LUCKY: Domestic sales and exports remain upbeat

Firm domestic cement prices, higher sales and a growth in exports despite the industry-wide trend helped Lucky Cement turn in a sound performance in the first six months of the going fiscal. The companys financial results released on Monday, showed a growth of 9.4 percent in the top line.
A slight increase in the cost of sales was attributed to higher cost of packing materials coupled with repairs and maintenance at the plant site. Yet the gross margins remained intact.
Distribution costs, administrative expenses and other operating expenses; all registered slight increases in proportion to the top line. However the company managed an increase in the bottom line that was enough to maintain its net margins despite slight cost increments.
The consensus market view on the companys performance appears to exhibit satisfaction based on a review of selected research reports from leading brokerage houses. Among the disclosures by Lucky, two power plants of 5MW each are expected to come online in February and September 2015, respectively.
The companys performance for the remainder of this fiscal will be mainly determined by coal and fuel prices that are expected to remain relatively low. Domestic demand is showing signs of strength and any additional push from government in the form of higher PSDP disbursements could provide the sector, including Lucky Cement an impetus for a strong showing by the end of FY15.

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Lucky Cement

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Rs (mn)                    1HFY14      1HFY15         chg

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Sales                       19575       21410        9.4%

Cost of goods sold          11067       12133        9.6%

Gross profit                 8509        9277        9.0%

Gross margin                  43%         43%

Distribution cost            1546        1747       13.0%

Administrative expenses       377         429       13.8%

Other operating expenses      494         646       30.8%

Finance cost                   21          13      -37.6%

PAT                          5161        5601        8.5%

Net margin                    26%         26%

EPS (Rs)                    15.96       17.32        8.5%

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