Pakistan Cements: Life comes full circle for local players
- Local cement players seem to have come full circle after recent international and local developments provide contrasting implications as the benefit of decreasing coal prices and increasing local cement prices gets offset by increase in FED and PkR weakness.
- Local cement prices now stand at PkR520-540/bag in North after witnessing an increase of PkR50-70/bag in last one month. The increase comes after a price competition among local players where overcapacity and muted demand in the backdrop led to prices declining by more than PkR100/bag to PkR440-460.
- Coal prices have also come down by 35% from US$96/ton in Dec’18 to US$62/ton in Jun’19 as trade tensions between US and China paint a gloomy global economic outlook while oversupply in the market further exacerbated the situation.
- The recent developments will only aid in reverting close to our base case and if we base expectations for full FY20 on current scenario, EBITDA margins of our universe are expected to increase to 27% in FY20 vs 24% of our base case. Company wise, LUCK stands to benefit the most with the company having a low cost structure and highest share of exports in the sales mix.
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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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