Fauji Cement Company Limited (FCCL) announced its 3QFY21 results today, posting PAT of PKR 1,010Mn (EPS: PKR 0.73), up 12% QoQ. The company’s 9MFY21 earnings cloaked-in at PKR 2,611Mn (EPS: PKR 1.89), up 9.6x YoY. Despite lower cement dispatches at 0.73Mn tons (↓1/23% YoY/QoQ), the profitability of the company remained intact due to higher cement prices (↑17/7% YoY/QoQ).
Key highlights of the result are summarized below: –
The net revenue of the company expanded by 51% YoY to PKR 5,918Mn in 3QFY21 due to higher cement prices (↑17% YoY) but witnessed a 3% QoQ decline due to lower cement dispatches (↓23% QoQ). Resultantly, the 9MFY21 topline increased to PKR 17,528Mn, up 30% YoY.
FCCL registered an eight quarter high gross margin of 29.8%, as compared to (2.7%)/25% in 3QFY20/2QFY21. This translated into higher gross profits of PKR 1,763 Mn, up 15% QoQ. The gross margins increased due to higher retention prices (↑46/11% YoY/QoQ).
The sales and distribution expense moved marginally to PKR 48Mn, up 1/5% YoY/QoQ. The administration expenses on the other hand, increased by 20% YoY but decreased 22% QoQ to PKR 117Mn.
Other income account witnessed a rather large increase of 11.4/10.6x YoY/QoQ to report at PKR 91Mn. The other expenses increased to PKR 115Mn, up 26% QoQ.
The net financial charges decreased to PKR 12Mn (↓ 79/6% YoY/QoQ) due to stable interest rates and lower debt levels.
Our FCCL Dec’21 target price is PKR 35.9 per share, offering upside of 52.6% from last close.
Further analysis will be done once detailed results are out.
Courtesy – BMA Capital Management Ltd.