Elixir Securities Limited – Flash Note

Business News General Business News

Karachi, April 17, 2018 (PPI-OT): Attock Cement Pakistan Limited – EPS down 22% YoY due to Lower Margins and Incremental Finance cost

Attock Cement Pakistan Ltd. (ACPL) announced its 3QFY18 financial results today. The company posted earnings of PKR5.88/sh, significantly down by 22% YoY, while cumulative earnings for 9MFY18 clocked in at PKR15.95/share; down by 18%YoY.

During the quarter, topline of the company witnessed an increase of 14%YoY to PKR4.6bn; 9MFY18 revenue also accreted by 8%YoY to PKR12.1bn. The increase in revenue can be attributed to capacity expansion of ~1.2 mntpa in Dec-17. Due to seasonal pickup in demand, local dispatches jumped 15%YoY for the company whereas exports climbed 7% YoY during the quarter.

Gross margins of the company clocked in at 30% during the quarter, down by 13ppts YoY largely due to higher coal and Power costs, while average margins for the 9MFY18 clocked in at 33% compared to 41% in 9MFY17.

Finance cost of the company increased to PKR74mn during 3QFY18 (up 39x YoY) as company starts to expense out the financial charges post CoD of the expansion, while effective tax rate of the company clocked in at 23% for the quarter.

Our Dec-18 PT of PKR212/share offers capital upside of 15% from last closing, however key risk to our PT includes more than expected price cuts in South ((greater than)PKR50/bag), further increase in coal prices and more than projected declines in offtakes.