IN FOCUS Pioneer Cement Limited (PIOC): Blend of volume and margin growth to propel earnings in FY16 We initiate our coverage on Pioneer Cement Limited (PIOC) with a target price of PKR77/sh. We expect the company to post earnings of PKR7.1/sh, PKR7.9/sh and PKR9.1/sh in FY15, FY16 and FY17, respectively. Our investment case for the company is based on 1) deleveraging of balance sheet, 2) one of the lowest capacity utilization levels in the industry, 3) strong cash generation and healthy payout and 4) valuable cost savings from cost efficiency initiatives (WHR). At our target price the scrip offers a total return of 8% (comprising of 3% potential upside and 5% dividend yield)- ‘ACCUMULATE’. We have not yet incorporated the impact of power cost savings from waste heat recovery (WHR) plant in our estimates thus a potential savings of PKR1.3/sh will remain key upside trigger to our valuations. Report by: Sajjad Hussain BMA Capital Management Ltd. (9221) 111 262 111 This report produced by BMA Capital Management Ltd. contains information from sources believed reliable; we do not guarantee that the matter is accurate or complete. Our Research Analysts compile this memorandum based on opinions and judgments, which may vary and be revised at any time without notice. This report is for information only and is not an offer to buy or sell, or solicitation of any offer to buy or sell the securities mentioned. It is published for the use of our clients may not be reproduced, distributed or published by any person for any purpose whatsoever. Action will be taken for unauthorized reproduction, distribution or publication. The views expressed in this document are those of the BMA Research Department and do not necessarily reflect those of BMA or its directors.
Posted on: Mon, 01 Dec 2014 05:57:51 +0000
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