Pakistan Cements: Further jump in cement prices in the offing; bumpy ride ahead
- In a latest development, our channel checks suggest, cement prices in North region are likely to see another round of increase by PKR10/bag effectivetomorrow.
- We believe this development, coupled with strong expected dispatches for Mar’18 (expected to surge by 8% YoY to 4.3mn tons) may drive positive market reaction in cement stocks in near-term.
- However, given; (i) the timing of price hikes, (ii) increase in coal prices, and (iii) 4.5% devaluation in 3Q, we believe any positive impact on sector’s margins from slew of price increases since first week of Mar’18 (9% cumulative) is unlikely to be seen in 3QFY18.
- We advise our investors to take a contrarian approach to the expected continuation of stock price rally and book profits at this level given: (i) cements have rallied 29% CYTD (absolute), indicating limited upside from this level, and (ii) upcoming supply pressure which may hamper the current uptick in cement prices amid low demand period.
- We flag Cherat Cement, Bestway Cement, DG khan Cement, Attock Cement as the scrips which may bear the most impact of the upcoming supply pressure and consequent price hiccups.
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.
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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