Karachi, March 28, 2023 (PPI-OT): FCCL: Flying under the radar

FCCL commissioned its Nimazpur capacity expansion of 2.05mn tons per annum in late Oct’22. Moreover, another capacity expansion of 2.05mn TPA at D.G Khan is in pipeline and expected to be commissioned in 2QFY24. Post D.G Khan’s expansion, company will be the third largest cement producer in Pakistan with total cement capacity of 10.5mn TPA.

Current coal mix stands at 53%/44% of local/Afghan coal while there is only a mere 3% reliance on imported coal. We expect gross margins for FY23/FY34 to clock in at 27.7%/29.0%.

FCCL has 28.6MW of Solar Power and 47.5MW of WHR capacity, currently contributing to around 28% to the power mix. Total reliance on self-generated power is around 42%.

Company has manageable debt on its books with a D/E of 0.50 and D/A of 0.25 compared to D/E: 0.61 and D/A: 0.30 of AKD Universe (EX-LUCK). Moreover, ~44.3% of the total long-term debt is in subsidized loans (TERF and LTFF).

We have a “Buy” rating on the stock, with Dec’23 TP of PkR16.4/sh, offering an potential upside of 40% from the stock’s last close.