AKD Securities Limited – LUCK: 1HFY15 Result Review

Karachi, February 23, 2015 (PPI-OT): Lucky Cement Limited (LUCK) posted unconsolidated net earnings of PkR2.93bn (EPS: PkR9.07) in 2QFY15, registering a growth of 12%YoY against NPAT of PkR2.61bn (EPS: PkR8.09) in 2QFY14. The growth in bottom-line came on the back of 1) 7%YoY jump in revenues to PkR10.9bn (cement dispatches up 3.9%YoY) and 2) improvement in GMs by 210bps to 44.5% in 2QFY15 vs. 42.4% in 2QFY14. This took 1HFY15 earnings to PkR5.60bn (EPS: PkR17.32) vs. PkR5.16bn (EPS: PkR15.96) in 1HFY14, up by 9%YoY.

Other key takeaways from the notice issued to KSE include: 1) LUCK’s 5MW WHR plant at Karachi Plant is expected to come online by the end of Feb’15, 2) Vertical grinding mills are also expected to be operational by the end of this month and 3) LUCK’s joint venture Basra project posted net profit of US$6.4mn in 1HFY15.

Having gained 4.3%CYTD, LUCK trades at a forward unconsolidated P/E multiple of 13.6x. AKD Securities Limited an Accumulates stance on the scrip, where favourable cement sector dynamics and the company’s cost competency is to help net earnings growth. AKD Securities Limited’s TP of PkR583.3/share offers 12% upside.


LUCK: Profit and Loss Account

PKR mn 1HFY15 1HFY14 YoY 2QFY15 2QFY14 YoY 1QFY15 QoQ
Sales (net) 21,410 19,575 9% 10,940 10,243 7% 10,470 4%
Cost of sales 12,133 11,067 10% 6,074 5,899 3% 6,058 0%
Gross profit 9,277 8,509 9% 4,865 4,344 12% 4,412 10%
Admin expenses 429 443 -3% 221 251 -12% 208 6%
Distribution expenses 1,747 1,546 13% 879 851 3% 868 1%
Operating profit 7,100 6,519 9% 3,765 3,243 16% 3,335 13%
Other expenses 646 428 51% 334 171 95% 313 7%
Other income 616 416 48% 284 195 46% 332 -15%
Financing costs 13 21 -38% 4 9 -58% 9 -60%
Profit before tax 7,057 6,486 9% 3,712 3,257 14% 3,345 11%
Tax 1,456 1,325 10% 780 642 21% 676 15%
Profit after tax 5,601 5,161 9% 2,932 2,615 12% 2,669 10%
EPS 17.32 15.96 9% 9.07 8.09 12% 8.25 10%
DPS – – – –
Gross margin 43.3% 43.5% 44.5% 42.4% 42.1%
Net margins 26.2% 26.4% 26.8% 25.5% 25.5%
Source: Company Accounts and AKD Research

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