Lucky Cement Limited (LUCK) is schedule to announce its 1HFY16 results on February 20, 2016. We expect company to post PAT of PKR 6.74bn (EPS: PKR 20.86) against PKR 5.60bn (EPS: PKR 17.32) recorded in same period last year, depicting a growth of 20% Y/Y. In 2QFY16 bottom‐line is likely to grow by 29% Y/Y to PKR 3.77bn (EPS: PKR 11.68) versus PKR 2.93bn (EPS: PKR 9.07) recorded in 2QFY15. Higher bottom‐line growth is due to the 1) favorable sales mix 2) soft international coal prices 3) positive contributions from WHR. We do not expect the company to declare any dividend during the period under review.

1HFY16 Earnings Expectation

Local volumetric sales grew substantially during the period by 16% Y/Y to 2.35mn tons that largely offset the impact of depressed exports sales. Exports endured a drop of 29% Y/Y to 0.88mn tons owing to imposition of anti dumping duty by South Africa and miserable demand in Afghanistan. Thus, share of local dispatches in overall sales mix improved to 73% from 62% while total volumetric sales re‐ mained flat at 3.23mn tons, down by 0.75% Y/Y;

Cost per ton is expected to reduce by 5.3% Y/Y to PKR 3,532/ton primarily due to the 23% Y/Y decline in international coal prices and commissioning of 5MW WHR plant. Thus, gross margin is likely to clock in at 48% as versus 43% recorded in 1HFY15;

Finance cost is expected to remain muted at PKR 5mn in the absence of any inter‐ est bearing debt on the balance sheet. Moreover, distribution cost is expected to drop by 29% Y/Y due to lower export sales;

By: Habib Metropolitan Financial Services