Pakistan Cement_All set for good days ahead! , (AKD Daily, Nov 09, 2021)
AKD Daily
Pakistan Cement: All set for good days ahead!
- Local cement dispatches declined by 5%YoY for Oct’21 where Northern region witnessed a decline of 8%YoY while South posted an increase of 11%YoY. Sequentially, 15%MoM increase was witnessed in local dispatches.
- Overall we expect the local demand to remain strong for FY22 as economic activity continues to pick up where private sector is expected to provide the major support to demand. However, exports are expected to take a hit in near term particularly as cost of manufacturing continues to increase courtesy coal prices.
- Although margins can take a hit in near term, given our view of coal prices retreating post winter, we expect profitability of the sector to improve significantly in medium term because cement prices have historically proved to be sticky.
- Recent volatility is a good opportunity to accumulate in our view as coal prices are expected to ease off post winter. In this backdrop, we advocate for building positions in stocks having strong balance sheet and opting for an expansion in the next expansion cycle hence our top picks include LUCK (TP: PkR1289.2/sh) and MLCF (TP: PkR80.1/sh).
AKD Research
Maple Leaf Cement Factory is engaged in the production and sale of white cement, grey cement and clinker. Co. is a subsidiary of Kohinoor Textile Mills Limited.
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