Higher coal price along with increase in FED to drag gross margins down
Despite increase in cement price in both the regions, gross margin of cement manufacturers in both regions is expected to be depressed owing to high coal price during the quarter and increase in Federal Excise Duty (FED). To recall, the government increased FED for FY19 by PKR 12.5/bag which is expected to cut retention price. Moreover, the coal price during the quarter remained ~21% YoY higher along with depreciated PKR which pushed coal prices further high in PKR terms. Note that average cement price of PKR 577/bag in Northern region during 1QFY19 remained ~ PKR 30/bag higher compared to SPLY, however same average price of ~PKR 577/bag in South remained only PKR 7/bag higher than SPLY. That said, we don’t expect any positive net impact from cement price hike especially in South as the increase in FED is higher than price hike in the region.
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.
Co. is engaged in the manufacture and sale of cement and clinker.
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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