8/3/2019 The Bell 26 December 2011

1/3

December26,20THE BELLPAKISTAN RESEARCH

PleaserefertothelastpageforAnalystCertificationandotherimportantdisclosures

elixirsecuritiesa dawood group company

Flattishcementofftakesduring2QFY12todate:Local industrydispatchesduringthefitwomonthsof2QFY12wereupamere0.5%YoYat3.73mntonswhereasexportvolum

weredown5%YoYat1.47mntons.Weconservativelyestimate2QFY12industryvolumes

remain in line with Oct11 and Nov11 dispatches, down 1% YoY. We expect LUCK

maintainits1Qlocalandexportmarketshareat16%and25%respectively.

Strongmargins todriveearnings growthduring2Q:EBITDAmargins for localdispatchduring2QFY12areexpectedtoclock inatPKR2,218/ton,up1.07xYoYonthebackof35

YoYhigher retentionpricesasCOGS/ton isexpectedatPKR3,202/ton,up8%YoY.Expo

EBITDAmarginsareexpectedatPKR620/ton,down24%YoY,duetoweakexportretenti

prices.

Initialestimatessuggestrobustearnings:BasedonindustrydispatchesdataofOct11aNov11andhigherlocalpricespost1QFY12,LUCKsEPSfor2QFY12isexpectedatPKR4.8

up1.1xYoY.

InvestmentPerspective:AtthelastclosingpriceofPKR78.1/share, LUCKoffersanupside41%toourJun12pricetargetofPKR110/shareandtradesatFY12PERof3.7x.BUY!

Flattishcementofftakesduring2QFY12todateLocalcementoff take forthe industryduringfirsttwomonthsof2QFY12markedupby

mere0.5%YoYto3.73mntons,whereasexportdispatchesstoodat1.47mntons,down5

YoY.Weestimateindustrydispatchestofall1%YoYduring2Qwithlocalvolumesat5.5m

tonsandexportdispatchesat2.2mntons.

Exportdispatchesslowdownisexpectedduetoweakexportpricesandourchannelchec

suggest thatexportshavebecomeunviable for someof thenorthernplayerswithhigh

cost of production. We expect LUCK to maintain 1Q market share in local and expo

dispatchesat16%and25%respectively,whichshalltranslateintodispatchesof1.4mnto

upamere1%YoY.

Strongmarginstodriveearningsduring2QLocalcementpriceshaveshownphenomenalgrowthof23%YoYduring2QFY12todatea

withretentionoftaxbenefitsallowedinFY12Budget,localretentionpricesforLUCKduri

2QareexpectedatPKR5,284/ton,up35%YoY.However,COGS/tonisexpectedtoremain

linewith

1Q

at

PKR3,202/ton,

up

8%

YoY,

which

shall

lead

to

local

EBTIDA

margin

PKR2,218/ton,up1.1xYoY.Export retentionpricesareestimatedtodeclineby6%YoY

PKR5,175/ton, translating into EBTIDAmarginof PKR620/ton,down24% YoY.Net selli

pricelesslogisticchargesforexportsisexpectedatPKR3,771/ton,up3%YoY.Whilehigh

gaspricesfromJan12wouldputpressuresoninputcost,coalpriceshavecorrectedby7

during1HFY12.Assuch,costwouldlikelyremaincontainedgoingforwardwhilemarginsa

expectedtoremainsustainable.

Our initial estimates driven by 2Q to date average prices (local and export) and ceme

dispatchesduringOct11andNov11suggestanEPSofPKR4.80for2QFY12,up1.1xYoY.

Construction&MaterialsLUCK:Higherretentionstodriveearningsgrowthduring2Q

LUCKPAPriceTarget:PKR110/ShareClosingPrice:PKR78.1/Share

Key Data

12m Price Range (PKR) 83.6 60.3

Market Cap (PKR mn) 25,252.4

Outstanding Shares (mn) 323.4

Avg. Daily Volume mn (YTD) 1.2

YTDRelativePerformance

Source: Elixir Research

LUCK FY12E FY13E FY14E

EPS (PKR) 21.1 16.0 16.1

DPS (PKR) 6.0 5.0 5.0

PER (x) 3.7 4.9 4.8

Div Yield 7.7% 6.4% 6.4%

EV/EBITDA (x) 2.7 2.9 2.5

P/BV (x) 0.8 0.7 0.6

ROE 21% 14% 13%

Source: Elixir Research

SateeshBalaniACsbalani@elixirsec.com

(+9221)111354947Ext:3120

75

80

85

90

95

100

105

110

31-Dec-1

0

21-Jan-1

1

11-Feb-1

1

07-Mar-11

29-Mar-11

19-Apr-11

10-May-1

1

31-May-1

1

21-Jun-1

1

12-Jul-11

02-Aug-1

1

23-Aug-1

1

19-Sep-1

1

10-Oct-11

01-Nov-1

1

25-Nov-1

1

20-Dec-1

1

(%) L UCK K SE-100 In dex

8/3/2019 The Bell 26 December 2011

2/3

THE BELL

2 ELIXIRSECURITIES December26,2011

Economic&PoliticalNewsResearch,(+9221)35694679

SNGPLmayface750mmcfdgasshortfallinJanuaryTheSuiNorthernGasPipelines(SNGPL)iscurrentlyfacinggasshortfallof550mmcfd,whichmayreach750mmcfdinJanuary,2012,a

fourdaygas loadmanagementplan for industrywouldbe implemented till Januaryendwhilegassupply to fertiliserplantswould

restoredafter

February.

IncentivesforautoindustryThe government has notified incentives for new entrants in automobile sector under its auto industry development programm

AccordingtotheEngineeringDevelopmentBoard,additionalcustomsdutyliveableunderanearlierSROof2006wouldnotbecharged

subcomponents,importedinakitformbyanassemblerormanufacturerdeclaredtobeanewentrantbytheEDB.

8/3/2019 The Bell 26 December 2011

3/3

THE BELL

3 ELIXIRSECURITIES December26,2011

AnalystCertificationTheresearchanalyst(s)denotedAConthecoverofthisreport,primarilyinvolvedinthepreparationofthisreport,certifiesthat(1)

theviewsexpressedinthisreportaccuratelyreflecthis/herpersonalviewsaboutallofthesubjectcompanies/securitiesand(2)no

partofhis/hercompensationwas, isorwillbedirectlyorindirectlyrelatedtothespecificrecommendationsorviewsexpressedin

thisreport.

DisclaimerThe report has been prepared by Elixir Securities Pakistan (Pvt.) Ltd and is for information purpose only. The information andopinionscontainedhereinhavebeencompiledorarrivedatbaseduponinformationobtainedfromsources,believedtobereliable

andingoodfaith.Suchinformationhasnotbeenindependentlyverifiedandnoguaranty,representationorwarranty,expressedor

implied ismadeas to itsaccuracy,completenessorcorrectness.Allsuch informationandopinionsaresubject tochangewithout

notice.Descriptionsofanycompanyorcompaniesortheirsecuritiesmentionedhereinarenot intendedtobecompleteandthis

documentisnot,andshouldnotbeconstruedas,anoffer,orsolicitationofanoffer,tobuyorsellanysecuritiesorotherfinancial

instruments.

ResearchDisseminationPolicyElixirSecuritiesPakistan(Pvt.)Ltd.endeavorstomakeallreasonableeffortstodisseminateresearchtoalleligibleclientsinatimely

mannerthrougheitherphysicalorelectronicdistributionsuchasmail,faxand/oremail.Nevertheless,notallclientsmayreceivethe

materialatthesametime.

CompanySpecificDisclosuresElixir Securities Pakistan (Pvt.) Ltd. may, to the extent permissible by applicable law or regulation, use the above material,

conclusions,researchoranalysis inwhichtheyarebasedbeforethematerial isdisseminatedtotheircustomers. ElixirSecurities

Pakistan(Pvt.)Ltd.,theirrespectivedirectors,officers,representatives,employeesand/orrelatedpersonsmayhavealongorshort

positioninanyofthesecuritiesorotherfinancial instrumentsmentionedorissuersdescribedhereinatanytimeandmaymakea

purchaseand/orsale,oroffertomakeapurchaseand/orsaleofanysuchsecuritiesorotherfinancialinstrumentsfromtimetotime

intheopenmarketorotherwise. ElixirSecuritiesPakistan(Pvt.)Ltd.maymakemarketsinsecuritiesorotherfinancialinstruments

describedinthispublication,insecuritiesofissuersdescribedhereinorinsecuritiesunderlyingorrelatedtosuchsecurities. Elixir

SecuritiesPakistan(Pvt.)Ltd.mayhaverecentlyunderwrittenthesecuritiesofanissuermentionedherein.

OtherImportantDisclosuresForeigncurrencydenominatedsecuritiesissubjecttoexchangeratefluctuationswhichcouldhaveanadverseeffectontheirvalue

orprice,orthe incomederivedfromthem.Inaddition, investors insecuritiessuchasADRs,thevaluesofwhichare influencedby

foreigncurrencieseffectivelyassumecurrencyrisk.

Copyright 2011, Elixir Securities Pakistan (Pvt.) Ltd. All rights reserved. This report or any portion hereof may not bereproduced,distributed,publishedorsenttoathirdpartywithoutpriorconsentof ElixirSecuritiesPakistan(Pvt.)Ltd.