Pakistan Cement_FY20 to end on a rough note, (AKD Daily, Aug 21, 2020)
AKD Daily
Pakistan Cement: FY20 to end on a rough note
- AKD Cement universe’s profitability is expected to remain in negative territory for 4QFY20 despite slight improvement in prices as COVID-19 related disruptions eat into profitability. Overall, FY20 turned out to be a dismal year with AKD cement universe posting LAT of PkR5.6bn against PAT of PkR18.9bn for FY19.
- Declining coal prices and decrease in interest rate is expected to provide some buffer as effective coal prices declined by 13.7%QoQ to average at USD69.3/ton for 4QFY20 while SBP decreased interest rates by 400bps to provide relief to local industry.
- LUCK and FCCL are the only two companies from our universe to remain in green by the end of FY20 where cost efficiency plays in favor of LUCK while low leverage helped FCCL sustain in times of price competition.
- Re-iterating LUCK (TP: PkR693.5/sh, 15.1% upside) and MLCF (TP: PkR41.9/sh, 20.8% up-side) as our top picks, we maintain a favorable outlook on the sector on the back of en-couraging demand numbers which opens up room for local players to increase prices in the medium term.
AKD Research
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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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