This report studies LUCKY CEMENT as a target against other companies studied as a basis for comparable analysis in the industry. Lucky Cement is the largest cement manufacturer in Pakistan and its upcoming expansion in Karachi will take its capacity from 6.5mntpa to 9mntpa, further cementing its spot as the market leader.
Lucky Cement Limited was incorporated in Pakistan on September 18, 1993 under the Companies Ordinance, 1984 (the Ordinance). The shares of the company are quoted on all the three stock exchanges in Pakistan. The Company has also issued GDRs which are listed and traded on the Professional Securities Market of the London Stock Exchange. BUSINESS PROFILE
SECTOR: Cement Industry
PRODUCTS AND SERVICES:
Lucky Cement aims at producing cement to suit every user. The following types of cement are available:
ORDINARY PORTLAND CEMENT (OPC)
Ordinary Portland cement is available in darker shade as well as in light shades in Lucky Star with different brand names to suit the requirement of users.
SULPHATE RESISTANT CEMENT (SRC)
Sulphate resistant Cement’s best quality is to provide effective and long lasting strength against sulphate attacks and is very suitable for constructions near sea shores as well as for canals linings. It provides very effective protection against alkali attacks. The company currently produces five brands:
* Lucky Cement
* Lucky Star
* Lucky Gold
* Lucky sulphate resistant cement(SRC)
CUSTOMERS AND END MARKETS
Lucky Cement aims at producing cement to suit every user. At present, it is producing Grey Portland Cement and also Sulphate Resistant cement. The customers are able to get Portland cement both in dark shade as well as in light shade with different brand names to suit the requirement of user. The Portland cement specifically made for prefabrication industry with a lower setting time is also available. In addition, the plant also produce Slag cement for specific users. DISTRIBUTION CHANNELS
Dealers, retailers and block makers are the integral part of Lucky Cement's sales strategy. This strong network of more than 200 dealers, located at strategic locations throughout the country, has enabled the company to create an impressive distribution system and access to markets at even the remote parts of the country.
| | 30-Jun| 30-Jun| 30-Jun| 30-Jun|
| | 2008| 2009| 2010| 2011|
| | Restated| PKR| Reclassified| PKR|
Gross Profit Margin| 25.69%| 37.26%| 32.55%| 33.48%|
EBITDA Margin| 23.91%| 31.77%| 23.07%| 25.87%|
EBIT Margin| 18.14%| 27.41%| 17.31%| 19.83%|
Net Income Margin| 15.79%| 17.45%| 12.08%| 15.26%|
Return on Invested Capital| 9.06%| 19.32%| 11.17%| 12.63%| Return On Equity| 14.35%| 19.77%| 12.50%| 14.29%|
Return On Assets| 7.82%| 11.97%| 8.18%| 9.63%|
Leverage Ratio| 3.84%| 1.82%| 2.33%| 1.99%|
Debt to total capitalization| 45.51%| 39.43%| 34.49%| 32.60%|
The profitability of the company is quite decent, and shows an upward trend, which can be seen by the financial ratios of the firm. There was a slight dip in the year 2010, but then increased considerably in year 2011. This was mainly due to the decrease in the cost of production for Lucky Cement (decrease in the cost of raw materials). The prospects of the company are bright, which are demonstrated by high net income margin and return on invested capital ratios.
Lucky Cement is growing at a brisk pace, as the overall cement industry is facing a desirable scenario, which is also demonstrated by high return on equity and return on assets ratio. The company is also paying its creditors back shown by the decrease in leverage and debt to total capitalization ratios, which is a positive sign for the firm, and shows that it is growing at a considerable rate.
RETURN ON INVESTMENT
The return on investment of Lucky Cement...