Karachi, September 16, 2021 (PPI-OT): Pakistan Cement Conference – Key takeaways

AKD Securities Ltd. organized Pakistan Cement Conference where some of leading local cement manufacturers, namely LUCK, DGKC, ACPL and GWLC participated and shed light on industry’s and their company’s outlook over short to medium term.

On the demand side, optimism was noted across the board with different companies placing their estimate for FY22 demand growth at 8-10%YoY as private sector is expected to continue providing the support in the aftermath of the recently concluded amnesty scheme.

On the exports side, dispatches to Afghanistan are expected to remain uncertain in the short term as things settle down in the country while in medium term, rebuilding post war can result in increased exports. On the other hand, sea based clinker exports will become infeasible with the increasing coal costs.

Current coal inventory with the industry is at average cost USD100-110/ton however the recent shipments have been arriving at much higher rates of USD140-150/ton and if the cement prices are not increased further, margins are expected to take hit from 2QFY22 onwards.

Even though sector is expected to remain under pressure in near term on the back of increasing coal prices, we maintain our positive stance on the sector with the current lull as an opportunity to build positions at attractive prices. LUCK (TP: PkR1289/sh) and MLCF (TP: PkR80/sh) remain our top pick from the sector.