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Lucky Cement Limited reports a solid 42% YoY jump in earnings – Summit Research


Added by Baqar Abbas Jafri on January 28, 2013.
Saved under CEMENT SECTOR, HEADLINES
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Lucky Cement Limited reports a solid 42% YoY jump in earnings – Summit Research
By: Muhammad Sarfraz Abbasi, Summit Capital (Pvt) Ltd.Mr Sarfraz
The Board of Directors’ of the Lucky Cement Limited (LUCK) has announced 1HFY13 financial result today. The company has reported an outstanding upsurge in its earnings of 42% YoY to PKR4.92bn translating into an EPS of PKR13.27 in 1HFY13 as against the PAT of PKR3.02bn and EPS of PKR9.33 in the corresponding period last year. In our view, there were three key factors behind superb performance of the company i.e. 1) higher sales because of the higher prices, 2) higher other income and 3) decline in financial charges. During 1HFY13 the company has reported a hefty augment in its sales of 14% YoY to PKR17.51bn as against the sales of PKR15.37bn in same period last year. The stunning boost in monetary sales was mainly because of the better local dispatches coupled with higher retention prices. The company has recorded 5% YoY growth in local dispatches to 1.77m tons as against the 1.68m tons in the same period last year. Average per bag retention prices were hovering around PKR465/bag (13% YoY higher) in south zone and PKR438/bag (8% YoY) higher in north zone as compare to the same period last. However, the LUCK has experienced a decline of 15% on its exports to 1.01m tons as against the exports of 1.18m tons in 1HFY12 primarily because of the lower demand from the GCC and African countries. Nevertheless, the company has shown a spectacular 32% YoY increase in its gross profit to PKR7.69bn in 1HFY13 over PKR5.81bn in 1HFY12 (gross margins of 44% versus gross margins of 38% in 1HFY12).
Moreover, during the 1HFY13 operating costs witnessed an increase of 18%YoY to PKR2.34bn against the operating costs of PKR1.92bn in 1HFY12 primarily because of the higher distribution cost which was up by 17%YoY to PKR2.04bn. Conversely, financial charges have declined by 61% YoY to PKR66m in 1HFY13 as against PKR170m in the same period last year because of lower long term debt. Resultantly, LUCK has reported a substantial 48% jump in its PBT to PKR5.17bn in 1HFY13 as against the PBT of PKR3.18bn in 1HFY12.
We recommend a HOLD stance on Lucky Cement Limited as the stock is currently trading at a higher price than our calculated DCF based Fair Value of PKR145.

Source: http://investorguide360.com/latest-economic-news/lucky-cement-limited-reports-a-solid-42-yoy-jump-in-earnings-summit-research/?fb_action_ids=475985212460228&fb_action_types=og.likes&fb_source=aggregation&fb_aggregation_id=288381481237582 

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