FY2015 financial results announced yesterday, Attock Cement Pakistan Limited (ACPL) posted 10% higher earnings on YoY basis of PKR 2,206mn (EPS: PKR 19.26), compared to PKR 2,014mn (EPS: PKR 17.59) recorded last year. On sequential basis, ACPL posted 9% QoQ lower profits of PKR 562mn (EPS: PKR 4.91) in 4QFY15, as compared to PKR 619mn (EPS: PKR 5.41) posted in 3QFY15.

Key Highlights:

  • The company registered a 4% YoY increase in its topline during FY15, mainly on account of 2% YoY increase in average cement prices.
  • Gross margins of ACPL jumped by 400bps YoY to 34% in FY15 amid 8% YoY lower coal prices to USD 70.9/ton during the period.
  • Selling/Distribution expenses increased by 22% YoY to PKR 987mn as freight charges increased on export sales.
  • The company also recorded effective tax rate of 40% during 4QFY15 amid imposition of the super tax. Furthermore, effective tax rate during FY15 recorded at 31% versus 23% a year back.
  • Along with the results, the BoD of ACPL also approved an expansion of 3,300MT clinker/day (1.2mn tons cement) on its existing plant site with the expected capital outlay of USD 120mn (PKR 12.3bn).
  • As per our estimates post results, the company would have cash and cash equivalents of PKR 3,470mn (adjusted for final cash dividend of PKR 10.5/share and last quarter profits including additional taxation).
Exhibit: Financial Highlights
PKR mn 4QFY15A 3QFY15A QoQ FY15A FY14A YoY
Net Sales 3,296 3,421 -4% 13,086 12,547 4%
Gross Profit 1,218 1,181 3% 4,396 3,704 19%
Selling Expenses 207 236 -12% 987 806 22%
Other Income 80 129 -38% 423 270 57%
Profit after tax 562 619 -9% 2,206 2,014 10%
EPS @ 114.52 shares 4.91 5.41 19.26 17.59
DPS 10.5            – 15.0 13.0
Source: Company Financials, AHL Research

 

Recommendation: BUY!

Based on our DCF based Dec-15 target price of PKR 243/share, the stock offers an upside of 21% from current levels. We thus recommended ‘BUY’ on ACPL.

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