Karachi, July 05, 2021 (PPI-OT): Pakistan Cement: Highest ever sales for FY21

Local cement sales had another bumper month, increasing by 22%YoY for Jun’21 as incentives provided to the construction sector continue to bear fruit with most of the increase being contributed by private sector.

Overall, total cement dispatches for FY21 stood at 57mn tons – highest ever – increasing by 19%YoY where local dispatches increased by 20%YoY to 48mn tons buoyed by construction sector package while growth was amplified by low base due to COVID-19 related restrictions placed in 4QFY20.

Coal prices continue to cause trouble, increasing by 35% since Dec’20 however local manufacturers have increased prices by PkR25-35/bag during last one month and we expect another increase of PkR20-25/bag to fully pass on the increase in coal prices.

Even though sector has remained under pressure recently due to increasing coal prices, we expect the sector to come back into limelight in 1QFY22 where we continue our preference for LUCK (TP: PkR1289/sh, 44% upside) and MLCF (TP: PkR80/sh, 72% upside).