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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