we would discuss the performance of Attock Cement Pakistan Limited (ACPL) in 9MFY18.
  • Primarily owing to higher coal prices, the profit after taxation (PAT) of ACPL fell by 18% YoY in 9MFY18 to Rs 1.82 billion (EPS: Rs 15.95) as against a PAT of Rs 2.23 billion (EPS: Rs19.55) in 9MFY17. However, the decline in earning was restricted owing to higher volumetric sales and lower effective taxation. As new production line has started operation form January 2018, company would take tax benefit amounting Rs 924 million under section 65B.
  • On back of higher volumetric sales, the net revenue of the company reached Rs 12.14 billion in 9MFY18 resulting in a 8% YoY growth when compared to a net revenue of Rs 11.24 billion in the identical period in FY17. The overall retention per ton of cement sold reduced due to stiff competition in the market, penetration in far away low prices markets of the country to take advantage of robust local sales and highly competitive prices in export markets. On the other side due to significant rise in coal and other input prices, the cost of sales of the company surged by 22% YoY in 9MFY18 to Rs 8.16 billion as against Rs 6.66 billion in 9MFY17. Therefore gross profit came down by 13% YoY in 9MFY18 to Rs 3.98 billion as against Rs 4.57 billion in 9MFY17. Consequently, gross profit margin of the company reduced to 32.8% in 9MFY18 versus 40.7% in 9MFY17.