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AKD Securities Limited – Off the Analyst’s Desk (November 30, 2022)

Karachi, November 30, 2022 (PPI-OT): ACPL: Analyst Briefing Key Takeaways

Attock Cement Pakistan Limited (ACPL) held its corporate briefing for FY22 today, wherein the following was discussed:

Company reported PAT of PkR1.1bn for FY22, up 1.4%YoY compared to last year.

Cement sales were majorly disrupted by increasing fuel prices, overall economic slowdown, flood impacts majorly in the southern region and multiple hikes in the interest rates. Company reported 1QFY23 PAT of PkR116mn, down 57% from the SPLY.

Company’s total dispatches (clinker + cement) during 1QFY23 declined to 356k tons vs. 599k tons in SPLY and price per bag stands at PkR1,040.

The company’s retention price increased by 45% during 1QFY23, however gross margins stood at 17% vs. 19% SPLY due to rising costs of production mainly on the back of burgeoning power/fuel cost alongside sharp PkR depreciation.

The company’s new line IV with capacity of 4k TPD is expected to come online by end FY23. Capacity utilization dropped to 76% in FY22 vs. 110% in FY21.

Company’s current power mix is 30-40% from national grid and remaining 60% from its own production (including WHR and Solar Power). Company also installed a 20MW Solar power plant during FY22. Solar power generation of the company is around 17-20% of the total power needs and the management is planning to add additional capacity of 1MW to it.

Fuel mix of ACPL is 70% imported coal and 30% alternative fuels such as local coal from Bhikki, Baluchistan and Thar. Cost of imported coal stands at ~PkR41k/ton while local coal costs around PkR25-35k/ton.

Company is mostly importing Mozambique coal @ US$160/ton. Furthermore, management commented that approximately 130kg of coal is used to manufacture one ton of clinker. Company keeps an average 4-5 months of coal inventory.