Analyst:

Muhammad Sarfraz Abbasi

sarfraz.abbasi@atlascapital.com.pk
(+92-21)-111-226-100 (Ext.403)
Morning Pulse Oct 21, 2010

Market Snapshot
Bottom line expected to post decline… Index Chg %
Cement Sector: LUCK – 1Q/FY11 KSE 30 10066.6 11.21 0.11
We expect operating expenses to see an upsurge of
results expectation… 18.31% to PRs857.06m against PRs724.40m during the
KSE 100
KSE ALL
10,486.02
7,299.55
21.13
15.39
0.20
0.21
same period of last year while we anticipate operating
Synopsis…
expense to post a decline of 10.67% Q-o-Q. Financial
Lucky Cement Limited (LUCK) is scheduled to
charges are also likely to witness a negligible increase
Pakistan Research

announce its 1Q/FY11 results today. We expect Key Data

of 1.39% Y-o-Y and 4.00% Q-o-Q. Bottom line of the
company to record Profit After Tax (PAT) of PRs679.38m Market Cap(PRs bn) 22.36
company is expected to record a considerable decline Shares Outstanding (m) 323.38
(EPS PRS2.10), showing a decline of 38.38% against
of 38.33% Y-o-Y to post PAT of PRs679.38m (EPS PRs2.10) Bloomberg LUCK PA
corresponding period of last year when company
as against corresponding period of last year. In addition 12M Avg. Volume (m) 1.71
recorded PAT of PRs1,102.51m and EPS of PRs3.41. In our
to this, we expect bottom line to post an increase of
today’s report we will present our expectations on
17.79% on Q-o-Q.
results.
(PRs m) 1Q/FY10A 1Q/FY11E Y-o-Y 4Q/FY10A Q-o-Q

Top line likely to see yet another decline… Net Sales 6,042 5,549 -8% 6,482 -14%
Cost of Sales 3,808 3,737 -2% 4,791 -22%
Top line of the company is likely stay under pressure
Gross Profit 2,234 1,812 -19% 1,691 7%
during the 1Q/FY11. Revenue of the company is Admin expenses 44 71 62% 78 -8%
expected to record a decline 8.16% to PRs5.55bn as Distribution exp 680 786 15% 883 -11%
12M LUCK's relative performance

against PRs6.04bn Y-o-Y while in comparison of 4Q/FY10 Operating Profit 1,510 955 -37% 731 31%
138%

it is expected to decrease by14.40%. This drop in Finance Cost 155 157 1% 151 4% 116%

revenue is mainly attributed to low volumetric sales Profit Befor Tax 1,261 749 NA 540 39%
94%
despite of per bag cement prices in local market have Taxation 158 70 -56% -37 -289%
Profit After Tax 1,103 679 -38% 577 18%
increased to PRs335-340 against 4Q/FY10 when 72% LUCK KSE-100
EPS (PRs) 3.41 2.10 -38% 1.78 18%
average per bag prices were around PRs310-315. 50%
Source: Company Accounts, Atlas Research

Apr-10

Aug-10
Oct-09

Oct-10
Feb-10
Nov-09

Jan-10

Jun-10

Sep-10
Dec-09

Mar-10

May-10

Jul-10
Shrinking volumetric sales hurting gross margins… Future Outlook and recommendation…
The company is expected to improve its local As the retention prices already have increased and we
dispatches by gaining about 14% market share in expect increase in local demand mainly due to
1Q/FY11 against 12% of 1Q/FY10 mainly due to increase rehabilitation activities which are gradually starting.
in cement prices was seen in the local market. On the However we believe major impact of increase in
other hand, we expect export sales to decrease which demand would be seen in 2H/FY11. We further expect
would resultantly restrict growth in revenues. In addition reconstruction activities will pick up the pace by
to this, cost of sales is expected post a slight increase of 2H/FY11 and we foresee a bounce back in export sales.
1.86% Y-o-Y to PRs3.74bn against PRs3.81bn in 1Q/FY10 Atlas Capital Markets (Pvt.) Ltd
We maintain BUY stance on scrip as it offers an upside
mainly attributed to increased energy cost. potential of 27% from its current trading levels to our B-209, Park Towers, Clifton, Karachi
Nevertheless, we anticipate Gross margins to record at DCF based target price of PRs90. Equity Research: Equity Sales:
32.66% against 26.09% in 4Q/FY10. Tel: 92 (21) 5376125 Tel: 92 (21) 5368261-8
Fax: 92 (21) 5376126 Fax: 92 (21) 5376122
Money Market: Corporate Finance:
Tel: 92 (21) 5376128 Tel: 92 (21) 5824991
Fax: 92 (21) 5376129 Fax: 92 (21) 5376122
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Tel: 92 (21) 5376125
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