Kohat has been a mid-tier cement producer with a capacity of 2.6 million tons contributing to six percent of the industry capacity and operating at 69 percent, but its standing in the sector is a strong upward trajectory.

In its PSX notice yesterday, the company announced a jump in revenues by 12 percent in FY16, clocking at Rs14 billion (FY15: -2%) while earning an after tax of Rs4.4 billion, which was a 33 percent year on year growth (FY15: 5%). The company also gave a final cash dividend of Rs1 per share (10%) and an interim cash dividend of Rs5 per share (50%).

The company’s cost of sales fell by two percent and total dispatches grew by 13 percent (FY15: -3%) selling 2 million tons of cement in FY16. This growth is largely contributed by an 18 percent growth in local dispatches. This low cost, high sales scenario has nudged up the company’s margins to a whopping 46 percent in FY16 (Lucky: 49%, Attock 40%, DG khan: 43% Cherat: 37%). Margins stood at 39 percent in FY15.

Low costs are contributed to its FO - based power plant and a 15 MW of WHR, which started producing electricity in April 2016. The company is also in the process of installing a new cement mill with a capacity of 105 tons per hour that will start operating end of 2017. This will boost efficiency to its production chain.

The company also increased its capacity utilization to 78 percent in FY16, and announced that it is exploring opportunities for adding a new line either greenfield or brownfield with a capacity of 2.3 million tons. The added capacity will take up its share in the industry to 8-9 percent.

The company that was incurring losses in FY10 now has one of the highest margins in the industry and the expansions plans have come at the perfect time. This is the company to watch out!

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Kohat Cement (KOHC) Year End FY16


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Rs (mn)                         FY16       FY15     YoY


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Sales                       14,019.8   12,472.2     12%


Cost of Sales                7,523.3    7,657.3     -2%


Gross Profit                 6,496.6    4,814.9     35%


Distribution cost              154.6       94.2     64%


Administrative cost            133.1      113.7     17%


Other operating expenses       436.0      337.9     29%


Finance cost                    78.1       93.7    -17%


Other income                   479.3      462.0      4%


Profit before taxation       6,174.1    4,637.4     33%


Taxation                     1,766.0    1,315.2     34%


Net profit for the period    4,408.1    3,322.3     33%


Earnings per share (Rs)         28.5       21.5     33%


GP margin                        46%        39%


NP margin                        31%        27%


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