Report
Shahrukh Saleem
EUR 9.34 For Business Accounts Only

Pakistan Cement_Price of being in the limelight, (AKD Daily, Dec 24, 2020)

  • Number of risk are looming on the horizon for local cement manufacturers in the form of i) Competition Commission of Pakistan (CCP) initiating inquiry over cement price increase, and ii) sharp spike in coal prices (up 50% since Oct’20), with implications for pricing moving forward.
  • CCP has recently issued an enquiry report regarding alleged cartelization by cement manufacturers during Apr’20-May’20, increasing prices by PkR50/bag. The enquiry committee has recommended initiating proceedings against the APCMA and its member undertakings.
  • With the sector on strict watch of CCP, we believe the spot light may force players to self regulate, possibly staggered price hikes at best, with complete absorption of cost by the sector at worst (unlikely) and in case of the latter, margin suppression in 3QFY21 cannot be ruled out.
  • We continue to prefer LUCK (TP: PkR868.5/sh, 28.6% upside) and MLCF (TP: PkR57.6/sh, 37.3% upside) with LUCK’s low cost based shielding against potential headwinds while a diversified portfolio further reduces the risk. MLCF having the option of petcoke can switch its fuel to petcoke in case coal prices continue increasing.

AKD Research

Underlying
Maple Leaf Cement Factory Ltd.

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.

Provider
AKD Securities Limited
AKD Securities Limited

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.

Analysts
Shahrukh Saleem

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