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Invest & Finance Securities Ltd

Driven by trust

Equity Research
Aug 24, 2010

Lucky Cement Ltd. (LUCK)
Things will only get better

- Lucky is the largest cement company in Pakistan and holds a dominant competitive edge on both domestic and export fronts. With its Waste Heat Recovery Plants already online in Karachi and Pezu, savings in power costs are expected to boost LUCK’s earnings further. No capacity expansion is announced hitherto but as per a statement given to the press by the company’s CEO in Aug 2009, LUCK may increase production capacity to 9mn tons by FY12. We have not incorporated the impact Current Price: PKR66.21 of this capacity, however, as this expansion is so far in its planning Buy stage. - Key investment themes are, 1) Plans of raising exports by exploring new destinations, 2) Waste Heat Recovery Plant online at two locations to date resulting in up to 23% savings in power cost 3) Boost in other income via CDM benefits 4) Long term debt declining, rising future cash in hand available with prospect of increase in the payout ratio, 5) 35% Inland Freight subsidy for cement exporters, 6) Exports, being half of LUCK’s revenue, to benefit from PKR depreciation (IFSL estimate of 5% annually) - Valuation and Recommendation: With an upside potential of 25%, we recommend BUY for LUCK with a fair value of PKR82. The stock is currently trading at FY11E and FY12E PE of 5.6x and 4.8x, respectively. - Key risks: 1) The APCMA not being able to uphold cement prices due to CCP intervention or drop in demand, 2) Fuel and Power cost savings not up to expectations as estimated, 3) Squeezing of export margins due to new regional capacities and any increase in coal prices that cannot be passed on, and 4) Tight control of multinational cement giants in African countries, resulting in a continental collusion of sorts.

Fair Value: PKR82
Amreen HiraniAC

(92-21) 32276932-35 (ext 202) amreen.hirani@investfinance.com.pk Ayub Ansari (92-21) 32276965 ayub@investfinance.com.pk

Bloomberg code 52 week Range: Current Price Avg.Vol (mn) High Low Year End Mkt-Cap PKR (bn)

LUCK PA 66.21 2.63 88.40 58.56 June 21.41

KSE100 9,812.1 147.2 10,677.5 8,246.7 2,747.9

LUCK Financial Sum m ary FY10A Net profit (PKR mn) EPS (PKR) DPS (PKR) Dividend Yield PE (x) BV/share (PKR) P/BV (x) EV/EBITDA (x) ROE 77.61 0.85 4.59 12.5% 3,137 9.70 4.00 6% FY11F 3,849 11.90 5.95 9% 5.55 85.52 0.77 3.68 13.9% FY12F 4,458 13.78 9.65 15% 4.79 93.35 0.71 3.35 14.8% FY13F 4,715 14.58 12.39 19% 4.53 98.28 0.67 3.23 14.8% FY14F 5,183 16.03 14.42 22% 4.12 101.91 0.65 3.01 15.7%

Source: Company Notice, IFSL Research

Disclaimer: This report is for information purposes only and we are not soliciting any action based on it. The material is based on information we believe to be reliable but we do not guarantee that it is accurate and complete. Invest & Finance Securities Ltd. will not be responsible for the consequence of reliance upon any opinion or statement herein or for any omission. IFSL does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.hirani@investfinance. Earnings before Interest.pk Acronyms ACPL APCMA CAGR CCP CDM DGKC EBITDA EFS FCCL FCFE FED PSDP ROA RoCE RoE TDAP Tpa Tpd THCCL WHR Attock Cement Pakistan Ltd All Pakistan Cement Manufacturars Association Compounded Annual Growth Rate Competition Commission of Pakistan Clean Development Mechanism D G Khan Cement Ltd. Tax. Depreciation and Amortization Export Finance Scheme Fauji Cement Company Ltd Free Cash Flow to Equity Federal Excise Duty Public Sector Development Programme Return on Assets Return on Capital Employed Return on Equity Trade & Development Authority of Pakistan Tonnes per annum Tonnes per day Thatta Cement Company Ltd Waste Heat Recovery 2 .com.Aug 24.

715 FY14F 5.510 43. In comparison to the 40% massive growth in FY09.458 FY13F 4. 50% LUCK Market Share 40% 30% 20% 10% 0% FY05A FY06A FY07A FY08A FY09A FY10A FY11F FY12F Total Export Local Source: Company Reports.536 13.4% overall market share. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen. Additionally. Yield Earn.872 7.7 -32% 11. IFSL Research Lucky Cement is expected to depict an increase in net sales for FY11 due to an expected 5% fall in volumetric sales. Higher prices are expected to boost bottomline in FY11-12.39 14.214 12.0 10% Source: Company Notice. respectively. IFSL Research 3 .95 9. BVS (PKR) 38.9 DPS (PKR) Div.137 FY11F 3.8x.832 8.849 FY12F 4.pk LUCK maintaining the lead LUCK is the leading Pakistani cement producer with 19. with 33% in exports and 13.Aug 24.5 93.9 23% 13. the Waste Heat Recovery Project has saved the day with savings in fuel and power cost. we expect LUCK to improve on its payout aided by rising free cash flows due to 1) no major capex. Company Reports. Also.6 85.6 6% 16. Growth in earnings by 23% Y/Y is expected in FY11 due to savings in fuel and power cost and potential exports with potentially higher domestic demand as a result of destruction by the floods.2% in local market in FY10.com. LUCK recorded a decline of 16% in FY10 in fuel and power cost.725 10.766 41.531 7. IFSL Research LUCK Valuation Summary PKR m n PAT EBITDA EPS (PKR) 5. revenues from exports and CDM benefits are expected to favor LUCK.576 77. Capacity Utilization 90% 85% 80% 75% 70% 65% FY08A FY09A FY10A FY11F FY12F LUCK FY13F FY14F Industry Source: ACPMA.404 Y/Y Total Assets Total Liab.8 16% 14.080 42.00 5.109 10. With an upside potential of 25%.890 10.3 101. The stock is currently trading at FY11 and FY12 PE of 5. With the assumption of 5% annual PKR depreciation.183 9.313 39. Yield 4.6x and 4. and 2) negligible long term debts to be repaid.65 12.hirani@investfinance.507 6. we recommend BUY for LUCK with a fair value of PKR82.42 6% 9% 15% 19% 22% 18% 21% 22% 24% FY10A 3.3 98.

000 40.000 15. the industry capacity will further grow by 2% in FY12 to reach 47mn tpa. Not much change in the industry capacity leaves industry growth stagnant. However. Capacity utilization is expected to increase from 74% in FY10 for the coming years due to cement manufacturing companies not expanding in a big way with assumption of growth in dispatches. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.com.000 5. Actual PSDP utilized last year was only 46% of the actual budget allocation by the government. With the current repercussions of the floods in Pakistan. But this has been washed away in the Pakistan Floods 2010. working as a risk factor.4% Y/Y growth in total volume where almost 68% of the sales comprised of local dispatches during FY10.000 20.000 20. Adding THCCL’s incremental capacity of 3k tpd.2k tpd expansion).000 35.hirani@investfinance. Local Dispatches Source: APCMA. which raised hope of some growth in the cement industry. The industry’s capacity increased by 6% in FY11 with fresh installation at FCCL (7. Correlation of Growth in PSDP and Domestic Sales 95% 75% 55% 35% 15% -5% FY05 -25% Growth in PSDP Growth in Domestic Sales FY06 FY07 FY08 FY09 FY10 166km Rahim Yar Khan . are likely to add to increasing domestic cement price pressures.000 10. The increasing global prices of coal.Aug 24.pk A peek at the Cement Industry The cement industry in Pakistan has been in a relatively inactive phase.Bhaw alpur Add. industry dispatches and utilization are expected to increase by the same margin the next year. with 30% of the exports already being sent there. 50. with reference to capacity expansion on the whole.000 - Industry Capacity ('000 tons) FY08A FY09A FY10A FY11F FY12F FY13F FY14F North South Source: APCMA FINANCIAL HIGHLIGHTS OF KEY INDUSTRY PLAYERS FOR 9MFY10 LUCK Gearing GP Op Margn Net Margin 14% 35% 19% 14% DGKC 17% 18% 16% 3% FCCL 57% 14% 10% 7% ACPL 15% 28% 22% 16% Source: Company Reports Major Constructions for FY11 Projects to complete in FY11 16000-18000m of Highw ays PSDP budget has been raised to PKR663bn from PKR646bn in FY11. Carriagew ay 200km Gw adar-Ratodero Road upto Hoshab 300MW Chashma Nuclear Pow er Plant Gomal Zam Dam Karachi Bulk Water Supply Scheme Satpara Dam Major project launched in FY11 Daimer Basha Dam Source: Text of Budget Speech 2010-2011 Source: Economy Survey of Pakistan 45.000 25.000 FY08A Industry Demand ('000 tons) FY09A FY10A FY11F FY12F FY13F Exports Sales driven by Local Dispatches The industry witnessed 12.000 40. GoP is planning to cut down the Federal PSDP by 50% by delaying a handful of projects and foremost meeting up with basic necessities for the flood survivors.000 10. We expect export to increase its proportion in FY11 due to potential in Africa.000 30.000 30. IFSL Research 4 FY14F .

E. The current FOB coal price of US$102/ton.A. with higher probability of affecting the northern plants in FY11 EPS sensitivity to domestic sales Punjab and KP. 250 200 150 100 50 - FY08A FY09A FY10A Local FY11F Export FY12F Coal FY13F FY14F Source: Company Reports.000 30. have not yet impaired any key players of the industry.41 -4% construction and cut back other projects. particularly in the North region to raise their prices.93 -8% Recently the GoP has also decided to reallocate funds. gas and power tariff.000 10. TANZANIA IRAQ 9MFY09 9MFY10 Source: TDAP Cost Drivers 300 LUCK Cement Prices with Global Coal Prices (PKR per bag) Hike in power tariff through out FY10 by 25% had led cement manufacturers.65 11.pk Indusrty Exports (US$ 000) 50. Demand in the southern region looks stable with steady growth in prices expected unlike the sudden spike in north. which may rise further and increase the average fuel cost with PKR depreciation as a cost add on.12 10. Looking at he data of Richard Bay. 5 . Most Sales (mn tons) EPS (PKR) EPS % from base case destruction by the floods has been on the infrastructure and domestic housing. Retail cement Prices (PKR per bag) 365 345 325 305 285 265 245 225 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 North South Source: FBS Impact of flood The recent floods. This may be due to south region already enjoying higher margins due to lower freight and logistic costs in comparison to the north.39 11. planning to prioritize -10% 2.com. International aid is also expected Base case 2. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.000 40.hirani@investfinance. Source: IFSL Research the local demand in the cement industry is expected to grow for a span of two years with respect to the flood damages. covering up the gap between the North and South cement prices towards the end of FY10. It has been learnt that not only demand from the army in the north is increasing.000 20. it looks like the association is once again in form with cement prices rising in the North by PKR60/bag in the last quarter of FY10. but also foreign projects for construction are in queue which is working as a catalyst for the association to raise cement prices in the north.000 BAHRAIN OTHER KUWAIT MOZAMBIQUE OMAN QATAR SOMALIA SRI LANKA U. -20% 2. With previous indictments of ACPMA by the CCP and majority of the cement manufacturing companies in Pakistan being fined for it.Aug 24. IFSL Research Hike in local price per bag The recent escalation in average prices of cement by 6% Q/Q in 4QFY10 is due to the climb in cost of coal.90 for the recovery of the damages by the floods. After a dip in the short term. 6% Q/Q increase in coal prices with further expected increase is pushing cement manufacturers to increase cement prices. which may lead to construction and higher demand of cement ahead. Imported coal rates have been mounting due to high demand globally. Bloomberg.

500 2. it’s average local cement price for FY10 has declined by 25%. coming to PKR228/bag. followed by 27% in Afghanistan which is mainly dependent on Pakistan to meet its cement demand. and while LUCK managed well due to higher margins in exports. With the increasing demand in Africa and Sri Lanka. Africa and the Middle East. LUCK is expected to raise revenue in comparison to FY10.pk LUCK: Incentives to invest Sales and expansion After a growth of 26% and 2% in local and export demand Y/Y respectively in FY10. As a result of increase in exports of 11% Q/Q 4QFY10 and current trend of exports with expanding destinations. The scenario for export is similar due to its increasing potential globally. LUCK Demand ('000 tons) 4.000 FY08A FY09A FY10A Local FY11F Export FY12F FY13F FY14F Source: Company Reports. accounting 54% of LUCK’s exports.hirani@investfinance. local sales are expected to grow in FY11 and FY12 as a consequence of the destruction by the floods. we have forecast that LUCK may show 12% growth in export revenue in FY11. LUCK Revenue FY10 LUCK Exports FY10 51% 49% Local Sales Exports Africa and Middle East India Agfhanistan Others Source: Company Report.500 3.000 3. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen. LUCK is also fishing for fresh locations digging for more foreign revenues. With the increasing cement prices in North and expected growth in volume in the coming period.000 2. In spite of increase in volume of exports by 2% Y/Y FY10.Aug 24. Collusion of multinationals in Africa does not give LUCK much space to maneuver in terms of pricing. Company Management High margins and revenues through exports The industry’s average cement prices decreased by 20% Y/Y FY10.com. IFSL Research 6 . the revenue from exports has decreased by 6%. exports in the future are likely to increase with a CAGR of 5% till FY13.

71 14. LUCK is meanwhile in negotiations with KESC to deal a power supply of 20MW which will be generated from the Waste Heat Recovery Plant.96 12. and 3) Qualifying for CDM benefits under the Kyoto protocol.78 13.02 FY12E 13.pk Waste heat recovery project. a timely savior The benefits of the waste heat recovery project are likely to be multiple in nature for LUCK.04 FY13E 14. IFSL Research Savings from the PKR2. This addition to LUCK’s earnings will increase as the plant in Pezu has also commenced its operation. These savings are a critical part of LUCK as it is drastically affecting the earnings of LUCK. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.03 16. Sensitivity for CDM Income (100. Fuel and Power Cost PKR/ton with Y/Y Growth on Total Fuel and Power Cost 2500 2000 1500 1000 500 0 FY08A FY09A FY10A FY11F FY12F FY13F FY14F 60% 50% 40% 30% 20% 10% 0% -10% -20% Source: Company Reports. Benefits expected to accrue as a result of implementation are 1) Fuel and power cost savings.hirani@investfinance.000 units to be achieved with income of US$20-US$30 per unit under this benefit.30 FV 82 83 83 7 .90 11. This income will not only increase LUCK’s earnings for FY11 by 2%-3% but also once again advantage LUCK with the PKR depreciation due to inflow of foreign currency.84 FY14 E 16.58 14.17 16. Earning by caring for the environment As qualifying under the CDM within the framework of the Kyoto Protocol for at least four years.2bn in the southern plant have been taken to be 23% of the required power with the rest of the energy generated by natural gas. 2) Power supply to KESC.91 14. The management has estimated 100.000 units) on EPS & FV Per Unit Base Case (US$ 20) US$25 US$30 Source: IFSL Research FY11F 11.com.Aug 24. We have estimated the income to be received from 3QFY11 at US$20 per unit. LUCK will be the pioneer in the Pakistan Cement Industry to be compensated carbon credits by companies that finance CO2 emissions in developed countries.

better prospects ahead With LUCK’s 6% Y/Y FY10 decrease in gross sales. In spite of having a low cost of finance. With the intention of financing its future projects not through debt finance in the near future.000 5.66bn at end of FY10 and 50% of the remaining has also been paid off in 1MFY11.500 3.000 FY08A FY09A FY10A FY11F FY12F FY13F FY14F Source: Company Reports.000 4. We expect LUCK to increase its dividend payout ratio by 10% in FY11 and further by 30% in FY12.500 5. Our long term annual domestic price increase for LUCK is 5% LUCK Net Retention PKR per ton 6. IFSL Research Loads of Cash: Higher Payout possible LUCK’s debt to equity is expected to fall below 23% in FY11. vitally are funds for Export Refinancing. The increase in EFS mark up rate to 8. LUCK’s cash is internally generated as investments are not being financed from long term borrowings.hirani@investfinance. an immense decline of 54% Y/Y in FY10 had been seen in the financial charges which will decline in the future as well with payback of loans and no additional debt financing for the time being. The management has no sure plans of expansion for which funds can be borrowed which also results in surplus cash in the coming years. Slight increase of 1% Y/Y FY10 in short term borrowings.5% has a negligible effect on its finance cost. Lower retention for FY10 only.500 4.com.000 3. This slight increase.500 2. 60% 40% 20% 0% FY08A LUCK Debt to Equity Ratio FY09A FY10A FY11F FY12F FY13F FY14F Source: Company Reports. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.Aug 24. the management is in a hurry to pay back the long term debt which decreased the gearing by 13pps Y/Y to 32% in FY10. in comparison to PKR1.03/share in FY10. With the repayment of loans. net sales for FY10 have fallen 7% Y/Y due to decline of 22% Y/Y in net retention per bag.000 2. which are 48% of the total liabilities. With this. we expect that LUCK’s free cash flows to further improve in the future.3bn in FY09 are now only PKR1. we expect LUCK’s cash balance to reach PKR2. The policy of high retention ratio has gradually improved LUCK’s capacity to fund its capital expenditure through equity instead of debt financing.99/share in FY12. not effecting the finance cost. and are expected to gradually decrease in the long term as well. will decline in the coming financial years and leave surplus free cash for LUCK.pk Low leverage to bring in growth opportunities Long term loans stated as PKR4. IFSL Research 8 .

14 FY13F 14.48 14. and with DGKC also generating its own power and enjoying savings due to the efficiency from its Waste Heat Recovery Project.78 13. The anti dumping issue in Africa along with “continental cartel” can be a barrier for increase in exports.23 14.hirani@investfinance.67 15.90 12.59 16. As Fauji Cement has expanded its capacity this year.02 12.64 13.69 FY13F 13.19 FY12F 13.54 11.88 16. The African issue of imposing anti-dumping duty of 25% may hit the export prospects of LUCK to Africa. 9 .58 14.90 12.72 14. Sensitivity of power cost savings by WHR Plant on EPS PKR 15% 20% Base case (23%) 25% 30% Source: IFSL Research FY11F 10. Sensitivity of Local Cement Prices on EPS PKR -5% -2% FY11F 11.com.17 16.74 FY12F 12.62 11.03 16.04 14. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.17 14.14 12.44 14.32 17.39 FV 82 82 82 82 82 Average Local Cement Prices (PKR per bag) 320 300 280 260 240 220 200 1QFY10 2QFY10 Industry 3QFY10 LUCK 4QFY10 Source: Industry Sources.86 15.76 13.78 14. Also the Middle East may see setting up of more of its own cement manufacturing plants due to which its requirement from that region will further decline while also posing as potential competition in the African market. Company Reports Base case (5%) 2% 5% Source: IFSL Research Possible over estimation of fuel and power cost savings LUCK’s cost savings from the Plant may not be as efficient as expected.40 13. there is a risk that the cement price may not sustain its growth as rivals would be able to lower their cement prices and thus presents a downside risk to our 5% annual cement price increase assumption.93 14.58 14.79 11.94 11.05 FV 74 79 82 85 90 African “continental cartel” Potential in exports can decline due to saturation in the overseas market. Other factors like increase in gas prices (long term assumption of 5% annual increase) may also lead to deviations from our base case. followed by Thatta Cement for the same within 24 months.93 FY14 F 15.86 15.43 13. With that the Plant may not be able to generate enough power for other power houses on which it is relying.03 16.Aug 24.pk What can go wrong Pressure on prices The recent increase in cement prices may not be able to sustain in the long run. if export prices are decreased to compete with local cement manufactures in Africa.54 FY14 F 14.

00% 19.849 1.04 FY15F 5.666 (1.20 12.058 12.510 FY14F 5.570 26.944 (686) (1.715 1.257 14. we have used a fundamental beta of 1.684 (232) 7.091 42.661 82 FY12F 2.017 15.707 (314) 7. Beta Risk free rate Risk premium Discount Rate 1. the stock provides an upside potential of 25% to our FCFE based fair value of PKR82.216 8.904) (1.10 FY12F 4.766) (1. (PKR) Source: IFSL Research FY11F 1.235 1.216 2.521 FY15F 5.6x.Aug 24. For calculation of Cost of Capital (Ke).458 1.383) (662) 5.668) 1.610 1.70 FY16F 6.076 FY16F 6.592 1. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.592 3. resulting to 19.2x with a risk premium of 6%.851 FY13F 4.516 (559) 4.655 (326) 6.95%. Offering dividend yield of 9%.017 2.pk Valuation: BUY with fair value of PKR82 We have valued Lucky Cement using FCFE methodology.512 (604) (830) 5.078 2.com.017 15.308) 2.52 10 .hirani@investfinance.618 (390) 5.95% (PKR mn) Free cashflow to Equity holders Discounted FCFE Sum of discounted FCFE Terminal Value Discounted Terminal Value Equity value Value/sh.451 (906) (529) 6.078 13.017 2.041) 4.75% 6.573 (365) 5.235 1.82 FY13F 4. (PKR) Source: IFSL Research FY11F 3.062 (1.01 FY14F 5.183 1. The scrip is currently trading at P/E of 5.075 FCFE calculation (PKR mn) PAT Depreciation Working Capital Changes Cash Generated from Operations Change in Borrow ings Fixed capital expenditure Free Cashflow to Equity FCFE/sh.058 1.806 (1.

958 1.986 569 3.509 4.227 41.477 8.098 3.959 7.735 43.819 42.077 FY13F 3.773 33.676 6.807 8. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.508 16.730 43.187 1.246 1.967 3.651 310 2.90 FY12F 30.483 679 (185) 6.926 28.234 21.pk Income Statement .955 12.971 602 (88) 5.647 6.508 138 1.927 5.664 307 5.683 10.439 38.603 42.715 1.694 31.803 29.841 467 4.495 743 (194) 6.014 9.927 1.148 258 5.03 FY15F 38.LUCK (PKR mn) Net sales Cost of Sales Gross Profit Other Operating Expense Other Income Profit from operations Depreciation & Amortization EBIT Finance cost PBT Taxation Net Income EPS (PKR) (323.763 FY12F 3.763 1.043 9.948 5.887 4.530 7.907 5.610 5.788 22.986 30.896 5.715 14.642 38.376 765 5.012 21.573 3.166 19.LUCK (PKR mn) Paid up Capital Reserve Unappropriated profit Total Shareholders Equity Total long term liabilities Trade & other payables Total Current liabilities Total liabilities & Equity Stock in trade Trade debts Other receivables Cash & bank balances Total Current assets Total Non current assets Total assets FY10A 3.781 1.241 39.35 Balance Sheet .234 24.771 2.356 1.533 1.325 1.978 258 (2) 5.777 17.224 31.749 1.374 525 3.869 3.464 399 5.036 8.58 FY14F 35.607 1.313 609 779 185 334 6.940 542 3.066 608 4.Aug 24.833 805 (204) 7.496 14.507 FY14F 3.311 873 (107) 7.903 1.849 11.378 1.517 11.527 9.559 184 6.507 1.258 3.565 5.417 280 3.234 24.78 FY13F 33.140 725 25.339 32 280 8.506 1.511 5.890 707 5.533 FY15F 3.806 24.586 11 .649 27.37mn shares) FY10A 24.458 13.736 14.650 43.183 16.234 22.077 1.234 21.213 1.314 13.874 31.176 11.957 1.654 1.789 477 3.358 643 4.234 23.850 31.904 30.002 41.com.313 FY11F 3.586 1.hirani@investfinance.137 9.854 4.212 32.70 FY11F 26.610 17.539 39.661 43.981 10.

15 18.95 101.47 0.0% 1.65 1.0% 1.05 0.7 525.0 299 2.6% 0.9% 0.com.8 106.2% 10.60 0.10 35.7 0.65 323 14.80 0.9 100.Aug 24.8% 30.LUCK FY11F FY12F FY13F FY14F FY15F Exchange rate Grow th Capacity Local Demand Export Demand Prices Local (PKR/bag) Export (US$/bag) Gas Tariff (PKR) per MMBTU Imported Coal (US$/ton) LUCK m arket share Local Export 10.3% 31.78 9.pk Key Ratios .18 FY10A FY11F FY12F FY13 FY14F FY15F Key Assumptions .8 104.81 0.LUCK (PKR mn) Liquidity Ratios Current ratio Quick ratio Capital Structure Times Interest Earned Debt to Equity ratio Return Ratios RoE ROA RoCE DuPont Analysis Net profit margin Asset turnover Equity multiplier RoE Profitability Gross Margin EBITDA Margin Net Margin Grow th Sales Grow th EBITDA Grow th Net Profit Grow th General Ratios No.90 5.94 92.22 13.35 0.7 329 2.09 0.8 552.6 476.95 323 13.1 106.35 15.71 0.93 1. of shares (mn) EPS DPS 323 9.6% 0.9% 30.3% 10.0% 1.33 96.7% 87.58 12.70 4.hirani@investfinance.12 23.9 579.0% 2.89 12 .7% 0.6% 30.00 0.71 0.00 323 11.73 1.0% -10.36 0.32 10.80 106.61 -7% -34% -32% 9% 25% 23% 13% 10% 16% 9% 4% 6% 8% 7% 10% 8% 7% 8% 33% 22% 13% 34% 26% 14% 35% 25% 15% 35% 24% 14% 36% 23% 14% 37% 23% 14% 13% 64% 153% 12% 14% 67% 144% 14% 15% 73% 136% 15% 14% 78% 134% 15% 14% 82% 132% 16% 14% 89% 129% 17% 12% 8% 9% 14% 10% 11% 15% 11% 13% 15% 11% 13% 16% 12% 14% 17% 13% 16% 7.0% 1.03 14.3% 10.6% 272 2.7% 30.0% 2.42 323 17.7 346 2.6% 10.6 500. 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.0 314 2.7 106.0% 4.99 0.68 1.70 0.94 1.39 323 16.0% 2.0% 3.

hirani@investfinance.com.com. 202 Email: amreen. 264 Email: azher@investfinance.com.pk Azher Ali Quli (Technical Analyst) Tel: (+92 21) 32276932-35 Ext.pk 13 . 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen.pk Muhammad Irfan Dojagi Tel: (+92 21) 32276944-45 (dir) Email: irfan@investfinance.Aug 24.pk Institutional Sales Syed Kaleem Akhtar Tel: (+92 21) 32276940-41 (dir) Email: kaleem@investfinance.com.pk Irfan Mansoor Tel: (+92 21) 32276932-35 Email: irfan.com.pk Research Khalid Iqbal Siddiqui Tel: (+92 21) 32276965 (dir) Email: khalid.com.com.mansoor@investfinance.hirani@investfinance.pk Ayub Ansari Tel: (+92 21) 32276957 (dir) Email: ayub@investfinance.com.iqbal@investfinance.pk Amreen Hirani Tel: (+92 21) 32276932-35 Ext.

35787737 Faisalabad 503. Tel: (+92 41) . 2010 Pakistan Equity Research: LUCK Amreen Hirani (92-21) 32276932-35 Ext:202 amreen. is.hirani@investfinance. Faisalabad.29 Fax: (+92 21) . Technocity Building. 5th Floor. Off: I. Invest and Finance Securities Limited Head Office: 12th Floor. Tel: (+92 42) . Pakistan.35.31 Fax: (+92 41) .35787732 . State Life Building Circular Road.32276932 .2602529 14 . or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. Pakistan.pk Branches: Karachi B-375.pk Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies. Main Gulberg Lahore.com. Pakistan. Siddique Trade Center 72.32276969 website: www. Fax: (+92 21) . Tel: (+92 21) .com.34819727 . Tel: (+92 21) .34919929 Lahore 319.investfinance.Aug 24.36 Fax: (+92 42) . and 2) no part of any of the research analyst’s compensation was. Karachi.2602527 . with respect to each security or issuer covered in this research that: 1) all of the views in this report accurately reflect his/her personal views about any and all of the subject securities or issuers . Block 6 Gulshan-e-Iqbal Karachi.I Chundrigar Road. Pakistan. Hasrat Mohani Road. Corporate Tower.