AKD Securities Limited – AKD Daily (May 11, 2022)

Karachi, May 11, 2022 (PPI-OT): Pakistan Cement: Cement dispatches decline by 29%MoM for Apr’22

Local cement dispatches posted a disappointing read for Apr’22, declining by 17/29% YoY/MoM. Both the regions, North and South, witnessed similar fortunes where local dispatches in North declined by 17/27% YoY/MoM to 2.8mn tons while dispatches in South decreased by 18/37% YoY/MoM to 0.6mn tons.

Overall, local cement dispatches for 10MFY22 stand at 39.5mn tons, down 1.8%YoY while exports have decreased by 34.1%YoY to 5.0mn tons, taking overall dispatches to 44.5mn tons, down 6.9%YoY.

After touching a high of USD460/ton, coal prices cooled down and hovered around USD250/ton for a while in search of equilibrium. However, the recent ban by Europe on coal imports from Russia has provided new impetus to prices and they have once again crossed USD300/ton.

The volatility in coal prices and stock prices of our AKD Cement Universe provide a good entry point, in our opinion, as medium to long term outlook still remains intact. More than international coal prices, we believe local economic and political uncertainty has remained the primary drag and once clarity emerges, cement sector will lead the rally.

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