IGI Securities Limited – Day Break

Karachi, April 17, 2019 (PPI-OT): Cements – FCCL: Lesser dispatches, lower retentions and inflated costs to push down 3QFY19 by 32%YoY to PKR 0.42

Fauji Cement Company Limited’s (FCCL) board meeting is scheduled on 18th Apr-19 to announce financial result for 3QFY19, wherein we expect the company to post earnings of PKR 582mn (EPS PKR 0.42), down by 32%YoY.

We estimate decline in earnings on the back a) lower dispatches made during the period – 26%YoY decline, b) greater discounts offered to dealers; and c) higher input costs on the back of 25%YoY depreciation of PKR against greenback.

This will bring 9MFY19 profitability to PKR 2.41bn (EPS PKR 1.74) up by +13%YoY compared to PKR 2.12bn (EPS PKR 1.54) in the same period last year. On a quarterly basis, earnings are expected to decrease by 43%QoQ.

We recommend a ‘HOLD” stance on FCCL with our Dec-19 target price of PKR 18.4/share offering 2.1% upside from last close.

Leave a Reply