Attock Cement Private Limited (ACPL) likely to post decent earnings growth of 12% in FY16 as profit after taxation to reach at Rs 2.46 billion (EPS: Rs 21.54) versus 2.20 billion (EPS: Rs 19.26) in FY15 on account of higher domestic dispatches, lower coal prices and expectation of reduction in electricity charges. Nonetheless the solid profitability, the organization is relied upon to proceed with its reputation of circulating cash dividend to its shareholders, where we anticipate that the organization will declare a substantial cash profit of Rs 10/share and Rs 12/share in CY16 and CY17, respectively slightly lower on account of expansion. We anticipate company to keep achieving its growth targets in the coming years. This increase is likely to be on the back of local demand increment at local front, implementation of CPEC project, and higher PSDP allocation. On the counterpart, a setback is likely to witness due to suppressed exports.

Production capacity likely hpw to utilize at max: The increased local infrastructure growth, led by China Pakistan Economic Corridor (CPEC) project launching, are likely to give boost to company’s domestic sales. Exports might remain under pressure. After the antidumping hit from South Africa last year, the company is exploring other markets including India, Somalia and Yemen. The cement producer is already supplying in Sri Lanka and other East African markets.

ACPL’s future intentions: ACPL has the plan to expand its production capacity in South region by 4,000 metric tons per day. This project will cost US$ 130 million, and would increase the company’s total production capacity up to 3 million tons. On the other hand, the company has also entered into joint venture contract with an Iraq-based company to construct 0.9 million ton cement grinding unit in Basra. The venture is likely to cost US$ 40 million, with 60% ACPL’s stake.

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By: Azee Securities Private Limited