LHBL: 3Q23 Earnings Update

LHBLBD BD’s earnings increased by 41% YoY during 3Q23 and by 58% YoY during 9M23

LHBLBD BD posted EPS of 1.38, registering 41% growth during 3Q23 and posted EPS of 4.49, registering 58% growth during 9M23.

12% YoY revenue growth during 3Q23 and 27% YoY growth during 9M23

  • LHBLBD BD’s revenue increased 12% YoY in 3Q23, driven by 8.7% growth in revenue from cement and 35.7% growth in revenue from aggregates.
  • During 9M23, LHBLBD BD’s revenue grew 27%, resulting from a 20.0% growth in revenue from cement and 122.4% growth in revenue from aggregates.
  • During 3Q23, revenue contribution of aggregates increased from 11.9% to 14.5% YoY, while the contribution of cement declined from 88.0% to 85.5%. During 9M23, cement and aggregates contributed 85.5% and 14.3% to revenue respectively.

Margin expansion of cement & clinker segment

  • Gross margin expanded by 128bps to 41.3% during 3Q23 and by 482bps to 39.2% during 9M23, resulting from higher cement prices.
  • Operating margin for the cement & clinker segment expanded by 254bps in 3Q23 and by 484bps during 9M23. However, operating margins of the aggregate segment contracted by 763bps during 3Q23 and by 478bps during 9M23. Despite this, operating margins for aggregates remain almost twofold as that of the cement & clinker segment.
  • During 3Q23, LHBLBD BD’s overall operating margin expanded by 172bps to 31.7%. Overall operating margin reached 30.6% after expanding by 537bps during 9M23.

Net margin expanded by 502bps during 3Q23 and by 461bps during 9M23

  • LHBLBD BD’s net margin expanded by 502bps to 25.0% during 3Q23 and by 461bps to 24.1% during 9M23.

We reiterate our ’BUY’ rating of LHBLBD BD at a fair value of BDT 102.0 per share for June 2024.