Pakistan Cement_Demand remains upbeat, calling for expansions, (AKD Daily, Nov 05, 2020)
AKD Daily
Pakistan Cement: Demand remains upbeat, calling for expansions?
- Local cement dispatches extended their outstanding run with an increase of 16/19% YoY/MoM to 4.9mn tons for Oct’20 where South fared better amongst the two regions, witnessing an increase of 18/23%YoY/MoM while North posted an increase of 16/18% YoY/MoM.
- Exports slowed down with a sequential decline of 22% as local players shift their sales mix towards local market to take advantage of higher retention prices at offer with impressive demand growth in the backdrop. For 4MFY21, local dispatches stand at 10.8mn tons, up 19%YoY.
- Given high utilization (101% for North) and support being provided by government in terms of expediting regulatory procedures and a concessionary financing facility (TERF), we believe announcements of capacity expansion can arrive earlier than expected.
- We continue to like MLCF (TP: PkR47.4/sh) and LUCK (TP: PkR761.3/sh) from the AKD cement universe with the former being one of the lowest cost producers implying lower sensitivity to retail price variations, while latter’s cost efficiencies coupled with diversified investments make it a safe play.
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