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Bestway Cement Limited (BWCL): Higher coal price and lower retention price to trim earnings for 2QFY18

 

Friday, 16 February 2018

By: Ismail Iqbal Securities (Pvt.) Limited

 

  • Bestway Cement Limited (BWCL) is scheduled to announce its 2QFY18 result on February 21, 2018. We expect the company to post earnings of PKR 2,884 (EPS: PKR 4.84) in 2QFY18, reporting a decline of 26.1% YoY.
  • Further, despite higher dispatches during 2QFY18, we expect BWCL’s topline to decline during the period, owing to lower cement price during 2QFY18.
  • Moreover, we expect BWCL’s gross margin for 2QFY18 to be lower than the corresponding period last year due to lower retention price during 2QFY18 and higher coal price during 1QFY18, the effect of which is expected to be observed during 2QFY18. Other than this, we expect BWCL to announce an interim dividend of PKR 3/share for 2QFY18.

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BESTWAY CEMENT LIMITED (BWCL): LOWER RETENTION PRICE TO TRIM EARNINGS

 

18 April 2018

ISMAIL IQBAL SECURITIES (PVT.) LIMITED

 

 

  • Bestway Cement Limited (BWCL) is scheduled to announce its 3QFY18 result on April 20, 2018. We expect the company to post earnings of PKR 2,671m (EPS: PKR 4.48) for 3QFY18, reporting a decline of 23% YoY owing to lower cement price during the quarter.
  • We expect BWCL’s gross margin to remain under pressure due to higher coal price during the quarter and lower retention prices. Other than this, we expect BWCL’s selling expenses to increase by 14% YoY due to higher dispatches during 3QFY18. Considering the impact of recent PKR devaluation, we expect the company’s net margin to remain unaffected. We expect company to announce an interim dividend of PKR 3/share in line with the corresponding period last year.
  • For 3QFY18, we expect BWCL’s gross margin to remain under pressure due to higher coal price and lower retention price. We expect BWCL’s retention price for 3QFY18 to be around PKR 315/bag, declining 9.4% YoY due to (i) fall in cement price in North which plunged to PKR 508/bag from PKR 530/bag in the SPLY and (ii) 25% higher FED during the quarter as compared to the SPLY. To make matters worse, the coal price during the quarter also remained at a notably higher level compared to corresponding period last year.
  • The average coal price for 3QFY18 remained 20% YoY higher, which along with lower retention price will lead to lower margins for the quarter. Therefore, we expect BWCL’s gross margin for 3QFY18 to be at 31% compared to 41.2% in the SPLY. To recall, the Federal Excise duty (FED) for FY18 is PKR 62.5/bag, PKR 12.5/bag higher than the SPLY.

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Bestway Cement Limited (BWCL): Earnings for 3QFY18 decline despite rise in dispatches

 

 

17 May 2018

Ismail Iqbal Securities (Pvt.) Limited

 

 

 

  • Bestway Cement Limited (BWCL) announced earnings of PKR 2.5bn (EPS: PKR 4.22) for 3QFY18, reporting decline of 27% YoY due to deterioration of cement price in the North. However, company’s topline was up 4% YoY due to rise in dispatches which increased by 26% YoY.
  • For the quarter under review, the company’s profit share from associates also dropped significantly to PKR 219m from PKR 575m in the corresponding period last year, trimming EPS by PKR 0.59/share. After incorporating results for 3QFY18 and revising some assumptions, we have trimmed down our December-18 target price to PKR 192 from previous target price of PKR 237.
  • Our new target price still offers an upside of 40% to the company’s last closing share price; hence, we are maintaining our positive stance on the scrip. Please note that we have not incorporated implications of Katas Raj case decision into our model as we await further information of the case which will be available once formal order of the case is passed.

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