MLCF is scheduled to announce its financial result for 3QFY22 on Apr 19th, 2022, whereby we expect the company to post a profit after tax of PKR 1,99mn (EPS: PKR 1.81), depicting a YoY growth of 63% compared to PKR 1,223mn (EPS: PKR 1.11) in 3QFY21. During the quarter, sales are expected to rise by 24% YoY primarily owed to higher retention prices which should offset the impact of a 13% decline in offtake to 1.12mn tons.

As a result of higher prices, we project gross margins in 3QFY22 at 33.8%, countering the impact of PKR depreciation and higher fuel costs. Albeit, we do highlight that MLCF has managed to outperform the industry with its inventory management (low cost Afghan and pet coke inventory in hand), whereas jump in cement prices since Dec’21 should also aid margins on a QoQ basis (2QFY22: 31.8%).

Meanwhile finance costs in 3QFY22 are forecast to display a 30% increase YoY led by augmented borrowing and higher interest rate following hikes by the SBP. This should take the 9MFY22 earnings to PKR 4,748mn (EPS: PKR 4.32), up by a robust 67% YoY from PKR 2,949mn (EPS: PKR 2.59) in SPLY. Higher margins (at 29.7% vs. 23.8% last year) amid improved pricing shielded the profitability of the company during 9MFY22.

Courtesy- AHL Research