Analyst:

Muhammad Sarfraz Abbasi

sarfraz.abbasi@atlascapital.com.pk
(+92-21)-111-226-100 (Ext.403)

Morning Pulse Jan 25, 2010

Cement Sector: ACPL result

behind the decline, in fact it is attributed to sluggish
demand during the 1HFY11. During 1HFY11 cement
ACCUMULATE
industry has been struggling with the diminishing sales as
preview… 8.19% decline was seen in local dispatches whereas
Market Snapshot

Synopsis… export dispatches were also found 11.16% down against KSE 30 12069.39 -64.63 -0.53
last year. KSE 100 12370.59 -61.32 -0.49
Attock Cement Pakistan Limited (ACPL) is scheduled to
KSE ALL 8584.97 -41.19 -0.48
announced its financial results for 1HFY11 on Thursday,
Pakistan Research

27th January 2011 We expect company to post Profit Rising cost may hurt profitability …
After Tax (PAT) of PRs272.06m (EPS PRs3.14), posting a We expect cost of sales to record upsurge of 14.73% to
sharp decline of 56.39% against corresponding period PRs3.03bn against PRs2.64bn during the same period of
of the last year when company had recorded PAT of last year. This upsurge in cost of sale is mainly driven by Key Data
energy costs and rising tariffs. Floods in Australia have Market Cap(PRs bn) 5.12
PRs623.91m and EPS of PRs7.20 respectively. In our
busted coal supplies to the world while demand is on Shares Outstanding (m) 86.59
today’s report we will discuss expected performance of Bloomberg ACPL.PA
the company in 1HFY11 and future outlook. rise which has pushed up prices to US$128 per ton in
12M Avg. Volume (m) 0.095
December. However, we believe that impact of rising
PRs(m) 1HFY10A 1HFY11E % Chg prices especially in the month of December would not
Revenue 3,731 3,609 -3% put a large impact on 1HFY11 profitability as company
COGS 2,642 3,031 15% holds 3 to 4 month coal inventories were bought at
lower rates. 12M ACPL relative performance vs KSE
Gross Profit 1,089 577 -47% 160%

ACPLL KSE-100
Distribution Costs 223 181 -19%
Lower expenses and financial charges may lend 135%

Administrative cost 86 90 4% support to bottom line… 110%

Other expenses 42 32 -22% We expect distribution cost and other expense to

85%
Other income 95 80 -15% record decline of 18.88% and 22.12% respectively. We
Operating profit 833 355 -57% believe that the company’s distribution cost has strong 60%

correlation with the sales and thus reduced sales are

Mar-10

Apr-10

Aug-10
Feb-10

May-10

Jun-10

Sep-10

Nov-10

Dec-10
Jan-10

Oct-10

Jan-11
Jul-10
Financial expenses 41 9 -78%
likely to lead to the lower distribution cost and other
Profit Before Tax 792 345 -56%
expenses. We also expect financial charges to see
Taxes 169 73 -56% substantial decline of 77.78% owing to repayment of
Profit After Tax 624 272 -56% debts.
EPS (PRs) 7.20 3.14 -56%
Source: Company accounts, Atlas Research Future Outlook and recommendation…
We are of the view that ACPL has an immense potential
Depressed demand leads to flimsy revenues… Atlas Capital Markets (Pvt.) Ltd
to increase its market share and profitability. However,
Top line of the company is expected to witness decline scale of the profitability will be forecasted once B-209, Park Towers, Clifton, Karachi
of 3.29% to PRs3.60bn against sales of PRs3.73bn in FY09. reconstruction activities pick up the pace. We expect Equity Research: Equity Sales:
The main reason behind this decline seems diminished construction activities to boost up in 3QCY11. Our DCF
Tel: 92 (21) 5376125 Tel: 92 (21) 5368261-8
Fax: 92 (21) 5376126 Fax: 92 (21) 5376122
dispatches as the company is expect to sell 844.89m based target price for scrip is PRs69 offering 16.73%
tons cement against 854.96m tons in the same period of Money Market: Corporate Finance:
upside potential. We recommend Accumulate stance. Tel: 92 (21) 5376128 Tel: 92 (21) 5824991
last year. Unlike last year retention prices is not the evil Fax: 92 (21) 5376129 Fax: 92 (21) 5376122
Financial Products Distribution:
Disclaimer: All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time
Tel: 92 (21) 5376125
of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Atlas Capital Markets (Pvt.)
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Limited accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All
information is provided without warranty and Atlas Capital Markets (Pvt.) Limited makes no representation of warranty of any kind as to the accuracy or Atlas Research is available on Bloomberg and
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