COMPANIES PROFILE

DG KHAN CEMENT

D.G. Khan Cement Company Limited, (DGKCC) is amongst largest the cement manufacturers of Pakistan with
a production capacity of 22,400 tons per day (6.72 million tons/annum). DGKCC has four cement plants, two
plants located at Dera Ghazi Khan, one at Khairpur Distt. Chakwal and one at Hub Lasbela District
(Balochistan). All the plants are based on latest Dry Process Technology.

The Company operates through a countrywide distribution network managed by different Regional
Sales offices. The Company's products are preferred on projects of national repute both locally and
internationally due to the un-paralleled and consistent quality. The Company is listed on Pakistan
Stock Exchanges.

Pakistan has an attractive market of cement industry. In 2015, it was reported local demand for cement increase
by 12% in one year and so the DG Khan cement decided to increase their capacity. Pakistani cement demands
are increasing with time due to active construction industry. In 2015, it was reported that local demand increased
drastically due to Pakistan-China Economic Corridor. With this hike in demand DG Khan setup their third and
one of the largest plant of Pakistan in Hub, Balochistan which is on the edge of Pakistani metropolis Karachi.
Cement manufacturing plant usually takes two to three years to complete. So, it is expected that this plant's
construction will complete in 2018 making DG Khan cement largest cement manufacture of Pakistan.

LUCKY CEMENT

ucky Cement is one of the largest producers and leading exporters of quality cement in Pakistan and is listed on
the Pakistan Stock Exchange (PSX). The company has also issued Global Depository Receipts (GDRs), listed
and traded on the Professional Securities Market of the London Stock Exchange.

Over the years, the Company has grown substantially and is expanding its business operations with production
facilities at strategic locations in Karachi to cater to the Southern regions and Pezu, Khyber Pakhtunkhwa to
furnish the Northern areas of the country. Lucky Cement is Pakistan’s first company to export sizeable quantities
of loose cement being the only cement manufacturer to have its own loading and storage terminal at Karachi
Port.

Lucky Cement strives to remain an efficient and low cost producer and is one of the pioneers to introduce and
install Waste Heat Recovery and Refuse Derived Fuel (RDF) and Tyre Derived Fuel (TDF) Plants in Pakistan. It
also has self-sufficient Captive power generation facility of 180 MW and supplies additionally generated
electricity to support the National grid. Lucky Cement owns a fleet of Bulkers & Trailers, which gives added
advantage in terms of logistics and efficient deliveries to all types of customers spread across the length and
breadth of the country.

Sales of DG Khan Cement

Forecasting Considerations:
Forecasting for the future should involve a careful examination of the reasons behind the negative growth in
2020.

Identifying and addressing the root causes of the decline will be crucial for making accurate predictions and
implementing strategies for future growth.
we can observe the sales trends and attempt to forecast future sales, though it's important to note that forecasting
based solely on historical sales data is inherently uncertain and should be considered as one of many inputs in a
comprehensive analysis.

Historical Sales Analysis:

1. 2019 to 2020: There was a decline in sales of -4.66%. This drop could be attributed to various factors,
including market conditions, company-specific issues, or external events such as economic downturns.

2. 2020 to 2021: Sales increased significantly by 17.99%. This recovery indicates a strong rebound,
which could be due to improved market conditions, strategic initiatives by the company, or a recovery
from the previous year's downturn.

3. 2021 to 2022: The company experienced another substantial increase in sales, growing by 25.63%.
This continued growth suggests sustained positive momentum.

4. 2022 to 2023: Sales continued to grow at 14.34%. While this growth rate is lower than the previous
year, it still indicates a positive trend.

Sales Forecasting:

For forecasting, one common approach is to use a Compound Annual Growth Rate (CAGR). The CAGR
smooths out the annual growth over a period and can be a useful metric for forecasting. However, this method
assumes that sales will continue to grow at a consistent rate, which might not be the case due to market
volatility, economic conditions, and other variables.

To calculate the CAGR over the 2019-2023 period:

CAGR=(Final ValueInitial Value)1Number of Years−1CAGR=(Initial ValueFinal Value)Number of Years1−1

CAGR=(70,49543,627)14−1CAGR=(43,62770,495)41−1

CAGR≈0.1271 or 12.71%CAGR≈0.1271 or 12.71%

Using this CAGR, we can forecast sales for the next year (2024):

Forecast for 2024=2023 Sales×(1+CAGR)Forecast for 2024=2023 Sales×(1+CAGR)

Forecast for 2024=70,495×(1+0.1271)Forecast for 2024=70,495×(1+0.1271)

Forecast for 2024≈79,477 million PKRForecast for 2024≈79,477 million PKR

Overall Analysis:

1. The company has shown a strong recovery and growth trend post-2019, which is a positive indicator.

2. The decreasing growth rate from 2022 to 2023 might suggest a normalization of growth after a period
of rapid expansion.

3. External factors (economic conditions, industry trends, competition, operational changes, etc.) can
significantly impact future sales, and these should be considered alongside the forecast.

4. It's important to note that sales forecasts are inherently uncertain and should be used in conjunction
with other analyses and market insights.
Sales of Lucky Cement

Forecasting Considerations:
Forecasting for the future should involve a careful examination of the reasons behind the negative growth in
2020.

Identifying the root causes and addressing them will be crucial for making accurate predictions and
implementing strategies for future growth.

Historical Sales Analysis:

1. 2019 to 2020: Sales increased from 108,296 million to 123,768 million, a growth of 14.29%. This
shows a solid growth rate, suggesting positive business performance or favorable market conditions.

2. 2020 to 2021: A significant increase in sales growth to 67.38%, with sales rising to 207,159 million.
This large jump could be due to a variety of factors, including market expansion, successful business
strategies, or recovery from specific challenges faced in the previous year.

3. 2021 to 2022: Sales continued to increase substantially, growing by 57.08%, reaching 325,400 million.
This sustained high growth rate indicates continued positive momentum.

4. 2022 to 2023: Sales grew by 18.35%, reaching 385,125 million. While this growth rate is lower than
the previous two years, it still signifies healthy growth.

Sales Forecasting:

Forecasting using the Compound Annual Growth Rate (CAGR) can provide an estimate for future sales. CAGR
offers a smoothed average growth rate, assuming consistent growth.

CAGR=(Final ValueInitial Value)1Number of Years−1CAGR=(Initial ValueFinal Value)Number of Years1−1

CAGR=(385,125108,296)14−1CAGR=(108,296385,125)41−1

CAGR≈0.3792 or 37.92%CAGR≈0.3792 or 37.92%

Using this CAGR, we can forecast sales for 2024:

Forecast for 2024=2023 Sales×(1+CAGR)Forecast for 2024=2023 Sales×(1+CAGR)

Forecast for 2024=385,125×(1+0.3792)Forecast for 2024=385,125×(1+0.3792)

Forecast for 2024≈532,474 million PKRForecast for 2024≈532,474 million PKR

Overall Analysis:

1. The company has demonstrated remarkable growth, especially in 2021 and 2022.

2. The declining growth rate in 2023 might indicate a normalization after a period of rapid expansion.

3. The forecast should be used with caution. Real-world factors such as market saturation, economic
changes, competitive dynamics, and operational challenges can significantly affect future performance.

4. A comprehensive analysis should include other financial metrics, market analysis, and company-
specific strategies and operations.

Capital Structure of DG Khan Cement

The data includes the proportion of total borrowings to shareholders' equity, interest or markup payable in days,
and the entity's average borrowing rate.

Analysis of Capital Structure Ratios:

1. Total Borrowings to Shareholders' Equity Ratio:

1. This ratio gives an indication of the leverage of the company. A higher percentage suggests
more reliance on debt compared to equity.

1. Over the years, this ratio has fluctuated: 41.6% (2020), 37.9% (2021), 40.3% (2022), and
39.6% (2023).

1. The relatively stable range (around 37.9% to 41.6%) suggests a consistent capital structure
with a moderate to slightly high reliance on debt.

2. Interest or Markup Payable (Days):

 1. This metric indicates the average number of days it takes for the company to pay its interest
expenses.

1. There's an increasing trend from 56.2 days (2020) to 90.9 days (2022), followed by a decrease
to 78.3 days in 2023.

1. The increase in days suggests that the company was taking longer to pay its interest expenses,
possibly indicating tighter cash flows or a strategic decision to delay these payments.

3. Entity Average Borrowing Rate:

1. This is the average interest rate the company pays on its borrowed funds.

1. There is significant variation over the years: from 10.8% (2020) to a low of 6.2% (2021), then
increasing again to 13.3% (2023).

1. The fluctuation in borrowing rates could be influenced by changes in market interest rates, the
company’s creditworthiness, or changes in the mix of debt instruments.

Overall Capital Structure Analysis:

1. Moderate Leverage: The company maintains a moderate level of leverage, balancing between debt
and equity. This can be beneficial as it allows the company to utilize debt financing without overly
burdening itself with debt obligations.

2. Interest Payment Capacity: The increasing days for interest or markup payable may raise concerns
about the company's liquidity or cash flow management. However, the decrease in 2023 could indicate
an improvement in this aspect.

3. Varying Borrowing Costs: The fluctuating borrowing rates reflect changing market conditions and
possibly the company's changing credit profile. The high borrowing rate in 2023 could increase
financial costs and impact profitability.

4. Risk Consideration: The company's capital structure and borrowing costs should be considered in the
context of overall business risk, industry conditions, and economic factors.

5. Sustainability: A key consideration is the sustainability of the current capital structure, especially in
light of the varying interest rates and the company's ability to manage its debt obligations effectively.

In summary, while the company seems to have a reasonably stable capital structure with a moderate level of
debt, attention should be paid to its changing borrowing costs and the ability to manage its interest payments.
The stability of its capital structure, combined with its cost of capital, will be crucial factors in its long-term
financial health and growth prospects.
Capital Structure of Lucky Cement

Analysis:

1. Weighted Average Cost of Debt (WACD):

1. WACD measures the average rate of interest a company pays on its debt.

1. It starts from 0% in 2018 and gradually increases each year, stabilizing at 3.32% in 2021 and
2022.

1. This indicates the company started utilizing debt financing from 2019 onwards and has
maintained a relatively low cost of debt.

2. Debt to Equity Ratio:

1. This ratio indicates the proportion of debt to equity in the company's capital structure.

1. There is a clear increasing trend: from 0.00 in 2018 and 2019 to 0.13 in 2022.

1. The increase suggests that the company is gradually taking on more debt relative to its equity.
However, even at 0.13 : 1 in 2022, the debt level compared to equity is relatively low.

3. Net Assets per Share:

1. This ratio indicates the book value of equity per share.

1. It shows a steady increase from PKR 267.08 in 2018 to PKR 397.50 in 2022.

1. This growth suggests that the company’s equity value is increasing, which is a positive sign
for shareholders.

4. Interest Coverage Ratio:

1. This ratio measures how easily a company can pay interest on its outstanding debt with its
earnings before interest and taxes (EBIT).

1. The ratio is exceptionally high in 2019 (403.16), then drops significantly in 2020 (6.74) but
recovers and grows in 2021 (38.57) and 2022 (41.25).

1. High values in 2019 and subsequent years indicate the company generates sufficient earnings
to cover its interest expenses comfortably.
Overall Financial Health Analysis:

1. Low but Increasing Leverage: The company has started to use more debt in its capital structure from
2019 onwards, but the level of debt remains relatively low compared to equity.

2. Low Cost of Debt: The WACD remains low even as the company takes on more debt, indicating
efficient debt management and potentially favorable borrowing conditions.

3. Strong Equity Position: The steady increase in net assets per share indicates a robust equity position,
which is a positive sign for investor confidence.

4. Solid Interest Coverage: The company's ability to cover its interest expenses with earnings is strong,
especially notable in the later years, indicating good financial health and less risk for creditors.

5. Overall Stability: The combination of a low and stable cost of debt, low leverage, increasing equity
value, and strong interest coverage suggests that the company is in a healthy financial position,
managing its capital structure effectively to support growth and stability.

Share Price-DG KHAN CEMENT

(Fiscal Year 2013-2023)

we should consider both the financial stance of the company and external factors that might have influenced the
stock market. However, without specific financial details for each year, the analysis will be more general and
based on typical factors that affect share prices.

Share Price Analysis (2013-2023):

1. 2013-2016 (Rising Trend):

1. 2013: Starting at PKR 85.73.

1. 2016: Peaked at PKR 221.73.

1. This period shows a significant upward trend.

1. Possible Reasons: This could be due to strong financial performance, growth in revenue and
profitability, positive market sentiment, expansion activities, or favorable industry conditions.

2. 2017 (Sharp Decline):

1. 2017: Dropped to PKR 133.72.

1. Possible Reasons: The sharp decline might be due to a correction after a period of rapid
growth, disappointing financial results, negative market news, or broader market downturns.
3. 2018-2019 (Continued Decline):

1. 2018: Further declined to PKR 80.15.

1. 2019: Slightly decreased to PKR 74.27.

1. Possible Reasons: Ongoing financial challenges, increased competition, rising operational

costs, negative industry trends, or economic downturns could contribute to this decline.

4. 2020 (Recovery):

1. 2020: Increased to PKR 114.58.

1. Possible Reasons: Recovery might be driven by improved financial performance, strategic

initiatives, market recovery, or positive industry-specific developments.

5. 2021 (Decline):

1. 2021: Fell to PKR 82.94.

1. Possible Reasons: This decline could be due to financial setbacks, market volatility, or
negative events affecting investor confidence.

6. 2023 (Further Decline):

1. 2023: Decreased to PKR 51.64.

1. Possible Reasons: Persistent challenges, such as financial underperformance, adverse market

conditions, or significant negative events (like a global economic downturn or industry-
specific crises) could lead to this continued decline.

Overall Observations:

1. Volatility: The share price has experienced significant fluctuations, indicating a volatile stock which
could be sensitive to company performance, market conditions, and investor sentiment.

2. Market and Economic Factors: External factors, such as economic conditions, market trends, and
investor sentiment, play a crucial role in stock price movements.

3. Company-Specific Events: Financial performance, corporate decisions (like mergers, acquisitions, or

new projects), and changes in management or strategy can have a significant impact on the stock price.

4. Industry Trends: Developments within the industry, such as regulatory changes, technological
advancements, or shifts in supply and demand, could also influence the stock price.

Conclusion:

To conclude, the share price movements of the company from 2013 to 2023 suggest a journey through different
phases of growth, decline, and recovery, influenced by a mix of internal financial performance and external
market and economic conditions. For a more detailed analysis, reviewing the company's annual reports,
financial statements, and news events corresponding to these years would provide deeper insights into the
specific reasons behind the share price changes.

Share Price-Lucky Cement

(Fiscal Year 2013-2023)

1. The company experienced periods of growth, decline, and stabilization over the past 10 years.

2. The share prices may be influenced by various factors, including market conditions, company
performance, economic trends, and industry dynamics.

3. A detailed financial analysis, including factors such as revenue, profit margins, and economic
indicators, would provide a more comprehensive understanding of the company's financial stance.

Share Price Analysis (2013-2023):

1. 2013-2016 (Significant Growth):

1. 2013: PKR 299.87.

1. 2016: PKR 866.26.

1. This period shows robust growth.

1. Potential Reasons: Strong financial performance, positive market sentiment, company

expansion, favorable industry conditions, or strategic successes could have contributed to this
rise.

2. 2017 (Decline):

1. 2017: Decreased to PKR 517.41.

1. Potential Reasons: Could be due to market correction, financial performance below

expectations, adverse industry developments, or macroeconomic factors.

3. 2018 (Further Decline):

1. 2018: Dropped to PKR 428.40.

1. Potential Reasons: Continued challenges, competitive pressures, operational or financial

difficulties, or broader market downturns.

4. 2019 (Recovery):

1. 2019: Increased to PKR 696.09.

 1. Potential Reasons: Recovery might be due to improved financials, effective business
strategies, positive market trends, or industry-specific growth.

5. 2020 (Slight Decline):

1. 2020: Fell to PKR 679.28.

1. Potential Reasons: Could be due to short-term market fluctuations, slight underperformance,

or external factors such as economic uncertainties.

6. 2021 (Decline):

1. 2021: Decreased to PKR 446.58.

1. Potential Reasons: Financial setbacks, market volatility, negative industry trends, or

significant external events could have led to this decline.

7. 2023 (Significant Increase):

1. 2023: Rose to PKR 786.98.

1. Potential Reasons: Strong financial performance, successful business initiatives, positive

market sentiment, or favorable industry conditions.

Overall Observations:

1. Growth and Volatility: The share price experienced significant growth, followed by periods of
volatility, reflecting changes in investor sentiment, company performance, and market conditions.

2. Influence of External Factors: Economic conditions, industry trends, and overall market sentiment
can significantly influence stock prices.

3. Company-Specific Factors: Financial results, strategic decisions, management changes, and

operational efficiencies likely played critical roles in shaping investor perceptions and the stock price.

4. Industry Dynamics: Developments within the industry, such as regulatory changes, competitive
landscape, and technological advancements, would also impact the stock.

Conclusion:

The share price history from 2013 to 2023 indicates a journey through growth, volatility, and recovery,
influenced by a combination of company performance, market dynamics, and broader economic factors. For a
more detailed understanding, examining the company's financial reports, market news, and industry trends
during these periods would provide greater insights into the specific drivers behind the share price movements.

Dividend Policy and Payouts

(Lucky Cement)
Lucky Cement has resolved to conclude a three-year intermission in its dividend disbursements to shareholders
by dispensing a Rs 18 per share dividend to end its fiscal year (FY). At Rs 18 per share, this is the most
substantial dividend payment per share the company has made since FY 2018 — when the company made a
payment of Rs 13 per share.

However, cement companies are renowned for not paying large dividends to begin with. The matter is further
bewildering when viewed in conjunction with Lucky’s share buyback activity over the past few months

Analysis of Dividend Policy:

1. 2013-2018 (Consistent Growth):

1. Dividends increased steadily from PKR 8 in 2013 to PKR 13 in 2018.

1. Implication: This suggests a period of financial strength, consistent earnings, and a policy of
sharing profits with shareholders. The consistent increase reflects confidence in the company’s
financial stability and future prospects.

2. 2019 (Significant Reduction):

1. The dividend was reduced to PKR 6.5.

1. Implication: This could indicate a cautious approach due to lower profits, cash flow
challenges, or a strategic decision to retain more earnings for reinvestment. It could also
reflect external challenges like market downturns or industry-specific issues.

3. 2020-2022 (No Dividend):

1. No dividend was declared in these years.

1. Implication: This is a strong indicator of financial stress or significant strategic shifts, such as
major investments, acquisitions, or restructuring that require substantial capital. It could also
be due to external factors like economic downturns or adverse market conditions.

4. 2023 (Significant Increase):

1. Dividend increased to PKR 18, a substantial rise.

1. Implication: This indicates a possible return to financial strength, improved cash flows, and
management’s confidence in the company’s stability and profitability. It suggests that the
company has overcome the challenges faced in previous years.

Overall Observations:

1. Reflective of Company’s Financial Health: The changing dividend policy seems closely tied to the
company's financial performance and strategic decisions.

2. Investor Confidence: Consistent dividends typically build investor confidence, while fluctuating
dividends, especially reductions or suspensions, can cause concern among shareholders.
3. Strategic Reinvestment vs. Shareholder Value: The suspension of dividends from 2020 to 2022
might reflect a strategic decision to reinvest earnings into the business for long-term growth, at the cost
of short-term shareholder returns.

4. Economic and Industry Factors: External factors such as economic conditions and industry trends
could have influenced the company's earnings and, consequently, its dividend policy.

Lucky Cement's dividend policy from 2013 to 2023 has seen phases of growth, reduction, suspension, and a
significant increase, mirroring its financial journey and strategic choices during this period. The initial growth
phase suggests financial strength, the subsequent reduction and suspension indicate challenges or strategic
reinvestment, and the latest increase in 2023 signals a recovery or renewed confidence in the company’s
prospects. To understand the specific reasons behind these changes, it would be beneficial to review the
company’s financial statements, management discussions, and industry reports for the respective years.

Dividend Policy and Payouts

(DG Cement)

Analysis of Dividend Policy:

1. 2016 & 2018 (High Dividend):

1. 2016: PKR 20.

1. 2018: PKR 20.

1. These years show a high dividend payout.

1. Implication: This suggests that the company was financially robust during these years,
generating sufficient profits and cash flow to distribute a significant amount to shareholders.
High dividends often reflect strong earnings and a commitment to returning value to
shareholders.

2. 2017 (Slight Decrease):

1. 2017: Reduced to PKR 17.6.

1. Implication: The decrease, though not drastic, could indicate a slight dip in profitability or
cash flow, or a decision to retain more earnings for internal use, such as reinvestment, debt
reduction, or for cushioning against future uncertainties.

3. 2019 (Significant Reduction):

1. 2019: Decreased significantly to PKR 4.7.

1. Implication: This major reduction in dividends could signal financial stress, a significant drop
in earnings, or strategic decisions to conserve cash for operational needs, investments, or debt
 repayments. It may also reflect external challenges or adverse market conditions impacting the
company's performance.

4. 2020 (Negative Dividend):

1. 2020: (-5).

1. This indicates a negative dividend, which is unusual and could imply that the company might
have asked shareholders to return previously paid dividends, or it could be an accounting
adjustment.

1. Implication: If interpreted as a dividend repayment or adjustment, it suggests severe financial

constraints or losses, possibly due to extraordinary circumstances. This scenario would require
a deeper analysis of the company's financial statements and notes for 2020 to understand the
exact nature and reasons for this negative figure.

Overall Observations:

1. Fluctuating Dividend Policy: DG Khan Cement's dividend policy seems to fluctuate significantly,
indicating varying financial performance and strategic decision-making over these years.

2. Financial Health Indicator: The varying dividends reflect the company's financial health and
management's confidence in its future earnings and cash flow.

3. Investor Perception: While high dividends can boost investor confidence, significant reductions or
unusual adjustments (like a negative dividend) might raise concerns about the company's stability and
future prospects.

DG Khan Cement's dividend policy from 2016 to 2020 shows significant fluctuations, suggesting periods of
financial strength and challenges. The high dividends in 2016 and 2018 indicate robust financial health, whereas
the significant reduction in 2019 and the unusual negative dividend in 2020 point towards financial difficulties
or major strategic shifts.

Analysis of DG Khan & Lucky Cement

1. Industry Dynamics:

1. The similarities in the share price trends between the two companies may indicate that both are influenced
by similar industry dynamics, economic conditions, or market trends.

2. Market Response:

1. Positive share price growth periods suggest that the market has responded favorably to the companies,
potentially due to strong financial performance, industry conditions, or strategic initiatives.

3. Volatility Consideration:
1. The volatility in share prices during specific years highlights that external factors, market sentiment, or
company-specific events can impact stock performance.

4. Need for Further Analysis:

1. While share prices offer insights, a comprehensive analysis would require consideration of financial
statements, profitability ratios, debt levels, and other key financial metrics to understand the firms' overall
financial health