• To recall, company reported standalone earnings of PkR13.8bn (EPS: PkR47.2), largely flat YoY compared to PkR13.7bn (EPS: PkR46.8) in SPLY.
• Company’s consolidated earnings increased by 11%YoY to PkR39.4bn (EPS: PkR134.4), from PkR35.3bn (EPS: PkR120.6) in SPLY, mainly due to improved performance across all subsidiaries.
• Local cement offtakes declined by 14%YoY to 3.0mn tons in 1HFY25, reducing the company’s market share to 16.4% from 17.1% in SPLY. Management attributed this drop to intensified market competition amid lower utilization levels.
• Export offtakes surged by 92%YoY to 1.8mn tons from 0.9mn tons in SPLY, increasing the company’s export market share to 38% from 26% in SPLY. Key export destinations include Africa, Sri Lanka, and Bangladesh.
• Local avg. retention prices stood at PkR16k/ton during 1HFY25. Prices have recently come under pressure due to higher supply and subdued demand, with the North region witnessing a decline of PkR50/bag lately. On the export front, retention prices are PkR9k/ton for Afghanistan, while sea route prices are ~US$41/ton for cement and US$30/ton for clinker.
• Management guided that weighted avg. coal prices were PkR37k/ton in 1QFY25, which eased to PkR35k/ton in 2QFY25. Moving forward, management foresees coal prices remaining largely stable around the 2QFY25 levels.
• Regarding coal mix, South plant predominantly relies on imported coal, whereas the North plant is more tilted towards local and Afghan coal.
• During the half-year period, a 28.8MW captive wind power project at South plant was successfully commissioned. Following its commissioning, 55% of the power requirement can be met through renewables, including WHR, solar, and wind.
• Looking ahead, management anticipates a delayed recovery in cement demand, expecting FY25 demand growth to remain negative. However, they anticipate local cement prices to improve, especially in the North, with a recovery in demand.
• Management further guided that the chemical and auto segments are expected to track the overall growth of the economy.
• On the foreign cement operations, all plants in Iraq & Congo are operating at 90-95% utilization levels with optimum efficiency.
• Lucky Electric Power Company Ltd. (LEPCL) maintained 100% plant availability during 1HFY25 and aims to improve its merit order and reduce electricity costs with the commencement of Thar coal supply next year.
• Management apprised that the recently approved 5-for-1 stock split aims to enhance liquidity in the market and attract retail investors by making the stock price more accessible.
• We maintain our ‘BUY’ stance on LUCK with a Dec’25 target price of PkR1,965/sh. Our liking on the scrip is supported by: i) improving market share given recent expansion, ii) higher gross margins driven by optimal coal and power mix, and iii) expected recovery in portfolio businesses alongside broader economic improvement.

Courtesy –  AKD Research