Karachi, September 13, 2021 (PPI-OT): CHCC – FY21 Analyst Briefing Takeaways
Cherat Cement Company Ltd. (CHCC) conducted its analyst briefing today to apprise investors of 4QFY21 result and future outlook. To recall, company posted FY21 PAT of PkR3.2bn (EPS: PkR16.5) against loss after tax of PkR1.9bn (LPS: PkR9.74) for FY20. For 4QFY21, PAT clocked in PkR982mn (EPS: PkR5.05), down 10%QoQ.
Company’s cost of production declined by PkR268/ton to PkR4,678/ton for FY21 as cost of raw material declined by PkR89/ton while despite increase in coal prices, cost of fuel and power per ton stood at PkR2,746/ton for FY21 against PkR2,982/ton for FY20 after company utilized gas based power generation.
Company sold 3.4mn tons in local market during FY21 against 2.9mn tons for FY20, depicting an increase of 18%YoY in sales while company’s exports increased by 8%YoY for FY21. Moving forward, company expects local demand to stage a growth of 8-9%YoY for FY22 while exports to Afghanistan are expected to pick up, moving forward.
Commenting on its fuel mix, management said that 20-30% of the coal consumption is met using Afghan coal while 60-70% is met through South African and Indonesian coal. Cost of afghan coal usually trades at 10-15% discount to Richards Bay coal however availability of Afghan coal remains a concern.
Company is still targeting 4QFY21 as possible completion date for BMR of Line-I, however recent disruptions in international supply chain can result in possible delay of 1-2 months. BMR is expected to improve efficiency of Line-I resulting in decrease in cost of PkR350/ton.
Regarding the recently announced Greenfield project, LCs have not been established yet however company estimates the cost to be around PkR34bn of which PkR24bn will be financed using debt. To note, company has not availed TERF facility. COD for the new line is expected to be in 3 years however company is striving to complete it earlier than that.
Solar Power plant will entail total CAPEX of PkR1.4bn with COD expected in Jan’22. The plant will be able to provide 12.5-13MW of electricity. Current power mix of the company includes 30-35% from WHR, 10% from PESCO/PEDO while rest of the power demand is met using gas based captive power plant.