Karachi, March 21, 2022 (PPI-OT): LUCK: Plant visit takeaways

Lucky Cement Ltd (LUCK) organized its plant visit on 19th Mar’22 where the company took analysts through its production facility in South. LUCK has four lines deployed at its South plant having total clinker capacity of 4.8mn tons.

Company also took us through its state of the art power plants where LUCK predominantly uses gas as fuel while it also has a 2km long conveyor belt to transport limestone. The conveyor belt is longest in Southern region.

We expect gross margins of the company to stand at 22% and 17% for 3QFY22 and 4QFY22, respectively as usage of Afghan coal in North is expected to shield margins. Moreover, the price increase by the players has been timely and will aid in relieving pressure off margins.

We maintain LUCK as one our top picks from the sector with i) company being among the first ones to expand in next expansion cycle, ii) recent commencement of Lucky Electric Power Plant which is expected to add PkR13/27/sh to consolidated bottom-line for FY22/23, iii) other portfolio investments of the company which provide exposure to variety of sectors including automobile and electronics.