Maple Leaf Cement Factory Limited (MLCF) recently announced corporate results for the period ended December 31, 2014 where despite higher sales volume and local cement prices, the cumulative profit after taxation (PAT) of the company declined by 3.3% YoY in 1HFY15 primarily owing to hike in effective Taxation.
The PAT of the company totaled Rs 1,434 million (EPS: Rs 2.72) in 1HFY15 versus a PAT of Rs 1,482 million (EPS: Rs 2.81) in 1HFY14. Due to imposition of Alternative Corporate Tax (ACT), the effective taxation of the company hike to 25.9% in 1HFY15. Along with higher revenues, the bottomline was also supported by decline in finance cost.

Gigantic QoQ rise

On QoQ basis however the company posted significant growth on back of higher retention prices, lower effective taxation, and reduced finance cost. The PAT of the company totaled Rs 888 million (EPS: Rs 1.68) in 2QFY15 resulting in a 62.9% QoQ growth as against a PAT of Rs 545 million (EPS: Rs 1.03) in1QFY15. The corporate results were accompanied with an interim cash dividend of Rs1/share.

Revenues rise on higher prices and volumes

The net revenue of the company grew by 9.4% YoYin 1HFY15 to Rs 9,675 million versus Rs 8,844 million in 1HFY14. This rise was on back of higher local cement prices and increased volumetric sales. The cost of sales of the company surge by 5.8% YoY in 1HFY15 to Rs 6,187 million versus Rs 5,848 million in1HFY14.
Therefore the gross profit climbed by 16.4% YoY in 1HFY15 to Rs 3,488 million versus Rs 2,996 million in 1HFY14. The gross profit margin of the company moved up to 36% in 1HFY15 versus 33.9% in the identical period in FY14.

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Volumes jump 16% YoY

With the support of decent rise in local sales on back of rising construction activities in the country, the overall volumetric sales of the company reached 1.39 million tons in 1HFY15 which is 16% YoY up from 1.20 million tons in the similar period in FY14. The domestic sales increased to 1,090k tons in 1HFY15 growing by 14.1% YoY from 956k tons of cement sold in 1HFY14. Export sales however remained dull mainly due to availability of cheaper Iranian cement in Afghanistan.


The scrip is currently trading at a price of Rs 50.4/share offering an upside potential of 20% to our December’15 target price of Rs 61/share.
However, we recommend BUY on dips strategy for the script.