Karachi October 27, 2021: Cherat Cement Company Limited hit upper circuit breaker of PKR145.26 in today session after company announce profit of PKR1.2 billion of profit. Cherat Cement Ltd. (CHCC) announced its 1QFY22 results today where in the Company reported profitability of PKR1,193mn (EPS: PKR6.14) as compared to profit of PKR309mn (EPS: PKR1.59) in 1QFY21 and profit of PKR983mn (EPS: PKR5.06) in 4QFY21 says Deepa Jeswani research analyst at Darson Securities.
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Significant improvement on YoY basis in earning is due to increase in local cement retention price, substantially improve other income and declined in Finance cost. Despite minor decline in local offtake (down 2% YoY) company’s net sales increased by (37%/6%YoY/QoQ) to post PKR7,161mn, in line with our estimated sales. This improvement is driven by better cement retention prices (up 43/6% YoY/QoQ) amid low discounts.
Despite heightened international coal prices, CHCC margins showed a remarkable improvement and margin clocked in at 29% in 1QFY22 vs (21/28% YoY/QoQ) this is much higher than our projected margins. This significant improvement is owing to reduction in fuel cost (used mix of 25% local coal, 30% of Afghan coal and remaining used south African coal) . Company also piled up low cost imported coal inventory.
Other operating expense also rose by 4.39x YoY due to higher provision in WWF & WPPF given better profitability of the company.
CHCC other income surged by (18.5x/2.92x YoY/QoQ) as it clocked in at PKR156mn in 1QFY22 (we await further details on the reasons for improvement). The finance cost declined by (43%/6% YoY/QoQ) due to reduction in debt amid low interest rate regime.
