Pakistan Cement_Dec'17 Dispatches Review
According to provisional statistics total dispatches, cement dispatches growth slowed down a little in Dec'17 registering growth of 1.5%YoY to reach 3.61mn tons. Coming off a high base, domestic dispatches were recorded at 3.29mn tons in Dec'17 vs. 1HFY18 avg. of 3.28mn tons, growing by 3.2%YoY. On the other hand, exports continued to slide by 13.3%YoY to reach 0.320mn tons during the period. On a cumulative basis, total dispatches growth reached 11.7%YoY in 1HFY18 led by domestic demand growth of 16.7%YoY in 1HFY18. Post end of seasonal slowdown alongwith the commencement of election year, we anticipate total dispatches growth to remain healthy going forward (AKD estimates 8%YoY growth in industry dispatches in FY18). We derive our thesis from: 1) strong PSDP and provincial spending in 2HFY18 ahead of national polls (68% unutilized federal PSDP at the end of Dec'17) and 2) impressive growth in private sector credit related to construction activity (+38.0%YoY in Nov'17). While risk of pricing indiscipline prevails with upcoming expansions, we believe current price levels 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 CHCC (TP: PkR140/sh) in our Cement Universe.
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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