Pakistan Cement_Nov’17 Dispatches Review
Total cement dispatches during the month rose 4.8%YoY to 3.93mn tons in Nov'17, while declining on a monthly basis (down 6.9%), as reflected in provisional data released by APCMA. Local demand growth tapered off to 9.4%YoY/-5.3%MoM against an avg. 4MFY18 dispatches growth of 25.6%, on account of construction activities losing pace as winter approaches. Exports, on the other hand, remained under significant pressure with figures showing a significant 26.4%YoY /20.5%MoM decline possibly due to trade barriers imposed by Afghanistan. Cumulatively, 5MFY18 dispatches are up 13.8%YoY over the previous year to 18.50mn tons primarily driven by strong domestic consumption, (+19.8%YoY), while export growth decelerated (down 18.1%YoY). Post the seasonal blip, we expect domestic demand to pick up pace with GoP looking for swift completion of public projects during the election year, evident in 20%YoY higher PSDP disbursement in 5MFY18. With pricing concerns coming to the fore alongwith fundamental pressures (rising coal prices), the cement sector has undergone steep correction (down 44% since May'17). While pricing risk remains as additional capacity streams online, we base our investment case on: 1) strong domestic demand growth and 2) discounted valuations. In this backdrop, we maintain our preference for well diversified, energy efficient companies like LUCK (TP: PkR898/sh), MLCF (TP: PkR108/sh), DGKC (TP: PkR194/sh) and PIOC (TP: PkR109/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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