D.G. Khan Cement Company is scheduled to announce its 3QFY21 financial result on 24th Apr’21

D.G. Khan Cement Company Limited (DGKC) is scheduled to announce its 3QFY21 financial result on 24th Apr’21 whereby we expect the company to post earnings of PKR 2,506mn (EPS: PKR 5.72) compared to a loss of PKR 1,003mn (LPS: PKR 2.29) in SPLY and PKR 1,152mn (EPS: PKR 2.63) in 2QFY21.

We expect a strong surge in gross margins (27.0% vis-à-vis 0.6% in 3QFY20) led by a significant improvement in retention prices (cut in FED together with pricing restoration in North) as well as soft coal prices, which should offset the impact of volumetric decline (-10% YoY to 1,595k tons).

We also foresee improvement in margins on a QoQ basis (2QFY21: 21.2%) as price hike in North and PKR appreciation are expected to offset the impact of volumetric decline (2QFY21: 1,859k tons; -14%) and higher coal prices. In addition, other income of DGKC is set to undergo a jump of 3x YoY / 6x QoQ to PKR 1,650mn given recognition of dividend income from MCB (PKR 15/share). In 9MFY21, earnings are estimated to arrive at PKR 3,307mn (EPS: 7.55) compared to a loss of PKR 1,850mn (LPS: PKR 4.22) in SPLY with margins projected at 19.3% (9MFY20: 3.5%) due to higher retention prices and lower coal prices.

Courtesy – AHL Research

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