We upgrade Lucky Cement to Buy (PO: PRs151) and DGKC to Neutral (PO: PRs48) on the back of improved FY13E EPS outlook and attractive valuations.
We revise our FY13E earnings estimates for Lucky by 12% and DGKC by 24% on the back of 1) stable pricing outlook with increase in South prices, and 2) 14% cut in coal price forecast.
BofAML global metals & mining team has cut coal price forecast by 14%/8% for FY13/FY14E due to expectation of increased over-supply of coal.
We foresee building up of near term rally in cement stocks led by 1) strong FY12 results announcement, 2) higher payouts and 3) strong FY13E earnings outlook.
Our cement universe is on average trading at 31% discount to the market multiples which we believe is not justified given ~40% earnings growth expected in FY13.
Lucky is our top in the sector, offering 21% upside to our new PO.
No comments:
Post a Comment