- We are previewing financial results for the quarter-ended June 2014 for Maple Leaf Cement Company Ltd (MLCF- 4QFY14) and Lafarge Cement Pakistan Ltd (LPCL – 2Q2014).
- We expect MLCF to register 7%YoY and 18%QoQ higher 4QFY14 EPS of Rs2.09. Incorporating our 4Q estimates, we expect FY14 EPS to deliver 9%YoY growth.
- In the case of LPCL, we anticipate the company to register 2Q2014 EPS of Rs0.24, depicting a 6%QoQ growth and delivering 1H2014 EPS of Rs0.46 (-30%YoY).
- We expect higher cement prices to boost YoY revenue growth of MLCF, while declining financial charges are once again likely to come into play this quarter for both MLCF and LPCL.
- We re-iterate our ‘Buy’ recommendation on MLCF with a target price of Rs43 while we maintain our ‘Hold’ call on LPCL where the trigger remains the anticipated tender offer from Bestway Cement (BWCL).
MLCF: EPS of Rs2.09 expected in 4QFY14
We expect MLCF to report PAT of Rs1,100mn (EPS: Rs2.09) in 4QFY14 compared to a PAT of Rs1,028mn (EPS: Rs1.95) in the same period last year, translating into 7%YoY growth. We anticipate 17%YoY growth in MLCF’s 4Q top-line to Rs5.4bn, led by higher retention prices as well as volumetric growth. Consequently, gross profit is anticipated to jump by 3%YoY. That said, gross margin is likely to shrink to 33% from 38% in the same period because of higher power costs. Meanwhile, another projected positive aspect of the result are lower financial charges (-40%YoY) on the back of lower debt balance.
LPCL: EPS likely at Rs0.24 in 2Q2014
We expect LPCL to report PAT of Rs312mn (EPS: Rs0.24) in 2Q2014, down 42%YoY. The projected YoY decline in earnings is largely due to higher cost pressures driven by higher power costs. Resultantly, we are expecting gross margin to clock in at 30% compared to 38% in the corresponding period last year. Note that on a sequential basis, we are expecting LPCL to post a 6%QoQ growth in profitability. The anticipated QoQ growth of the company is premised upon 1) gradual uptick in cement prices as well as volumes (which should boost the top-line growth to 13%QoQ in 2Q2014) and 2) dip in financial charges by 23%YoY.