Report
Abdul Samad Khanani ...
  • Syed Waqas Imam
EUR 4.36 For Business Accounts Only

Intermarket Pulse: Pakistan Cements: Prices increase despite demand-price paradox

  • Cement players in North have coordinated a PRs5-10/bag increase in prices on the eve of construction season, which looks promising amid schemes in the run-up to elections. However, we flag that DGKC’s gigantic expansion in South will be an important checkpoint in determining the true industry price dynamics going forward.
  • FY18TD volumes exhibited an impressive show registering 14% YoY growth while the local demand was more robust (19% YoY growth). Preliminary numbers from Feb’18 suggest that exports (up 24%YoY, but hitherto declining) are set for a turnaround as new capacities come online in South in order to maintain high utilization levels.
  • In our view, it is too early to be cheering a turnaround in cement pricing discipline and the rally should be seen as an opportunity to book gains. Every PRs10/bag increase in retention prices increase core cement earnings of our Universe by 5%-11%. We prefer KOHC (cheapest in the sector) and MLCF (steep correction).
Underlyings
Attock Cement Pakistan Ltd.

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.

Cherat Cement Co.

Co. is engaged in the manufacturing and marketing of cement and clinker.

D.G. Khan Cement Co.

Co. is engaged in the production and sale of Ordinary Portland and Sulphate Resistant Cements.

Fauji Cement

Fauji Cement is engaged in the manufacturing and marketing of cement.

Kohat Cement Co. Ltd.

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 Ltd.

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.

Provider
Intermarket Securities Limited
Intermarket Securities 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.

Analysts
Abdul Samad Khanani

Syed Waqas Imam

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