Pakistan Cements: Jul’18 exports outshined local sales; maintain caution
- As per the latest data released by All Pakistan Cement Manufacturers Association (APCMA), cement sales for Jul’18 clocked-in at 3.56mn tons, up 19%/5% MoM/YoY (in-line with BMA’s expectation of 3.5mn tons).
- Resumption of normal working hours post Ramadan and Eid holidays supported 18% MoM growth in local sales despite monsoon season. The demand however, is expected to remain subdued in Aug’18 owing to monsoon and upcoming holidays on account of Eid and Independence Day.
- Following fresh supply additions of c.7.25mn tons in 2HFY18 by four players, industry exports have expectedly shifted its course. During Jul’18, exports recorded a jump of 31%/9% MoM/YoY to 0.52mn tons where South region outperformed North region driven by 55%/134% MoM/YoY jump in sea-based exports (mainly clinker).
- Cement prices have seen yet another rise of PKR5-10/bag of late. We eye the recent rounds of price increase with caution ahead of expected slowdown in demand (political transition) and fresh supply additions. Moreover, rising cost of operations may also dampen possibility of margin accretion due to price hike.
- We maintain our Market Weight stance on the sector and flag LUCK (TP: PKR710), DGKC (TP: PKR184), and MLCF (TP: PKR75) as our preferred picks.
Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.
Lucky Cement is a cement manufacturing and distribution company which is based in Pakistan. Co. is engaged in the manufacture and sale of Ordinary Portland, Sulphate Resistant, and Slag Cement. Co.'s brand names included Lucky Cement, Lucky Star, Lucky Gold, Chairman, and Lucky Sulphate Resistant Cement. Co. maintains production facilities in Pezu (Production capacity: 13,000 tons per day) as well as in Karachi (Production capacity: 8,000 tons per day). In addition, Co. is engaged in developing export markets for bulk loose cement from Pakistan to the Gulf Countries, African Markets, and Far East Region including Nepal & Sri Lanka.
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.
BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.
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