Intermarket Securities Limited - Pioneer Cement Ltd. (PIOC) Intermarket Pulse: Pakistan Cements: Peak is behind us; switch to North

Report

Intermarket Securities Limited

Abdul Samad Khanani

EUR 4.42 For Business Accounts Only

Intermarket Pulse: Pakistan Cements: Peak is behind us; switch to North

We revisit our coverage on IMS Cement Universe with a Market-weight stance. The sector now offers balanced dynamics on the upcoming expansion cycle, even after the recent sharp correction in share prices. We anticipate the space to become more competitive on new expansions amid some trimming of margins over the medium-term.

An estimated 32mn tpa additional capacity will come online in the next 5-6yrs but we do not anticipate a complete breakdown in the pricing consensus. Domestic demand should absorb c. 20mn tpa while the rest would have to be diverted towards exports especially once PKR becomes more competitive. At peak in FY09, Pakistan exported c. 11mn tons.

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We also initiate coverage on KOHC (Buy) and ACPL (Neutral) to take total coverage universe to c. 75% of sector capitalization. Our top picks are PIOC (TP: PRs178/sh) and DGKC (TP: PRs262/sh) where we like their valuations in the context of growth prospects. We are Neutral on FCCL (TP: PRs41/sh) & LUCK (TP: PRs862/sh) and recommend shifting out of these in favor of names carrying more upside potential.

24/07/2017 5 EN

Underlying

Pioneer Cement Ltd.

Co. is engaged in the manufacture and sale of cement and clinker.

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PK0056201012 Pakistan Stock Exchange Pakistan

Provider

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.

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Analysts

Abdul Samad Khanani

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Tellimer

Pioneer Cement: 3QFY23 Review - Lower offtake reduced profits; in line

Pioneer Cement Ltd (PIOC) has posted NPAT of PKR950mn (EPS: PKR4.18) for 3QFY23 up 96% YoY but down 19% QoQ, in line with our expected earnings of PKR940mn (EPS: PKR4.14). 9MFY23 net profits stand at PKR2.7bn (EPS: PKR11.91), up 66% YoY. KEY HIGHLIGHTS OF 3QFY23 RESULTS: * Net sales have increased by 18% YoY but are down 11% QoQ to PKR9.1bn in 3QFY23. The QoQ decline in revenue is due to lower volumes by 14% to 0.68mn tons. We expected a topline of PKR9.7bn. * Gross margins have increas...

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Pioneer Cement: 2QFY23 Review - Higher-than-expected margins lead to earnings beat

Pioneer Cement Ltd (PIOC) has posted NPAT of PKR1.2bn (EPS: PKR5.17) for 2QFY23 up 22% YoY and 101% QoQ. This came in much better than our estimated EPS of PKR3.71, with higher-than-expected margins leading to the deviation. 1HFY23 net profits stand at PKR1.8bn (EPS: PKR7.75), up 54% YoY. KEY HIGHLIGHTS OF 2QFY23 RESULTS: * Net sales have increased by 20% YoY and 24% QoQ to PKR10.3bn in 2QFY23. The QoQ increase in revenue is due to higher volumes and retention prices, in our view. We expecte...

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Intermarket Pulse: Pakistan Cements: Peak is behind us; switch to North

Pioneer Cement: 3QFY23 Review - Lower offtake reduced profits; in line

Pioneer Cement: 2QFY23 Review - Higher-than-expected margins lead to earnings beat

Pioneer Cement: 1QFY23 Review - Topline beat and flattish margins

Intermarket Pulse: Pakistan Food producers: 1QCY18- Another weak quarter for consumers

Pakistan IPPs: Favor NPL over NCPL in a tougher macro environment

Intermarket Pulse: Pakistan Banks: Valuation anomaly warrants switch to large banks

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