Elixir Securities Limited – Flash Note

Karachi, October 20, 2017 (PPI-OT): Attock Cement Company Limited – Result Review – Higher Input Cost Drags 1QFY18 EPS by 12.4%YoY to PKR5.28/share

Attock Cement Pakistan Limited (ACPL) announced its 1QFY18 financial result today, where it posted earnings of PKR5.28/share, down by 12%YoY/24%QoQ. The result was in-line with our expectations of PKR5.45/share.

Revenue of the company witnessed a healthy accretion of 7%YoY to PKR3.6bn primarily on the back of i) ~8%YoY growth in total dispatches and ii) stable domestic cement prices. During the quarter local to exports sales mix clocked in at 75:25 as compared to 68:32 in the corresponding period last year.

Gross margins of the company declined by 7.65pptsYoY to ~34% which was primarily on the back of higher fuel cost, where coal prices (landed) increased by 41%YoY to USD99/ton.

Other income of the company declined by 82%YoY to PKR11mn due to lower cash balance as the company undergoes its expansion phase. Effective tax rate of the company clocked in at 23% vs 30.5% in SPLY.

Our Jun-18 PT of PKR315/share offers 70% return from last closing, however key risk to our PT includes more than expected decline in cement prices in Southern Region, once new capacities come online over the remainder of FY18.

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