Pakistan Cement: Record high dispatches in Mar’18
According to provisional statistics, dispatches during Mar'18 registered growth of 8.5%YoY/13.8%YoY to reach a monthly peak of 4.30mn tons (previously at 4.08mn tons in Jan'18). Enhanced dispatches were led by record high domestic dispatches (3.95mn tons in Mar'18 vs. previous 3.78mn tons in Oct'17) where domestic demand growth stood at +5.3%YoY/+13.6%MoM in Mar'18. Exports also remained positive in Mar’18 clocking in at 0.35mn tons (up 65.2%YoY/16.4%MoM). On a cumulative basis, total dispatches growth reached 13.5%YoY in 9MFY18 led by domestic demand growth of 16.8%YoY. With the elections drawing close, we anticipate total dispatches growth to remain strong for the remainder of the year. We derive our thesis from: 1) strong PSDP and provincial spending in 2HFY18 ahead of national polls (39% unutilized federal PSDP at the end of Mar'18) and 2) impressive growth in private sector credit related to construction activity (+24.9%YoY in Feb'18). While risk of pricing indiscipline prevails with each expansions (particularly for South players), we believe recent cement price recovery (+PkR50/bag in North), offer attractive entry points especially when growth dynamics remain intact. While maintaining our preference for the sector (particularly North players), our top picks include well diversified, energy efficient companies like LUCK (TP: PkR898/sh), MLCF (TP: PkR108/sh), PIOC (TP: PkR109/sh) and DGKC (TP: PkR198/sh) in our Cement Universe.
Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.
Lucky Cement is a cement manufacturing and distribution company which is based in Pakistan. Co. is engaged in the manufacture and sale of Ordinary Portland, Sulphate Resistant, and Slag Cement. Co.'s brand names included Lucky Cement, Lucky Star, Lucky Gold, Chairman, and Lucky Sulphate Resistant Cement. Co. maintains production facilities in Pezu (Production capacity: 13,000 tons per day) as well as in Karachi (Production capacity: 8,000 tons per day). In addition, Co. is engaged in developing export markets for bulk loose cement from Pakistan to the Gulf Countries, African Markets, and Far East Region including Nepal & Sri Lanka.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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