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AHL Research

24 April 2017

 

Lucky Cement Company Limited

Earnings Review – 3QFY17 EPS @ PKR 10.47

LUCK: 9MFY17 EPS @ PKR 32.23 (up 8% YoY)

 

During 3QFY17 Lucky Cement Company Limited (LUCK) posted earnings of PKR 3,384mn (EPS: PKR 10.47), depicting a growth of 12% QoQ / decline of 1% YoY. On a cumulative basis, profitability during 9MFY17 displayed 8% growth at PKR 10,422mn (EPS: PKR 32.23) as compared to PKR 9,614mn (EPS: PKR 29.73) in SPLY.

 

LUCK - 3QFY17_Page_1.jpg

 

Result Highlights

  • On a sequential basis, the company’s topline witnessed an ascent of 9% QoQ to PKR 11.8bn, given higher average retention prices along with sales tipping towards the local market (~80% share) in 3QFY17. During 9MFY17, revenue jump of 5% YoY is attributable to an 8% YoY uptick in dispatches to 5,534K tons.
  • Meanwhile existing coal inventory procured at higher average prices from prior period managed to retract margins by ~426bps to 45%. Albeit, margins remained flat in 9MFY17 at 48% (9MFY16: 47%) owed to growth in domestic dispatches.
  • LUCK booked effective taxation at 29% (2QFY17: 28%).

Other Announcements:

  • The company is rigorously pursuing its 2.3mn tons Green Field cement facility with the Government of Punjab.
  • Brownfield expansion at the Karachi site of 1.25mn tons cement line is projected to become operational by Dec’17.
  • Moreover, Lucky Electric Power Company (LEPCL), has executed the EPC contract and finalized draft of PPA and implementation agreement. Furthermore, the company has also received intimation for coal allocation from Sindh Engro Coal Mining Company (SECMC). Pertinently, financial close is expected by Sept’17 and COD is scheduled in Dec’20.
  • While Iraq’s cement grinding capacity expansion (0.871mn tons) is expected to come online by Sep’17 (0.435mn in Aug’17 while remaining in Oct’17)
  • As far as KIA Lucky Motors is concerned, application has been submitted to the Board of Investment under Category A which is expected to get approval by end of Apr’17.

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24 April 2017

 

Lucky Cement Limited (LUCK)

 

FINANCIAL RESULT FOR THE NINE MONTHS ENDED 31/03/2017

(UNCONSOLIDATED) PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 14,668.803

(UNCONSOLIDATED) PROFIT/LOSS AFTER TAXATION RS. IN MILLION 10,421.840

(UNCONSOLIDATED) EPS = 32.23

(CONSOLIDATED) PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 17,980.910

(CONSOLIDATED) PROFIT/LOSS AFTER TAXATION RS. IN MILLION 13,055.709

(CONSOLIDATED) EPS = 37.27

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AKD Research

25 May 2017

 

LUCK: Expanding All-Around

We revisit our investment case on LUCK, rolling forward our Jun'18 SOTP based TP to PkR1,180/share (offering 22% upside), implying a BUY stance. Our recommendation is based on: 1) cost savings through new 10MW WHR (achieved COD in Jan'17), 2) doubling capacity of Iraq's JV to 1.742mn tpa (expected to come online in 1QFY18), 3) 1.18mn tpa Greenfield cement plant in DR Congo that started operations in Dec'16 and 4) earnings growth potential via 1.25mn tpa capacity expansion (expected to come online in 2QFY18). Additionally, LUCK as a conglomerate enjoys indirect exposure to the pharmaceutical business through its subsidiary, ICI that continues to grow (acquisition of certain assets of Wyeth Pakistan Ltd and Pfizer Pakistan Ltd). The setting up of greenfield manufacturing plant of Kia motor vehicles (25-30K p.a. capacity), approval for which is expected soon by BoI, remains a key upside earnings trigger. The stock has returned 11%CYTD in anticipation of inclusion in MSCI EM index with valuations standing at FY18F PE of 20.6x. While trading at a premium of 77% to the AKD cement universe's FY18F PE, we feel it remains justified given LUCK's strong earnings profile (5yr forward earnings CAGR of 14% vs. 12% of AKD cement universe) and various diversification projects, boosting consolidated earnings.

 

Performance Review:

LUCK's earnings grew by 8%YoY to record NPAT of PkR10.42bn (EPS: PkR32.23) in 9MFY17. Result highlights include: 1) 5%YoY growth in topline to PkR35.24bn as total dispatches grew by 2%YoY to 5.19mn tons, 2) GM increased by 70bpsYoY to 48.1% due to increase in WHR capacity by 10MW in Jan'17 and 3) 6%YoY decline in distribution cost to PkR1.4bn due to 26%YoY slippage in export dispatches.

 

Update on expansions:

  1. Brownfield Expansion: Construction work at LUCK's Brownfield Expansion (installation of additional Line of 1.25mn tpa) at Karachi Plant has entered into its final stage, where the management remains confident on the expansion progress expecting to achieve COD in Dec'17. The expansion is expected to provide much needed organic growth to the company (90%+ capacity utilization in FY16/10MFY17) making room available to catch up with the rising domestic demand, where development projects in Gwadar and private housing projects in Karachi are key growth triggers.
  2. Doubling Iraq JV's capacity: LUCK has been quick to realize the potential of Iraq's domestic demand (100% utilization of current capacity) as it reels from war affected insurgencies. Iraq's cement deficit stands at 7-8mn tpa which was previously bridged through imports from Iran. However, recent ban on cement imports in Iraq due to unstable security situation has opened avenues for domestic industry placing LUCK in a favorable position to mobilize additional output. In this backdrop, LUCK has announced to double its capacity to 1.742mn tpa with project financing (expected US$35mn) to be done through internally generated cash flows of the existing plant. The first phase of the expansion (50% of the capacity or 0.4355mn tpa) is expected to come online by Aug'17 whereas the remaining 50% is scheduled to come online by Oct'17. The project is expected to contribute incremental earnings of PkR4.06/5.22/sh in FY18/19F to consolidated results assuming 90% utilization after expansion.
  3. DR Congo JV: LUCK's effort to increase footprint beyond Pakistan has come to fruition with its JV investment in Cement Plant in DR Congo (1.18mn tpa) starting commercial operations in Dec'16. Cement consumption in Congo is estimated around ~1.5mn tpa against the local production of just ~350k tpa. Currently the plant is operating at 50% utilization with a huge growth potential considering Congo's domestic demand and supply situation. We estimate Congo JV to contribute annualized after-tax earnings of PkR3.31/share (at 60% utilization) in FY18F.
  4. Another 10MW WHR: As part of its ongoing cost reduction strategy, LUCK has installed another WHR plant of 10MW at Pezu that started operations in Jan'17. In this regard, we estimate 10MW WHR to fulfill ~10% of the company's power requirement and contribute after tax operational savings of PkR0.35/sh annually with GM improvement of around 1.3ppts.With the addition of the new plant, LUCK's total WHR capacity now stands at 45MW that is estimated to fulfill ~45% of company's power requirement from FY18F (at 80% utilization).

Investment Perspective: The stock has returned 11%CYTD in anticipation of inclusion in MSCI EM index with valuations standing at FY18F PE of 20.6x. While trading at a premium of 77% to the AKD cement universe's FY18F PE, we feel higher valuations remains justified given LUCK's strong earnings profile (5yr forward earnings CAGR of 14% vs. 12% of AKD cement universe) and various diversification projects, boosting consolidated earnings.

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AHL Research

27 July 2017

 

Result Previews

 

LUCK: FY17 Profitability to Grow by 4% YoY

The Board of directors of Lucky Cement Limited (LUCK) is scheduled to meet on July 31, 2017 to approve the financial results for FY17. We expect the company to post a profit after tax (PAT) of PKR 13.4bn (EPS: PKR 41.48) in FY17, as compared to PAT of PKR 12.9bn (EPS: PKR 40.03) during last year. A rise of 4% in net sales to PKR 47.2bn during FY17 is mainly due to an 8% YoY growth in local sales while exports are expected to decline by 31% YoY. The local-export ratio is expected around 84%-16% in FY17 as compared to 77%-23% in FY16. We estimate LUCK’s gross margins during the period under review to stand unchanged at 48%. On sequential basis, we expect the company to post a bottom-line of PKR 2.9bn (EPS: PKR 9.25) in 4QFY17, which is 10% lower than 4QFY16’s PAT of PKR 3.3bn (EPS: PKR 10.33). Along with the result, we expect the company to announce final cash dividend of PKR 10/share.

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Lucky Cement Limited

(LUCK)

 

July 31st, 2017

 

FINANCIAL RESULT FOR THE YEAR ENDED 30/06/2017

(UNCONSOLIDATED) PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 18,778.253

(UNCONSOLIDATED) PROFIT/LOSS AFTER TAXATION RS. IN MILLION 13,692.249

(UNCONSOLIDATED) EPS = 42.34

(CONSOLIDATED) PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 23,630.221

(CONSOLIDATED) PROFIT/LOSS AFTER TAXATION RS. IN MILLION 17,390.634

(CONSOLIDATED) EPS = 50.18

DIVIDEND = 120%

ANNUAL GENERAL MEETING WILL BE HELD ON 25/09/2017

BOOK CLOSURE FROM 11/09/2017

BOOK CLOSURE TO 25/09/2017

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AHL Research

21 August 2017

 

LUCK drops prices by PKR 25/bag

 

LUCK followed suit

As per official notification, Lucky cement Limited (LUCK) has cut cement’s Maximum retail price (MRP) by PKR 25/bag in the northern region. Pertinently, the decline came after recent price reduction by Bestway Cement Limited (BWCL) and Cherat Cement Limited (CHCC). Our discussion with dealers suggests that initially BWCL oversupplied the market with reduced prices and CHCC and LUCK followed suit in a phase-wise manner. However, interaction with the management of different companies also hints that price decline is on account of dull sales season ahead. We do accentuate that the pullback in prices is in addition to the discount offered (to the tune of PKR 10-15/bag).

 

We believe the recent decline in cement prices is mainly because of oversupply and expected slowdown of dispatches in the upcoming season (Eid holidays and winters). Historically, we have witnessed the same practice by domestic manufacturers during aforementioned season. Addionally, going forward with the upcoming capacity additions and levered positions of mid to small players, we view that price war would be minimal and pricing power will be retained by bigger players in the industry.

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AHL RESEARCH

26 JANUARY 2018

 

Lucky Cement Limited

Earnings Review – 2QFY18 EPS @ PKR 10.92

 

LUCK: 1HFY18 EPS @ PKR 20.25 (down by 7% YoY)

 

During 2QFY18, Lucky Cement Company Limited (LUCK) posted earnings of PKR 3,530mn (EPS: PKR 10.92), up by 17% QoQ / down by 7% YoY. On a cumulative basis, profitability during 1HFY18 displayed a slowdown of 7% YoY to PKR 6,547mn (EPS: PKR 20.25) vis-à-vis PKR 7,037mn (EPS: PKR 21.76) from SPLY.

 

Result Highlights

  • On a sequential basis, the company’s topline witnessed an ascent of 8% QoQ to PKR 12.1bn led by an identical growth in total dispatches to 1,953k tons. While on a YoY basis, sales remained stagnant at PKR 23.3bn during 1HFY18 attributable to a trivial 1% YoY uptick in dispatches to 3,757K tons alongside lower retention prices.
  • Meanwhile, margin accretion during 2Q by 289bps to 40% was led by a robust growth in domestic dispatches (+8% QoQ) which offset the 18% retraction in exports (220k tons in 2Q) as well as the uptick in coal prices (up by 7% QoQ on average at USD 93/ton). Albeit, margins pulled back by 11.6ppts in 1HFY18 vis-à-vis SPLY amid a massive 20% YoY jump in coal prices tagged with lower retention prices in the northern region.
  • Additionally, distribution costs during the period under review ticked higher by 20% QoQ in the wake of higher freight charges. Whereas a 22% YoY dip to PKR 813mn in half year was owed to a 35% decline in exports.
  • LUCK booked effective taxation at 20% in 2Q (1QFY18: 18%).

Other Announcements:

 

  • The company continues to pursue its 2.3mn tons Green Field cement facility with the Government of Punjab for necessary approvals. Albeit, given delays in the process, LUCK is assessing a similar sized Brown Field expansion at its current location in Pezu, KPK.
  • Lucky Electric Power Company (LEPCL) has successfully been extended a Letter of Support (LOS) by the Private Power Infrastructure Board. Hence, financial close is targeted for Jun’18 and COD is scheduled in Jun’21.
  • Finally, the company has reported that KIA Lucky Motors (KLM) commenced work on plant construction in Nov’17 in light of the New Entrant Agreement signed in Dec’17 with the Ministry of Industries & Production. Timeline for plant completion is set in CY19.

Recommendation:

 

  • Currently we have a HOLD stance on the scrip with target price of PKR 680.48/share.

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Lucky Cement Limited

(LUCK)

 

January 26th, 2018

03:13:19 PM

 

FINANCIAL RESULT FOR THE HALF YEAR ENDED 31/12/2017

 

(UNCONSOLIDATED) PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 8,094.644

(UNCONSOLIDATED) PROFIT/LOSS AFTER TAXATION RS. IN MILLION 6,547.133

(UNCONSOLIDATED) EPS = 20.25

 

(CONSOLIDATED) PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 10,343.284

(CONSOLIDATED) PROFIT/LOSS AFTER TAXATION RS. IN MILLION 8,576.879

(CONSOLIDATED) EPS = 24.47

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LUCKY CEMENT LIMITED (LUCKY): We initiate our coverage on Lucky Cement Limited (LUCK) with a “BUY” recommendation

 

 

10 April 2018

Zafar Securities (Private) Limited

 

 

  • We initiate our coverage on Lucky Cement Limited (LUCK) with a “BUY” recommendation based on Dec’18 TP of PKR 787/share. The stock offers a total return of 11%, composed of dividend yield (D/Y) of 2.5% and capital gain (CGY) of 8.5% from last price of 710/share
  • 1.3MTPA expansion at KHI plant along with additional 0.3MTPA from revamped Pezu plant to take LUCKY’s total capacity to a whopping 9.35MTPA, from 7.75MTPA previously, while maintaining operational capacity share of ~18%. However, further expansion plan of 2.3MTPA in Punjab is subject to delay due to necessary approvals. Alongside expansions, 10MW WHRPP at Pezu plant to deliver energy savings of PKR 355mn FY18E (EPS: PKR1.1/share) by reducing reliance on alternate captive power resources
  • Latest expansion of 0.871MTPA at cement grinding unit in Iraq expected to deliver jacked up earnings at PKR 1.5bn FY18E (EPS: PKR 4.6/share) to consolidated income statement amid favorable infant industry regulations. On the other hand, DR Congo JV is also expected to revive with PKR 0.9bn FY18E income due to stronger utilization. Beyond border cement ventures contribute PKR 51/share and PKR 23/share respectively towards our TP.

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Lucky Cement Limited (LUCK): LUCK to Announce Relatively Stable EPS than its Peers

 

 

24 April 2018

Ismail Iqbal Securities (Pvt.) Limited

 

 

 

  • Lucky Cement Limited (LUCK) is scheduled to announce its 3QFY18 result on April 26, 2018. We expect the company to post unconsolidated earnings of PKR 3,555m (EPS: PKR 10.99), registering a growth of 5.1% YoY. According to provisional cement dispatches number, company’s total cement dispatches during 3QFY18 registered a growth of 18% YoY. However, cement price for same period remained dull in Northern region which is expected to result in a slightly dull gross margin as compared to corresponding period last year. We expect the company’s cost of sales for 3QFY18 to increase by 22% YoY due to higher production during the quarter and rising coal prices along with recent PKR depreciation.
  • During 3QFY18, cement prices in Northern region remained bearish. The average cement price in the region declined to PKR 508/bag from PKR 538/bag in SPLY. However, unlike its peers LUCK is expected to be less affected by price decline in North as the company has almost equal market share in South. Hence we expect that although on the one hand company was negatively affected by lower cement prices in North it has enjoyed relatively stable prices of PKR 566/bag in South, therefore the overall impact of lower cement prices in North should be lower than LUCK’s North based peers. We expect the company’s gross margin for the quarter to be 38.8% as compared to 44.8% in the SPLY.

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Lucky Cement Limited (LUCK): 3QFY18 EPS expected at PKR 10.10, down 4%YoY

 

 

25 April 2018

Taurus Securities Limited

 

 

 

  • Lucky Cement Limited (LUCK) is scheduled to have its quarterly board meeting to announce its 3QFY18 financial results on April 26, 2018, wherein the cement manufacturer is expected to post a PAT of PKR 3.3bn (EPS: PKR 10.10), down slightly by 4%YoY, as against a PAT of PKR 3.4bn (EPS: PKR 10.47) in SPLY
  • At the behest of a ~16%YoY increase in total dispatches, sales revenue for the quarter is expected to mount by 13%YoY, despite ~3% fall in average selling prices across both the regions. Gross margins for the quarter are expected to dip by 7.9%YoY on the back of ~17%YoY increase in coal prices, coupled with ~3% depreciation of PKR against USD
  • On a quarterly basis, earnings are expected to fall by 8%QoQ to an EPS of PKR 10.10 as against PKR 10.92 in 2QFY18 due to falling margins (down by 2.7%QoQ), and falling average selling prices (down ~1%QoQ).

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Lucky Cement Limited (Luck): 9MFY18 earnings to fall 11%YoY on lower margins

 

 

25 April 2018

Pearl Securities Limited

 

 

 

  • The board meeting of Lucky Cement Limited is scheduled on 26th of April’18 to unveil its 9MFY18 financial results.
  • We estimate the company to register profit after tax of PKR9,259mn (EPS PKR28.63) during 9MFY18 as against PKR10,422mn (EPS PKR32.23) in the corresponding period of last year, depicting a fall of 11%YoY. The depressed earnings expectation is primarily due to margin attrition in the wake of higher cost of production coupled with lower retention levels
  • Top-line of the company is estimated to clock in at PKR36,082mn in 9MFY18 as compared to PKR35,241mn during same period last year, up by a meager 2%YoY. The increase in top-line is mainly due to higher dispatches (up 6%YoY), however, the overall growth constrained to only 2%YoY due to lower retention levels, down 3%YoY.
  • We expect gross level margins of LUCK to shrink considerably by 11ppsYoY settling at 37% during 9MFY18 versus 48% recorded in the corresponding period of last year. The likely contraction in margins is attributable to higher cost of production (up 17%YoY) in the wake of surging intl. coal prices (up 25%YoY).

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Lucky Cement Company Limited (LUCK): LUCK announces expansion of 2.6m MT/annum in Pezu, KPK

 

 

27 April 2018

Ismail Iqbal Securities (Pvt.) Limited

 

 

 

  • Lucky Cement Company Limited (LUCK) has announced a brown field expansion of 2.6m MT/ annum on its existing site in Pezu, Khyber Pakhtunkhwa at an estimated cost of PKR 17.5 bn. The project will take the company’s existing capacity in Pezu to 6.38m MT/annum. In our view the announcement is of no surprise as the company had already reported possibility of green field expansion at its existing site in Pezu, KPK considering continuous delays in getting necessary approval from Punjab Government for its previously announced green field expansion in Punjab. However, yesterday’s announcement regarding expansion of 2.6m MT/annum is higher than its previously planned expansion of 2.3m MT/annum in Punjab. We expect that the expansion will take 2.5 to 3 years to complete hence we expect plant to be commercially operational late in FY21 or in FY22. We also expect it to have an EPS impact of ~PKR 10.94 in FY22 if it operates at 80% of its capacity. We have not yet incorporated this in our valuation assumption.
  • The company has also announced to setup a Greenfield clinker facility of 1.2m MT/annum in Iraq, where the company already owns a grinding unit (which is final process of cement manufacturing) with the capacity of 1.742m MT/annum. As currently the company meets its clinker requirement in Iraq by procuring from peers, the clinker production facility in Iraq will make LUCK’s existing crushing facility self-reliant. The company has projected an estimated cost of expansion to be around USD 109 million and the project will be a joint venture between LUCK and its existing partner ‘Al-Shumookh Construction Materials Trading FZE, United Arab Emirates’

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Lucky Cement Limited (LUCK): Perpetual focus on growth prevails

 

 

04 May 2018

AKD Securities Limited

 

 

 

  • Post release of detailed accounts for 9MFY18, we revisit our investment case for LUCK incorporating, 1) recent budgetary measures (*gradual 1% annual reduction in corporate tax to 25% by FY23, *2%/1% super tax impact in FY19/FY20% and * 2% reduction in import duty on coal), and 2) sharp currency depreciation (weakened ~9%/5%TD since Dec'17/Mar'18 to stand at PKR115.5/US$ in May'18). In this regard, higher input cost on account of sharp PkR depreciation offset the benefits of curtailed import duty and corporate tax reduction in our forecasts.
  • Amending for the same, our rolled forward Jun'19 (SOTP based) TP now stands at PKR849/sh, (revised down by 5.5%), implying a BUY stance (29% upside). Consequently our 5yr forward unconsolidated earnings CAGR has also been revised down to 12% (previous 14%). Moreover, FED on cements has been increased again from PkR1.25/bag to PkR1.50/bag, requiring PkR15/bag (GST adjusted) increase in local cement price. Increase in FED is expected to reduce our earnings estimate for LUCK by ~9% for FY19/20F, assuming no price pass-on (not incorporated in our model). To that end, in order to cater to relatively fast pace of demand growth in the northern region, company has initiated a brownfield expansion of 2.6mpta at its Pezu plant.
  • Having said that, the stock has returned 26%CYTD on account of recent cement price recovery (+PkR40/bag in North) with valuations standing at FY18F PE of 16.5x (unconsolidated). While trading at a premium of 78% to the AKD cement universe's FY18F PE, justified in our view, given LUCK's strong earnings prospects and diversification through growth ventures enhancing consolidated fair value.

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Lucky Cement Limited(LUCK): Earning drops amid higher costs

 

 

22 May 2018

Azee Securities (Pvt.) Ltd.

 

 

 

  • In our today's morning briefing we would discuss the performance of Lucky Cement Limited (LUCK) in 9MFY18.
  • Despite higher volumetric sales, the profit after taxation (PAT) of LUCK fell by 6% YoY in 9MFY18 to Rs 9.80 billion (EPS: Rs 30.31) as against a PAT of Rs 10.42 billion (EPS: Rs 32.23) in 9MFY17 mainly owing to higher coal prices. However, higher other income, increased volumetric sales, lower effective taxation, and decline in other expenses restricted the decline in earning.
  • The net revenue of the company observed minor growth of 1% YoY in 9MFY18 to Rs 35.67 billion as against Rs 35.24 billion in 9MFY17 on back of higher volumetric sales however lower cement prices due to tough market conditions restricted the growth. The cost of sales on the other side surged by 23% YoY in 9MFY18 to Rs 22.57 million as against Rs 18.29 billion in the identical period in FY17 owing to higher coal and other fuel prices. Therefore gross profit of the company came down to Rs 13.09 million in 9MFY18 which is 23% YoY down from Rs16.95 billion in 9MFY17. Consequently, gross profit margin of the company reduced to 36.7% in 9MFY18 versus 48.1% in 9MFY17.
  • The overall volumetric sales of the company reached 5.84 million tons in 9MFY18 which is 6% YoY up from volumetric sales of 5.53 million tons in the identical period in FY17. This growth is on back of higher domestic sales owing to growing construction activities in the country. The domestic sales totaled 5.09 million tons in 9MFY18 which is 11% YoY up from 4.59 million tons in 9MFY17. On the other side, export sales fell by 20% YoY in 9MFY18 to 0.74 million tons as against 0.93 million tons in 9MFY17.

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Lucky Cement Limited (LUCK): Channelizing Diversity

 

 

20 June 2018

Arif Habib Limited

 

 

 

  • We reiterate our “BUY” stance on Lucky Cement Limited (LUCK), the stock offers an upside of 27% to our Dec’18 target price of PKR 680.5/share and trades at a FY19 forward P/E of 12x. Our preference for the scrip stems from i) steady growth in dispatches in light of strong domestic demand, ii) stable margins as compared to peers, iii) ongoing growth strategy enabling LUCK to be the largest manufacturer of cement in Pakistan, and iv) large scale economies rendering the company to be one of the most cost efficient players in the domestic space
  • To recall, cement prices in North had undergone a downwards spiral of PKR 60-70/bag since Mar’17 as cement players announced expansions which raised concerns of overcapacity. Albeit, recent change on the pricing front amid start of summers coupled increase in FED from PKR 1.25/kg to 1.50/kg has provided a much needed solace for prices in North with fresh hikes compressing the discount to prices in South. While the picture appears rosy at the moment, we believe price stability could be short-lived subject to arrival new capacities coming online.
  • LUCK continues to build its brand and portfolio as a strong balance sheet position and massive cash reserves feed the company’s risk appetite. As the company’s new brownfield plant with a capacity of 1.3mn tons came online in Dec’17, LUCK remains the 2nd largest cement player in the country with total capacity of over 9mn tons. Additionally, given continuous delay on account of its 2.3mn tons Green Field facility in Punjab, the cement manufacturer has decided to go for a 2.6mn tons Brown Field expansion at Pezu, KPK with estimated total cost of PKR 17.5bn. Moreover, Lucky Electric Power Company (LEPCL) has successfully executed an EPC contract and finalized a draft coal supply agreement; financial close is targeted for May’18 and COD is scheduled for Mar’21. Finally, diversifying into the automobile business, the company has reported that its 70% subsidiary KIA Lucky Motors (KLM) commenced work on an auto plant construction in Nov’17 in light of the New Entrant Agreement signed in Dec’17 with the Ministry of Industries & Production and timeline for plant completion is set for 2QCY19

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Lucky Cement Limited (LUCK): Lucky Electric Power Company Limited finally achieves financial close

 

 

26 June 2018

IGI Finex Securities Limited

 

 

 

  • Lucky Cement Limited (LUCK) has notified the exchange today that Lucky Electric Power Company Limited (LEPCL), a 100% indirectly owned subsidiary of the Company, has achieved financial close on June 25, 2018 after fulfilling all the necessary conditions required to be met as per the financing arrangement. The financing documents were signed on May 31, 2018.
  • LEPCL is in the process of setting up a 660 MW super critical coal based power project for supplying electricity to the national grid.
  • The project cost is estimated to be USD 885mn which shall be financed through a debt to equity ratio of 75:25.
  • The project aims to start commercial operations in Mar-21.
  • We estimate the project to contribute PKR 137/share to the total share price of LUCK on a SOTP basis.

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