AKD Securities Limited – AKD Daily (05-03-2021)

Karachi, March 05, 2021 (PPI-OT): Pakistan Cement: Cement dispatches increase by 6%YoY for Feb’21

Local cement dispatches extended their outstanding run with an increase of 6%YoY to 4.0mn tons for Feb’21 where South fared better among the two regions, witnessing an increase of 22%YoY while North posted an increase of 3%YoY.

Low number of working days led to a sequential decline in exports of 11% while on YoY basis, exports declined by 18% where number of factors are at play including logistical issues and seasonality while local players are also shifting their sales mix towards local market to take advantage of higher retention prices at offer.

Along with the result announcements, expansion announcements also gained pace with KOHC, MLCF and DGKC announcing expansions of 2.3-3mn tons, 2.4mn tons and 2.7-3.6mn tons, respectively while we believe some other players are also going to follow suit soon.

We continue to like DGKC (TP: PkR209.7/sh, 58.8% upside), MLCF (TP: PkR80.1/ sh, 75.1% upside) and LUCK (TP: PkR1289.2/sh, 50.3% upside) from AKD cement universe with our universe currently trading at EV/EBITDA of 7.4x while EV/ton stands at USD70.

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