Intermarket Pulse: Pakistan Cement: Foresee rising pressure on prices; exports only respite
- We roll forward our TPs of IMS cement universe to Jun’19 and update combination of macro changes in our models namely (i) North/South price declines from current levels, (ii) coal prices of US$90 for FY19 vs. US$80 earlier, (iii) fuel tariff adjustments, (iv) changes in local/export demand assumptions according to updated timeline of new capacities and PSDP cuts.
- We anticipate price reductions on falling utilization rates over the medium term. Prices in South may witness steep correction (PRs60/bag over next two years), as DGKC’s new expansion has started trial-run; while prices in North may continue to decline as new capacities commence ops (BWCL has reportedly started trial-runs).
- Our universe’s TPs are down by 4.5%-18% vs. previous estimates, except for LUCK (up 6%) and MLCF (down 2%), where clarity on expansion size in North and positive roll-over yield (large capex in FY18), respectively – is moderating the drag on valuations. Despite weak outlook for the sector, we like KOHC (TP: PRs219/sh) and LUCK (TP: PRs656/sh) as relatively more defensive names.
Attock Cement Pakistan Ltd. Attock Cement Pakistan Limited is principally engaged in manufacturing and sale of cement. The Company is also engaged in exporting clinker and cement both in bags and bulk to the United Arab Emirates (UAE), South Africa, Iraq, Sri Lanka and many other countries. The Company also has the facility of supply of cement in bulk and also produces the low alkali cement for some of its market. Its products include Ordinary Portland Cement (OPC), which is a product under the Falcon Brand used in all types of general construction. OPC can be used in concretes, mortars, grouts and premix concrete. It also offers Sulfate Resistant Cement (SRC), which is sold under falcon Brand and is used in sea and coastal areas and provides resistance to chemical attack from sulfates and dissolved salts present in sea and saline waters. The Company's Falcon Block Cement product is offered for block and precast slab makers.
Co. is engaged in the manufacturing and marketing of cement and clinker.
Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.
Fauji Cement is engaged in the manufacturing and marketing of cement.
Kohat Cement Company Limited. Kohat Cement Company Limited is a Pakistan-based company, which is engaged in the production and sale of cement. The Company's products include Grey Cement and White Cement. The Company offers Ordinary Portland Grey Cement under the brand name KOHAT CEMENT. The Company produces and sells White Portland Cement under the brand name KOHAT SUPER WHITE. The Company also offers white canvas for various architectural applications. The Company's white canvas is used for concreting and ornamental applications, terrazzo floorings, fixing of tiles and marbles, and others. The Company's White Portland Cement is available in all local markets in Pakistan and Afghanistan. The Company has an annual production capacity of 2.8 million tons of Grey Cement and 150,000 tons of White Cement. The Company produces both Grey and White Cements at its plants located in Rawalpindi Road, Kohat.
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.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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