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Topline Flash Note: D.G. Khan Cement (DGKC): Corporate Briefing Notes

• The management is expecting around 10-12% YoY growth in domestic cement demand in FY21 due to the construction package announced by the  government.
• Retention prices in North are hovering around Rs6,300-6,400/ton. In South, retention prices are at around Rs6,500-6,600/ton.
• Anti Dumping duties imposed by South Africa on Pakistan Cement will expire on Dec 15, 2020.
• If these duties are not renewed, then players will start exporting cement to this big market instead of clinker.
• Clinker export prices have climbed back to US$32/ton after falling to US$27/ton during early COVID-19 period.
• DGKC’s average clinker export price during 1QFY21 was ~US$27/ton, whereas last shipment that the company sold was at US$30/ton while current quoted price is at US$32/ton.
• Increase in coal prices will be passed on to the consumers.
• DGKC’s Hub plant has tax exemption valid till FY24.
• Power requirement of the company is between 86-95 Kwh/ton. For clinker production, power requirement is 60-65 Kwh.
• HUB plant will be self sufficient in power generation after commercial operations of 10MW WHR and 30MW coal fired power plant.
• Before announcing any major expansion, the company may look forward to rationalize its plants which can result in addition of smaller capacity.

However, any major expansion would be up to 12,000 TPD with a 30% equity component.