The gross margin estimates have been reduced for fiscal year 2013-14 (34%). PHOTO: FILE
Lafarge Pakistan Cement has posted a profit after tax of Rs1.8 billion for the calendar year 2013 (CY13), up 21% against a profit of Rs1.48 billion in 2012.
The company has announced a cash dividend of Rs0.30 per share. Earnings per share (EPS) improved to Rs1.37 in 2013 against EPS of Rs1.13 in the previous year.
The strong bottom-line growth was due to the lower financial charges that reduced by 37% year-on-year (YoY) and a tax reversal. Lafarge’s pre-tax earnings grew by only 4% on a YoY basis, while the gross margin went down 2 percentage points, from 33% in 2012 to 31% in 2013, JS Research reported on Monday.
However, following the announcement of the annual results of Lafarge, the brokerage house cut down its gross margin assumption for the future.
“In the post result scenario, we have trimmed our gross margin assumption for future years as well, cutting our earnings estimates for Lafarge,” the report said.
The gross margin estimates have been reduced for fiscal year 2013-14 (34%), 2014-15 (39%) and 2015-16 (33%). Consequently, the Discounted Cash Flow based target price for Lafarge has also been reduced to Rs8.8 from Rs9, the report added.
Despite this, the brokerage house maintained the ‘hold’ call on the stock because of rumours of a possible merger and acquisition that is likely to keep the stock trading at a premium to cash-flow based valuation.
Lafarge’s stock is trading below its replacement cost (at an EV/ton of $92) at Karachi Stock Exchange (KSE) which may be tempting for potential buyers and lead to the unlocking of value for the existing shareholders, it said.
Published in The Express Tribune, April 1st, 2014.
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