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Pakistan Cement: Sales in Sep-2020 likely to rebound sharply; Exports to cross 1mn ton mark after FY10

• Cement sales in Sep-2020 is estimated to clock in at near all-time high of 5mn tons (+17% YoY and 42% MoM), taking quarterly sales to 13.4mn tons (+20% YoY) - second highest quarterly dispatches.
• Local sales is Sep-2020 is expected to clock in at 3.9mn tons, up 12% YoY and 39% QoQ. Last month cement sales remained on the lower side due to lesser working days amidst religious holidays and heavy rainfalls nearly in all parts of the country.
• Overall uptick in cement demand is primarily led by the private sector and resumption in Real Estate activities after announcement of the construction sector package. This growth is also conjoined by start of work on different dams.
• Exports are also likely to close higher this month (+39% YoY and 53% MoM), crossing the 1mn tons mark, which was previously seen in FY10.
• Among companies, Lucky Cement (LUCK) is expected to record dispatches of 930k tons, up 49.8% MoM. This includes local sales of 625k tons and exports of 305k tons.
• Maple Leaf (MLCF) is expected to record 31% YoY growth to 421k tons including local and export sales of 388k tons and 33k tons, respectively.
• DG Khan (DGKC) is expected to record dispatches of 680k tons, up 43% MoM. This includes local sales of 460k tons and export sales of 221k tons.

In Oct-2020, we expect growth to slow down due to high base. However, in latter part of FY21, this trend is likely to sustain as more liquidity is likely in the sector as banks look to take construction sector loans to 5% of total loan book by Dec-2021 as per SBP directions.