Karachi, April 19, 2022 (PPI-OT): MLCF and ASTL: Result Previews

MLCF – 3QFY22 EPS to stand at PkR1.02: Maple Leaf Cement Factory Limited (MLCF) will be holding its board meeting today to announce 9MFY22 result where we expect unconsolidated EPS of PkR3.2 for 9MFY22, down 36%YoY. Unconsolidated EPS for 3QFY22 is expected to stand at PkR1.02, down 75/39% YoY/QoQ. The decline in profitability is a result of increasing energy prices where we witnessed coal prices touching an all time of high of USD460/ton during Mar’22. However, company has been utilizing other sources to counter the impact of coal prices where Afghan coal took the lead with MLCF utilizing it for 60-70% of the energy requirement for line-1 and line-2. For line-3, company has relied on pet coke to fulfill its energy requirements. A significant decline of 75% in profitability for 3QFY22 on YoY basis is majorly due to high base as MLCF realized a dividend from Maple Leaf Electric. Topline for 3QFY22 is expected to increase by 25%YoY majorly due to higher retail prices as manufacturers look to pass on increasing cost however on QoQ basis, topline is expected to decline by 3% as impact of higher prices has been more than offset by the decline in offtake. Gross margin for 3QFY22 is expected to stand at 23% against 31% for 2QFY22 while on YoY basis, a decline of 0.6ppts is expected to be witnessed. On consolidated basis, we expect profitability to stand at PkR1,392bn (EPS: PkR1.27) for 3QFY22.

ASTL – Earnings to remain solid in 3QFY22: ASTL is slated to announce its 3QFY22 result (21st Apr’22), where we expect the company to record NPAT of PkR582mn (EPS: PkR1.96) vs NPAT of PkR503mn (EPS: PkR1.69) in 3QFY21. The expected earnings primarily emanate from: i) 63.6/8% YoY/QoQ growth in the topline largely on account of higher rebar prices (+9.2%QoQ). Gross margin is likely to decline compared to YoY and QoQ basis (GM: 10.8% in 3QFY22E vs. 13.9% in 3QFY21 and 11.5% in 2QFY22), where input cost pressures (avg. scrap prices up 13%QoQ) coupled with PkR depreciation against US$ (3.7%QoQ) and fuel cost are key factors. Moreover, earnings are likely to see an improvement/decline of 15.7/3.3% for YoY/QoQ. The company currently trades at FY22/23F P/E of 3.9/3.5x while 3-yr PEG stands at 0.16x with our TP of PkR57/sh provides a capital upside of 75% from last close – Buy.