LAHORE (PPI) - DG Khan Cement Company Ltd (DGKC) is scheduled to announce its operating results for 9MFY11 on Monday. It is expected company to post Profit after Tax (PAT) of PKR398m translating into an EPS of PKR1.09, posting a modest growth of 3 percent YoY against the corresponding period of last year when company had recorded PAT of PKR388m and EPS of PKR1.06 respectively. In this report we will present our result expectations and future outlook. It is expected DGKC to post 11 percent YoY rise in sales during 9MFY11 to PKR13.12bn against PKR11.85bn in the same period of the last year. Our expectations for the augment in sales is attributed to slightly improved exports and better retention prices. However, slow down in local demand is likely to restrict growth in sales. We expect cost of sales to post an increase of 7 percent YoY to PKR10.42bn in 9MFY11 as against PKR9.74bn against PKR9.74bn in last year. The upsurge in cost of sales is mainly due to rising energy and transportation costs. In 9MFY11, we expect gross profit of the company to witness an upsurge of 28 percent YoY to PKR2.70bn against PKR2.12bn in 9MFY10. It is expected other income to post a rise of 8 percent YoY to PKR761m in 9MFY11 against PKR703m in 9MFY10. The main reason behind the upsurge in other income is dividend that company have received by company from MCB bank. This augment in other income seems to be playing role of a savior as excluding other income, core operations post a substantial decline of 67 percent YoY (LPS of PKR 0.29). On the other hand, financial charges are expected to increase by 10 percent YoY to PKR1.56bn in 9MFY11 against PKR1.43bn in the same period last year. Cement sector showed a lackluster performance as its 9M cumulative local and export dispatches declined by 8 percent YoY and 14 percent YoY respectively. However, on MoM basis (March over Feb 11), both local and export dispatches witnessed an upsurge of 25 percent and 16 percent respectively. In our view, improved dispatches in March11 is a sign of recovery in demand. We expect export to increase in remaining months of FY11 as there is a consistent demand from Afghanistan and also exporters have started exporting to India as BIS India has renewed licenses of majority of the cement exporters. We expect DGKC to reap the benefit of improving exports going forward.