AKD Securities Limited – AKD Daily (January 16, 2023)
Karachi, January 16, 2023 (PPI-OT): MLCF and CHCC: 2QFY23E Result Previews
MLCF – 2QFY23 EPS to stand at PkR1.38: Maple Leaf Cement Factory Limited (MLCF) is expected to announce 2QFY23 result sometime in late Jan/early Feb’23 where we expect the unconsolidated EPS for the quarter to clock in at PkR1.38, changing by 22%/-20% on QoQ/YoY basis. On the topline front, revenue is expected to settle at PkR15bn (Upward 17%/20% QoQ/YoY), majorly due to increased offtakes during the outgoing quarter (up 29%QoQ) vs. 1QFY23 as torrential floods and demand destruction bore its effects during the period. Furthermore, we expect the gross margins to clock in at 29% (vs. 28%/31% last quarter/last year), as the company continues to show prowess in efficient coal inventory management alongside the ability to successfully utilize local coal (~70% of coal mix) and pet coke in its fuel mix, significantly higher compared to peers. This is further aided by the commissioning of the newer Line-4 during Nov’22. Overall, company is expected to post PAT of PkR2.6bn (EPS: 2.5) for 1HFY23, up 12%YoY.
CHCC – Earnings to clock in at PkR9.3/sh in 2QFY23: Cherat Cement Company Limited (CHCC) is expected to announce 2QFY23 result sometime in late Jan/early Feb’23 where we expect the unconsolidated EPS for the quarter to clock in at PkR9.3, up by 22%/52% on QoQ/YoY basis. On the topline front, sales are expected to clock in at PkR10.85bn (up 20%/52% QoQ/YoY), majorly on the back of increased offtakes as demand recovered from low-base of 1QFY23, with offtakes expected to settle at 850k tons for the quarter. However, we expect gross margins to clock in at 31% for 2QFY23 (vs. 32% during 1QFY23), majorly due to unavailability of captive gas generator in winters alongside depleting low-cost coal inventories, keeping margins in check. Overall, finance costs (D/E: 0.83 1QFY23) are expected to hurt in the near term, where-in the company is expected to borrow significantly due to PkR36bn expansion (expected FY25), although delays in the capital project may be expected due to prevailing LC/supply chain issues. Overall, company is expected to post PAT of PkR3.3bn (EPS: 17.0) for 1HFY23, up 33%YoY.