JS Securities Limited - JS Research.

Karachi -- October 09, 2023 (PPI-OT)

FCCL and ACPL 1QFY24 result previews

We present 1QFY24 earnings expectations for Attock Cement Ltd. (ACPL) and Fauji Cement Ltd. (FCCL). We expect ACPL to post an EPS of Rs13.7, up 16x YoY over Rs10/share (after tax) gain on sale of stake of its subsidiary, Saqr-Alkeetan. FCCL, on the other hand is expected to post 1QFY24 EPS of Rs0.5, down 48% YoY over lower YoY gross margins and higher finance costs.

We maintain a positive outlook on the Cement sector, considering its robust long-term fundamentals. As restrictions on coal imports ease, cement manufacturers now have the opportunity to avail lower international prices for the commodity. Any commodity price surge owing to recent global geopolitical conflicts, however, remains a key risk.

Higher finance cost and tax charge to impact bottomline

We present 1QFY24 earnings expectations for Attock Cement Ltd and Fauji Cement Ltd. Better retention prices are expected to support top-line of cement manufacturers. On the cost front, cement players have opted to significantly increase the quantum of relatively cheaper variants in their coal mix providing cushion to margins. Higher finance costs and the elevated tax charge compared to previous year, however, are expected to dent profitability, barring any one-offs.

ACPL: Gain from sale of stake in subsidiary to lift EPS

The Board of Attock Cement (ACPL) is scheduled to meet on 9th October, 2023 to discuss 1QFY24 results. ACPL is expected to post 1QFY24 earnings of Rs1.9bn translating into an EPS of Rs13.7. For the quarter, we anticipate top-line to reach Rs 7.43bn, reflecting a 5% increase compared to the previous quarter. This growth is primarily attributed to better...