Over the last few years Lucky Cement Ltd showed solid growth in fundamentals
09 Sep 2014 • About Lucky Cement Ltd (
$LKCS) • By InTwits
Have you thought about Lucky Cement Ltd as a growth stock? Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Lucky Cement Ltd showed growth in the last financial year. The company's revenue surged on 44.8% in FY2014. Together with revenue growth Lucky Cement Ltd also managed to keep EBITDA growth. EBITDA grew 31.5% for the same period.
In the last 3 years Lucky Cement Ltd showed fast revenue growth of 46.1% from FY2011 to FY2014 annually. EBITDA surged on 44.9% from FY2011 to FY2014 annually.
Lucky Cement Ltd ($LKCS) financials for the last 5 years
| mln. PKR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 24,509 | 26,018 | 33,323 | 56,050 | 81,148 |
|---|
| Revenue growth, % | | 6.2% | 28.1% | 68.2% | 44.8% |
|---|
| Gross margin, % | 32.6% | 33.5% | 38.2% | 33.1% | 28.5% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 5,501 | 6,498 | 10,481 | 15,043 | 19,788 |
|---|
| EBITDA growth, % | | 18.1% | 61.3% | 43.5% | 31.5% |
|---|
| EBITDA margin, % | 22.4% | 25.0% | 31.5% | 26.8% | 24.4% |
|---|
| Net Income | 3,137 | 3,970 | 6,782 | 9,808 | 11,892 |
|---|
| Net Income margin, % | 12.8% | 15.3% | 20.4% | 17.5% | 14.7% |
|---|
| |
| CAPEX | 2,321 | 1,905 | 1,051 | 2,893 | 5,603 |
|---|
| CAPEX/Revenue, % | 9.47% | 7.32% | 3.16% | 5.16% | 6.90% |
|---|
| Debt | 8,101 | 7,226 | 658 | 10,711 | 11,584 |
|---|
| Cash | 287 | 287 | 436 | 1,439 | 3,744 |
|---|
| Net Debt/EBITDA | 1.4x | 1.1x | 0.0x | 0.6x | 0.4x |
|---|
| |
| ROIC, % | 11.2% | 13.5% | 23.8% | 22.9% | 20.3% |
|---|
| ROE, % | 13.0% | 15.0% | 22.2% | 26.4% | 26.0% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the longer period the company's EBITDA margin decreased slightly on 0.600 pp from 25% in FY2011 to 24.4% in FY2014.
We call Lucky Cement Ltd an attractive growth stock as together with the growth it delivers high ROIC at 20.3%. Three years ago it was lower at 13.5%. Average ROIC for the last three years was 22.3%.
The company's Net Income margin dropped on 2.80 pp from 17.5% to 14.7% in FY2014. In the last 3 years Net Income margin decreased slightly on 0.600 pp from 15.3% in FY2011 to 14.7% in FY2014.
Lucky Cement Ltd operates at ROE of 26.0%. Average ROE for the last three years was 24.9%.
Capital expenditures (CAPEX)
To fuel this fast growth the company had to invest in CAPEX.In FY2014 Lucky Cement Ltd had CAPEX/Revenue of 6.90%. CAPEX/Revenue decreased on 0.418 pp from 7.32% in FY2011 to 6.90% in FY2014. It's average level of CAPEX/Revenue for the last three years was 5.07%.
Leverage (Debt)
Having such a fast growth profile the company keeps low debt level at 0.4x Net Debt/EBITDA. In the last 3 years Lucky Cement Ltd showed big decline in leverage of 0.67x from 1.07x in FY2011 to 0.40x in FY2014.
Valuation vs. comparable companies
At the end of trading day today Lucky Cement Ltd traded at 0.4x EV/EBITDA which is 97.5% lower than 16.0x Construction & Materials peer group avearge calculated on the basis of 43 companies. At the end of trading day today Lucky Cement Ltd traded at 0.0x P/E which is 100% lower than 14.3x Construction & Materials peer group avearge calculated on the basis of 7 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 0.6x EV/(EBITDA-CAPEX) for Lucky Cement Ltd which is 92.9% lower than 7.8x Construction & Materials peer group avearge calculated on the basis of 7 companies.
Peers in Construction & Materials
Below we provide Lucky Cement Ltd benchmarking against other companies in Construction & Materials industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Accsys Technologies ($AXS) | | -18.1% | 9.5% | 25.5% | 78.0% |
| Heath(Samuel)& Sons ($HSM) | | 3.2% | -0.5% | 3.1% | 8.9% |
| Crh ($CRH) | | | | -0.3% | 4.9% |
| James Halstead ($JHD) | | | | -4.1% | 3.0% |
| Low & Bonar ($BD46) | | | | 5.9% | 1.9% |
| |
|---|
| Median (7 companies) | | 3.2% | 3.6% | 3.1% | 3.0% |
|---|
| Lucky Cement Ltd ($LKCS) | | 6.2% | 28.1% | 68.2% | 44.8% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Heath(Samuel)& Sons ($HSM) | 47.9% | 49.2% | 49.5% | 47.3% | 48.6% |
| James Halstead ($JHD) | | | 41.2% | 41.6% | 41.0% |
| Alumasc Group ($ALU) | 33.8% | 26.6% | 23.6% | 26.3% | 31.6% |
| Crh ($CRH) | | | 27.2% | 27.1% | 29.0% |
| Low & Bonar ($BD46) | | | | 26.0% | 25.8% |
| |
|---|
| Median (7 companies) | 33.8% | 26.6% | 25.4% | 26.3% | 29.0% |
|---|
| Lucky Cement Ltd ($LKCS) | 32.6% | 33.5% | 38.2% | 33.1% | 28.5% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| James Halstead ($JHD) | | | 20.2% | 19.8% | 20.1% |
| Low & Bonar ($BD46) | | | 8.0% | 10.4% | 10.4% |
| Heath(Samuel)& Sons ($HSM) | 10.3% | 9.2% | 9.6% | 7.3% | 10.1% |
| Alumasc Group ($ALU) | 9.9% | 7.9% | 5.3% | 8.1% | 9.8% |
| Crh ($CRH) | | | 8.5% | 4.6% | 8.4% |
| |
|---|
| Median (7 companies) | 9.9% | 7.9% | 8.0% | 7.3% | 9.8% |
|---|
| Lucky Cement Ltd ($LKCS) | 22.4% | 25.0% | 31.5% | 26.8% | 24.4% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Low & Bonar ($BD46) | | | 3.5% | 2.8% | 4.6% |
| Crh ($CRH) | | | 3.0% | 2.8% | 2.3% |
| Heath(Samuel)& Sons ($HSM) | 1.0% | 3.2% | 2.4% | 2.7% | 2.0% |
| Accsys Technologies ($AXS) | 12.1% | 7.8% | 7.1% | 1.6% | 1.7% |
| Alumasc Group ($ALU) | 0.8% | 0.9% | 1.7% | 1.3% | 1.5% |
| |
|---|
| Median (7 companies) | 1.0% | 3.2% | 2.4% | 1.7% | 1.7% |
|---|
| Lucky Cement Ltd ($LKCS) | 9.5% | 7.3% | 3.2% | 5.2% | 6.9% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| James Halstead ($JHD) | | | 49.3% | 46.2% | 46.7% |
| Alumasc Group ($ALU) | 13.8% | 12.6% | 6.5% | 17.5% | 22.6% |
| Heath(Samuel)& Sons ($HSM) | 7.0% | 8.1% | 9.7% | 8.7% | 19.7% |
| Low & Bonar ($BD46) | | | 4.0% | 7.5% | 7.4% |
| Crh ($CRH) | | | 4.8% | 0.6% | 5.4% |
| |
|---|
| Median (7 companies) | 7.0% | 8.1% | 4.8% | 7.5% | 7.4% |
|---|
| Lucky Cement Ltd ($LKCS) | 11.2% | 13.5% | 23.8% | 22.9% | 20.3% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Low & Bonar ($BD46) | | | 2.7x | 2.1x | 2.1x |
| Crh ($CRH) | | | 2.0x | 3.6x | 1.6x |
| Alumasc Group ($ALU) | 1.1x | 1.3x | 2.3x | 0.8x | 0.9x |
| James Halstead ($JHD) | | | -0.8x | -0.8x | -0.9x |
| Heath(Samuel)& Sons ($HSM) | -1.1x | -0.6x | -0.5x | -0.3x | -1.8x |
| |
|---|
| Median (5 companies) | -0.0x | 0.3x | 1.9x | 0.8x | 0.9x |
|---|
| Lucky Cement Ltd ($LKCS) | 1.4x | 1.1x | 0.0x | 0.6x | 0.4x |
