The Bell 26 December 2011
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8/3/2019 The Bell 26 December 2011
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December26,20THE BELLPAKISTAN RESEARCH
PleaserefertothelastpageforAnalystCertificationandotherimportantdisclosures
elixirsecuritiesa dawood group company
Flattishcementofftakesduring2QFY12todate:Local industrydispatchesduringthefitwomonthsof2QFY12wereupamere0.5%YoYat3.73mntonswhereasexportvolum
weredown5%YoYat1.47mntons.Weconservativelyestimate2QFY12industryvolumes
remain in line with Oct11 and Nov11 dispatches, down 1% YoY. We expect LUCK
maintainits1Qlocalandexportmarketshareat16%and25%respectively.
Strongmargins todriveearnings growthduring2Q:EBITDAmargins for localdispatchduring2QFY12areexpectedtoclock inatPKR2,218/ton,up1.07xYoYonthebackof35
YoYhigher retentionpricesasCOGS/ton isexpectedatPKR3,202/ton,up8%YoY.Expo
EBITDAmarginsareexpectedatPKR620/ton,down24%YoY,duetoweakexportretenti
prices.
Initialestimatessuggestrobustearnings:BasedonindustrydispatchesdataofOct11aNov11andhigherlocalpricespost1QFY12,LUCKsEPSfor2QFY12isexpectedatPKR4.8
up1.1xYoY.
InvestmentPerspective:AtthelastclosingpriceofPKR78.1/share, LUCKoffersanupside41%toourJun12pricetargetofPKR110/shareandtradesatFY12PERof3.7x.BUY!
Flattishcementofftakesduring2QFY12todateLocalcementoff take forthe industryduringfirsttwomonthsof2QFY12markedupby
mere0.5%YoYto3.73mntons,whereasexportdispatchesstoodat1.47mntons,down5
YoY.Weestimateindustrydispatchestofall1%YoYduring2Qwithlocalvolumesat5.5m
tonsandexportdispatchesat2.2mntons.
Exportdispatchesslowdownisexpectedduetoweakexportpricesandourchannelchec
suggest thatexportshavebecomeunviable for someof thenorthernplayerswithhigh
cost of production. We expect LUCK to maintain 1Q market share in local and expo
dispatchesat16%and25%respectively,whichshalltranslateintodispatchesof1.4mnto
upamere1%YoY.
Strongmarginstodriveearningsduring2QLocalcementpriceshaveshownphenomenalgrowthof23%YoYduring2QFY12todatea
withretentionoftaxbenefitsallowedinFY12Budget,localretentionpricesforLUCKduri
2QareexpectedatPKR5,284/ton,up35%YoY.However,COGS/tonisexpectedtoremain
linewith
1Q
at
PKR3,202/ton,
up
8%
YoY,
which
shall
lead
to
local
EBTIDA
margin
PKR2,218/ton,up1.1xYoY.Export retentionpricesareestimatedtodeclineby6%YoY
PKR5,175/ton, translating into EBTIDAmarginof PKR620/ton,down24% YoY.Net selli
pricelesslogisticchargesforexportsisexpectedatPKR3,771/ton,up3%YoY.Whilehigh
gaspricesfromJan12wouldputpressuresoninputcost,coalpriceshavecorrectedby7
during1HFY12.Assuch,costwouldlikelyremaincontainedgoingforwardwhilemarginsa
expectedtoremainsustainable.
Our initial estimates driven by 2Q to date average prices (local and export) and ceme
dispatchesduringOct11andNov11suggestanEPSofPKR4.80for2QFY12,up1.1xYoY.
Construction&MaterialsLUCK:Higherretentionstodriveearningsgrowthduring2Q
LUCKPAPriceTarget:PKR110/ShareClosingPrice:PKR78.1/Share
Key Data
12m Price Range (PKR) 83.6 60.3
Market Cap (PKR mn) 25,252.4
Outstanding Shares (mn) 323.4
Avg. Daily Volume mn (YTD) 1.2
YTDRelativePerformance
Source: Elixir Research
LUCK FY12E FY13E FY14E
EPS (PKR) 21.1 16.0 16.1
DPS (PKR) 6.0 5.0 5.0
PER (x) 3.7 4.9 4.8
Div Yield 7.7% 6.4% 6.4%
EV/EBITDA (x) 2.7 2.9 2.5
P/BV (x) 0.8 0.7 0.6
ROE 21% 14% 13%
Source: Elixir Research
(+9221)111354947Ext:3120
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(%) L UCK K SE-100 In dex
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8/3/2019 The Bell 26 December 2011
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THE BELL
2 ELIXIRSECURITIES December26,2011
Economic&PoliticalNewsResearch,(+9221)35694679
SNGPLmayface750mmcfdgasshortfallinJanuaryTheSuiNorthernGasPipelines(SNGPL)iscurrentlyfacinggasshortfallof550mmcfd,whichmayreach750mmcfdinJanuary,2012,a
fourdaygas loadmanagementplan for industrywouldbe implemented till Januaryendwhilegassupply to fertiliserplantswould
restoredafter
February.
IncentivesforautoindustryThe government has notified incentives for new entrants in automobile sector under its auto industry development programm
AccordingtotheEngineeringDevelopmentBoard,additionalcustomsdutyliveableunderanearlierSROof2006wouldnotbecharged
subcomponents,importedinakitformbyanassemblerormanufacturerdeclaredtobeanewentrantbytheEDB.
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8/3/2019 The Bell 26 December 2011
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THE BELL
3 ELIXIRSECURITIES December26,2011
AnalystCertificationTheresearchanalyst(s)denotedAConthecoverofthisreport,primarilyinvolvedinthepreparationofthisreport,certifiesthat(1)
theviewsexpressedinthisreportaccuratelyreflecthis/herpersonalviewsaboutallofthesubjectcompanies/securitiesand(2)no
partofhis/hercompensationwas, isorwillbedirectlyorindirectlyrelatedtothespecificrecommendationsorviewsexpressedin
thisreport.
DisclaimerThe report has been prepared by Elixir Securities Pakistan (Pvt.) Ltd and is for information purpose only. The information andopinionscontainedhereinhavebeencompiledorarrivedatbaseduponinformationobtainedfromsources,believedtobereliable
andingoodfaith.Suchinformationhasnotbeenindependentlyverifiedandnoguaranty,representationorwarranty,expressedor
implied ismadeas to itsaccuracy,completenessorcorrectness.Allsuch informationandopinionsaresubject tochangewithout
notice.Descriptionsofanycompanyorcompaniesortheirsecuritiesmentionedhereinarenot intendedtobecompleteandthis
documentisnot,andshouldnotbeconstruedas,anoffer,orsolicitationofanoffer,tobuyorsellanysecuritiesorotherfinancial
instruments.
ResearchDisseminationPolicyElixirSecuritiesPakistan(Pvt.)Ltd.endeavorstomakeallreasonableeffortstodisseminateresearchtoalleligibleclientsinatimely
mannerthrougheitherphysicalorelectronicdistributionsuchasmail,faxand/oremail.Nevertheless,notallclientsmayreceivethe
materialatthesametime.
CompanySpecificDisclosuresElixir Securities Pakistan (Pvt.) Ltd. may, to the extent permissible by applicable law or regulation, use the above material,
conclusions,researchoranalysis inwhichtheyarebasedbeforethematerial isdisseminatedtotheircustomers. ElixirSecurities
Pakistan(Pvt.)Ltd.,theirrespectivedirectors,officers,representatives,employeesand/orrelatedpersonsmayhavealongorshort
positioninanyofthesecuritiesorotherfinancial instrumentsmentionedorissuersdescribedhereinatanytimeandmaymakea
purchaseand/orsale,oroffertomakeapurchaseand/orsaleofanysuchsecuritiesorotherfinancialinstrumentsfromtimetotime
intheopenmarketorotherwise. ElixirSecuritiesPakistan(Pvt.)Ltd.maymakemarketsinsecuritiesorotherfinancialinstruments
describedinthispublication,insecuritiesofissuersdescribedhereinorinsecuritiesunderlyingorrelatedtosuchsecurities. Elixir
SecuritiesPakistan(Pvt.)Ltd.mayhaverecentlyunderwrittenthesecuritiesofanissuermentionedherein.
OtherImportantDisclosuresForeigncurrencydenominatedsecuritiesissubjecttoexchangeratefluctuationswhichcouldhaveanadverseeffectontheirvalue
orprice,orthe incomederivedfromthem.Inaddition, investors insecuritiessuchasADRs,thevaluesofwhichare influencedby
foreigncurrencieseffectivelyassumecurrencyrisk.
Copyright 2011, Elixir Securities Pakistan (Pvt.) Ltd. All rights reserved. This report or any portion hereof may not bereproduced,distributed,publishedorsenttoathirdpartywithoutpriorconsentof ElixirSecuritiesPakistan(Pvt.)Ltd.