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GWLC - Gharibwal Cement Limited

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Gharibwal Cement Limited

(GWLC)

 

September 27th, 2017

 

FINANCIAL RESULT FOR THE YEAR ENDED 30/06/2017

 

PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 3,044.676

PROFIT/LOSS AFTER TAXATION RS. IN MILLION 2,283.696

 

EPS = 5.71

DIVIDEND = 15%

 

ANNUAL GENERAL MEETING WILL BE HELD ON 25/10/2017

BOOK CLOSURE FROM 18/10/2017

BOOK CLOSURE TO 25/10/2017

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Gharibwal Cement Limited

(GWLC)

 

October 27th, 2017

 

FINANCIAL RESULT FOR THE FIRST QUARTER ENDED 30/09/2017

PROFIT/LOSS BEFORE TAXATION RS. IN MILLION 423.066

PROFIT/LOSS AFTER TAXATION RS. IN MILLION 301.797

EPS = 0.75

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Aba Ali Habib Research

20 November 2017

 

GWLC Synopsis

GWLC: Improving to stay competitive

 

Business Profile

 

Gharibwal Cement Limited is engaged in the production and sale of cement, having 6,700 tons per day clinker production capacity and an in-house power generation plant of 38MW. The company owns a quarry of prime limestone and shale, main ingredient of cement, having reserves adequate for 200 years. It has a paid-up capital of 400.27mn shares with 88.80% of the shares held by the directors, CEO and their family members. The shares of the company are currently trading at a price of PKR 23.43 in the market. The company has made a 52-week high of PKR 67.48 and a 52-week low of PKR 23.2.

 

Financial performance

 

During FY17, PAT clocked in at PKR 2,283.67mn (EPS: PKR 5.71), witnessing a decrease of 14.82%YoY, against PAT of PKR 2,681.06mn (EPS: PKR 6.70) primarily due to, (i) a decline in GP margin by ~5.3pps (ii) decline in other income by 82.22%. Decline in gross margins was primarily due to higher fuel cost led up by rising coal prices and declining cement prices. In the fiscal year 2017, revenues of the company increased by 6.7% YoY owing to increase in volumetric sales by 4.6% YoY to 162,033 tons clinker and 1,606,410 tons of cement mainly due to a growth in the demand of cement on account of boom in housing and construction activities. The other income of the company declined by 82.2% due to a remission of mark-up amounting to Rs.384 million on settlement of loans with BOP and NBP during FY16 which was recorded in other income in FY16. Moreover, the company saw an increase in its finance cost by 10.5% YoY due to an increase of PKR 45.89mn in the cost of unwinding up of discount and catch-up adjustment. The company trades at a P/E of 4.06x and P/B of 0.82x.

 

Future outlook

 

GWLC is all-set to grow bigger with a brown-field expansion project of 2.5mn tons leading to total capacity of 4.6mn tons (expected capacity share of 9% in North region post-expansion from 5% currently). The project will incurr a total CAPEX of PKR 14bn. Moreover, the company will also install another 250tph grinding mill and a 10MW WHR on the new plant. The project is expected to be operational by early 2019. Coal prices are following an increasing trend, coal prices for 1QFY17 clocked in at $84/mt which is an increase of 14.5% QoQ. Current coal prices are $90/mt, this rise in prices of coal may hit the profitability and margins for the company.

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