Karachi: DGKC and KAPCO for 1QFY12
DGKC; Recovery in price and volume may lead to 5x earnings growth
According to Arif Habib Limited, D.G. Khan Cement Company Limited (DGKC) is scheduled to announce its 1QFY12 result on October 22, 2011. Arif Habib expects the company to post profit after tax (PAT) of PKR 122mn (EPS: PKR 0.33) in 1QFY12, a massive 5x YoY growth, when compared with PAT of PKR 22mn (EPS: PKR 0.06) in the corresponding quarter last year.
This is mainly on account of an expected 10% YoY improvement in the volumetric sales coupled with 30% YoY increase in the average retention prices. The profitability of the company suffered from a 27% YoY decline in the volumes due to the floods last year. DGKC is expected to book dividend of PKR 3/share from MCB Bank, which is expected to improve other income by 4% YoY.
|Cost of Sales||3,959||2,849||39%|
|Profit after tax||122||22||450%|
|Source: Company financials and AHL estimates|
KAPCO is expected to earn PKR 1.70/share in 1QFY12
Kot Addu Power Company Limited (KAPCO) is scheduled to announce its 1QFY12 financial results on October 24, 2011. Arif Habib expects KAPCO to earn profit after tax (PAT) of PKR 1,498mn (EPS: PKR 1.70) compared to PKR 2,037mn (EPS: PKR 2.31) in the corresponding period last year, projecting a 26% YoY decline.
This is likely to be on account of higher maintenance cost. Higher other income earned through penal interest charge on receivables from WAPDA, will support the bottom line of the company. The company is expected to have maintained an average complex availability of over 81% while load factor for the period is expected to have averaged at 47% during 1QFY12.
Arif Habib Limited’s Dividend Discount Model (DDM) based target price for Jun 2012 works out to be PKR 58.7/share, which offers an upside potential of 35% from its last closing price of PKR 43.6/share. Besides upside, the scrip offers FY12E dividend yield of 16.2%.
|Financial Highlights (PKR mn)||1QFY12||1QFY11||YoY|
|General and Admin Expenses||154||140||10%|
|Source: AHL Research|