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