LUCK is expected to deliver phenomenal revenue/earnings CAGR of 20/21% respectively between FY10-22. Higher EV/ton of USD 107 as compared to local players seems justified, given the company’s diverse business portfolio and limited operational and financial leverage.

The company started a joint venture with KIA Motors (South Korea) in FY19 to leverage on growing demand, benefit from concessionary duties and a 5-year tax holiday. The project adds roughly PKR 152/sh to consolidated earnings and PKR 10.8/sh to our Jun-21 price target of PKR 857/sh.

Power business with an equity investment of USD 885mn is scheduled to be completed by Jun-21. LUCK holds 100% stake in this project, contributing PKR204/sh to our Jun-21 TP and PKR 29.57/31.49 per share to FY22/23 EPS, respectively.

In the wake of resumption in marketing arrangement amid the completion of the expansion cycle, LUCK has outperformed broader KSE-100 index by ~68% since Mar’20. Despite the outperformance, we prefer LUCK as our top pick with Jun-21 TP of PKR 857/sh, offering an upside of 31% from the last close.

BMA Capital Management Ltd.