AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, April 16, 2013 (PPI-OT): Result expectation: DG Khan Cement Company Limited (DGKC) is scheduled to announce its 9MFY13 financial results on 17 th April, 2013.
According to Elixir Securities Limited expects the company to post PAT of PKR4,681mn (EPS: PKR10.69), up 1.3x YoY. 3QFY13 earnings are expected at PKR3.57, up 97% YoY.
Key Financials Outstanding shares:438mn
| (PKR mn) | 3QFY12A | 3QFY13E | YoY | 9MFY12A | 9MFY13E | YoY |
| Net Sales |
6,003 |
6,481 |
8% |
16,704 |
18,306 |
10% |
| Cost of Sales |
3,967 |
3,795 |
-4% |
11,192 |
10,799 |
-4% |
| Gross Profit |
2,035 |
2,686 |
32% |
5,512 |
7,507 |
36% |
| SG&A |
645 |
466 |
-28% |
2,003 |
1,541 |
-23% |
| EBITDA |
1,751 |
2,623 |
50% |
4,566 |
7,143 |
56% |
| Other Income |
240 |
257 |
7% |
890 |
1,030 |
16% |
| Other Charges |
80 |
94 |
18% |
320 |
376 |
17% |
| Finance cost |
418 |
298 |
-29% |
1,303 |
875 |
-33% |
| PBT |
1,133 |
2,085 |
84% |
2,776 |
5,744 |
107% |
| Taxation |
341 |
521 |
53% |
703 |
1,063 |
51% |
| Net Income |
792 |
1,564 |
97% |
2,073 |
4,681 |
126% |
| EPS (PKR) |
1.81 |
3.57 |
97% |
4.73 |
10.69 |
126% |
| Dispatches (mn tons) |
1.01 |
1.03 |
2% |
2.96 |
2.96 |
0% |
| Avg. Retention (PKR/Ton) |
5,966 |
6,309 |
6% |
5,642 |
6,190 |
10% |
| COGS (PKR/Ton) |
3,943 |
3,694 |
-6% |
3,780 |
3,652 |
-3% |
| EBITDA (PKR/ton) |
1,740 |
2,554 |
47% |
1,542 |
2,416 |
57% |
Source: Company Accounts, Elixir Research
Strong cement prices and sales mix to support top line: Domestic cement prices during 3QFY13 increased by 3% QoQ and 7% YoY. Elixir Securities Limited expect s the company’s net local retention price to rise by 9% YoY to PKR6,387/ton. Elixir Securities Limited also expect the company’s sales mix to improve on YoY basis with local dispatches clocking in at 0.77mn tons, up 7% YoY against less profitable export dispatches of 0.25mn tons, down 10% YoY.
Improving fuel mix: DGKC’s DG Khan Plant is estimated to use coal and RDF in the ratio of 90:10 which shall yield savings of PKR27/ton. Khairpur Plant’s coal to RDF ratio for 3QFY13 is estimated at 70:30 which would save PKR82/ton. The fuel mix of plant in DG Khan and Khairpur plant is expected to improve to 75:25 and 60:40 respectively during FY14. At Elixir Securities Limited assumed coal prices of USD95/ton for FY14, RDF would yield cost savings of PKR384mn (PKR0.9/share) for DGKC. Retiring debt to lower finance cost: Elixir Securities Limited expects finance cost for 3QFY13 to go down by 29% YoY to PKR298mn on account of retiring debt and low interest rates. DGKC has reduced its net debt by 20% (PKR2,873mn) as of 1HFY13 as compared to 1HFY12 levels.
Global Expansion: DGKC has signed a MoU to acquire 58% shareholding in Sumaria Cement Holding Limited of Mauritius with an investment of USD8.6mn. Cement demand in East Africa is current very strong and shall continue its momentum on account of rising middle income and various infrastructure projects. Since no details are yet available about the expansion, Elixir Securities Limited has not included this project in Elixir Securities Limited estimates.
Estimates tweaked; PT increased to PKR85/share: Elixir Securities Limited has revised up Elixir Securities Limited Dec-13 PT from PKR70/share to PKR85/share. DGKC currently offers an upside of 19%, a dividend yield of 4% and trading at an FY13E PER of 4.9x. BUY!