Lucky Cement Limited (LUCK) - May 2023

Lucky Cement Limited (LUCK) – May 2023

Research Team

Table of Contents

Corporate Briefing Notes

Lucky Cement Limited (LUCK) held its corporate briefing session today to discuss the financial results for 9MFY23 and to highlight its future roadmap.

Key Highlights

● To recall, LUCK has announced the financial result for 3QFY23, wherein the company posted an unconsolidated PAT of PKR4.0bn (EPS: PKR12.78/sh), up 22% QoQ, but down 28% YoY. This took the 9MFY23 profitability to PKR 11bn (EPS: PKR35.53/sh). On a consolidated basis, LUCK has reported very strong net profits of PKR30.2bn (EPS: PKR67.11/sh) in 3QFY23, depicting an increase of 2.8x YoY.

● The increase in profitability is due to a one-off revaluation gain booked by LCI on remaining stake of NutriCo Morinaga of around PKR17bn along with strong growth witnessed from the chemical business and international cement operations.

● In response to sales volumes, the company informed that local sales stood at 4.6mn tons, down by 17%YoY that resulted into a decline in the company’s market share to 15% from 15.2% in 9MFY23. Similarly, on the export front, sales clocked in at 0.9mn tons, down by 44.5%YoY in 9MFY23. The market share in export contracted to 25.5% from 33.6% in the said period.

● Utilization levels of Cement in Pezu and Karachi stood at 41% and 65%. Whereas, utilization for clinker at Pezu and Karachi accounted at 29% and 66%, respectively.

● Post installation of 34MW solar plant at Pezu, Lucky’s current power mix stands at 274MW with 68/20/12% of Thermal/WHR/Solar. Moreover, Once the Pezu expansion come online, Thermal will be 67% (185 MW), WHR 20% (55 MW), and Solar 13% (35 MW).

● After expansion in South with 25MW Solar plant, the power mix will be Thermal 62% (185 MW), Solar 20% (59 MW), and WHR 18% (55 MW).

● Regarding coal mix, North market uses majority of local and Afghan coal whereas South market uses mix of imported and local coal. The company also eyes to increase the proportion of local coal to 80% subject to better availability.

● The weighted average coal cost for both plants is around Rs38-45K/ton.

● As per management, Lucky Motor’s profitability was majorly impacted by continuous volatility in auto sector as the company is operating at 50% utilization amid non-availability of CKD kits. Similarly, mobile manufacturing segment is also facing LC’s issues due to restrictions imposed by SBP, which led into significantly decline in revenue.

● On foreign business portfolio, both businesses are running profitability. Conversion of fuel to gas for kiln operations in Iraq will help the company in optimizing cost and increase the profitability of foreign cement operations.

● Lucky Electric (LEPCL) currently has one of the lowest electricity fuel cost at PKR13.24/KWh.

Future Outlook

● Going-forward, the management is of view that the cement demand will remain under pressure on the back of skyrocketing input cost coupled with economic slow-down. Moreover, LUCK has completed of buy-back of 10Mn shares and further announced a second buy-back of up to 23.8Mn shares starting from June 02, 2023 to Nov’23. This will increase the value per share thus benefited to shareholders.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

Analyst certification:

The research analyst for this report certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and 2.no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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