Karachi, August 13, 2021 (PPI-OT): MLCF: 4QFY21 EPS clocked in at PkR0.9 – (Below expectation)

Maple Leaf Cement Limited (MLCF) announced its FY21 result where company posted PAT of PkR3.8bn (EPS: PkR3.49) on consolidated basis against loss after tax of PkR3.6bn (LPS: PkR3.24). While for 3QFY21, company posted PAT of PkR980mn (EPS: PkR0.89) against loss after tax of PkR832mn (LPS: PkR0.76) for 4QFY20 while decreasing 20% on QoQ basis. The result was below our expectation.

Company’s topline for FY21 stood at PkR35.6bn, up 22%YoY as local cement prices improved post conclusion of price competition among local players in 4QFY21 while local dispatches during FY21 also posted a phenomenal growth of 20%YoY on the back of various incentives provided to construction sector. For 4QFY21, topline stood at PkR9.5bn, up 58/1% YoY/QoQ.

Consequently, on the back of improvement in prices, gross margins for FY21 also improved to 24% for FY21 against 2% for FY20. However, for 4QFY21, gross margins witnessed a sequential decline of 2ppts on the back of soaring coal prices while local players delayed the cost pass-on. A by-product of increased sales is increase in operating costs which witnessed an increase of 28% for FY21.

On the back of decrease in interest rates, finance cost for FY21 went down by 54%YoY while improved cash flow during FY21 also helped curtail short term borrowings. For 4QFY21, finance cost went down by 48/8% YoY/QoQ.

We have a Buy stance on the stock with our TP of PkR80.1/sh providing an upside of 79% where company’s third line capable of being operated on pet coke instead of coal shields the company from increasing coal prices while 40MW coal power plants makes it one of the most efficient local cement manufacturer.