Pakistan Cements: Sector profitability to grow despite FCCL’s decline
​For 2QFY17F, we expect IMS Cement Universe to post cumulative earnings growth of 3%YoY (Ex FCCL 13%YoY), led by 12%YoY local dispatches growth, and improved sales concentration towards domestic market. Though Coal/FO prices increased 68/25%YoY, disposal of some inventory may keep the margins mostly intact, in our view.
EPS estimates are as follows- DGKC (PkR5.98, up 11%YoY); MLCF (PkR2.88, up 2%YoY); PIOC (PkR3.71, up 52%YoY) and CHCC (PkR2.76,up 19%YoY). FCCL is expected to continue its losing streak (PkR0.63, down 48%YoY), while LUCK has already announced consolidated EPS of PkR13.43, up 12%YoY.
Important events during the quarter include (i) completion of 1.3mn tpa Line of CHCC, (ii) commencement of PIOC’s WHR and (iii) public interest shown by LUCK, BWCL, KOHC and FECTC in acquiring DCL’s Hattar plant. We continue our liking for DGKC (TP of PkR254) and LUCK (TP of PkR883) due to their best exposures in cement and other sectors.
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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