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The Bell about Construction and Material – Elixir Securities Limited

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by January 26, 2012 Brokerage

Karachi: LUCK: Earnings growth to continue during 2QFY12

According to Elixir Securities Limited,


Key FinancialsOutstanding shares:323mn
Net Sales6,4447,31814%12,02814,81423%
Gross Profit2,2362,97533%3,9685,89048%
SG and A1,227906-26%1,9741,948-1%
Other operating income0.110-100%0058%
Other Charges609050%11918051%
Finance cost1511553%294236-20%
Net Income7341,568114%1,4613,074110%
EPS (PKR)2.274.86114%4.529.52111%
COGS/ton(less dep)2,6922,7984%5,1925,70610%


Higher EBITDA margins to support earnings

EBITDA margins for 2QFY12 are expected to clock in at PKR1,763/ton, up 77% YoY due to 14% YoY rise in retention prices. Net retention prices on local off take during 2QFY12 are expected at PKR5,221/ton, up 34% YoY as marketing arrangement among cement manufacturers remained strong and cement producers retained tax benefits allowed during FY12 budget. Higher local retention prices would offset 4% YoY rise in COGS/ton. Rise in COGS/ton is estimated to be fuelled by 11% rise coal procurement prices. Net selling prices on export dispatches remained weak at PKR5,183/ton, down 6% YoY.

Market share of LUCK to remain steady

Local dispatches for the industry grew by 5% YoY to 5.76mn tons on account of low base effect as dispatches remained slow during 1HFY11 due to floods. Export dispatches posted a decline of 9% YoY to 2.1mn tons, on account of weak export demand from major export destinations and consistent rise in freight costs. Elixir Securities Limited expects LUCK to maintain its market share at 1QFY12 levels. Local dispatches are expected to clock in at 0.92mn tons, grabbing 15% market share whereas export dispatches are expected at 0.55mn tons, with a market share of 26%.


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