Lucky Cement (LUCK) has underperformed in comparison to the KSE100 benchmark since January 2011 even as the company’s profits swelled by 38 percent during 3QFY11 against overall two percent growth in KSE100’s profitability.
LUCK’s performance bucks historical trends as the stock has consistently outperformed the market since January 2007 to December 2010.
It is believed that LUCK’s performance in the period has been on the basis of the company’s median earnings yield (on a quarterly basis) works out to 3.5 percent compared to KSE-100’s median of 2.6 percent said Syed Saquib at Gslpk, adding that over the last seventeen quarters, LUCK’s earnings yield has been marginally lower than the benchmark in only three quarters.
Still, the company’s fundamental situation is indicated to be sound as it has emerged the most efficient cement producer with a presence in both regions of the country and a diversified export market. Further efficiencies are expected to materialise from RDF plants while sale of excess power to HESCO offers an additonal source of income.