Fecto Cement Limited earnings meet expectations – Elixir Research
By: Syed Nasir Rizvi and Sohaib Bin Shahid,
(+92-21) 3569 4679
Elixir Securities Pakistan (Pvt.) Ltd
Fecto Cement Limited (FECTC) announced its 1QFY14 financial results on 30th October 2013. The company posted EPS of PKR3.05, up 4% YoY and 1.0x QoQ, in line with our expectations.
Margins remained buoyant
While most other manufacturers posted increased costs of production, FECTC managed to contain costs and posted margin expansion during 1QFY14. COGS and retention clocked in at PKR239/bag and PKR337/bag during 1QFY14 against FY13 average of PKR235/bag and PKR323/bag. Thus, EBITDA margin for the quarter clocked in at PKR78/bag, up 11% as compared to FY13 average of PKR70/bag.
Deleveraging to continue; dividend estimates revised down
Fecto Cement Limited has followed deleveraging strategy since FY11. We expect deleveraging to continue further in FY14 and have thus revised down our dividend estimates for the year to PKR3/sh.
Our Jun-14 price target of PKR40/sh offers an upside of 6% along with a dividend yield of 8%. We maintain our HOLD stance on the stock.