Lucky Cement (LUCK), my most favourite company in cement sector has posted it's result for 1H 2011. The company made an after tax profit (PAT) of PKR 1461 million and an EPS of PKR 4.52 as compared to last year EPS of 5.90 for the same period which means earnings have declined by 23%, however, this decline was already expected in market as we all know dispatches have been affected very badly because of floods. Situation at the export front is not that worrisome right now. Prices of cement are not showing any declining trend which is also a good thing for cement sector. Rising coal prices are a major threat to cement sector and one needs to keep a close eye on it.
The company is expected to post an EPS of PKR 11 and dividend of PKR 5 for full year 2011. With the current price of PKR 70, company is trading at an attractive P/E of 6.4 and dividend yield of 7% is also not that bad. The target price of Lucky Cement is quoted at around PKR 85 which means capital gain of 21% is possible. Total expected return amounts to 7%+21%= 28%. I regard it as a least risky and the most attractive scrip in cement sector right now.
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