· Local cement dispatches clocked in at 4.82mnMT during the month of Nov’21 as against 4.51mnMT in SPLY , depicting a growth of 7%YoY during the month of Nov’21. This took the total dispatches during 5MFY22 to ~23.0mnMT, down 3.4%YoY.
· Domestic dispatches from north increased to 3.47mnMT (11%/-9% YoY/MoM) while South based pants dispatched 0.65mnMT (7%/-15% YoY/MoM) in Nov-21. This took total dispatches from north to 17.43mnMT, 2%YoY during 5MFY22 while south volumes are up 16%YoY to 5.56mnMT.
· During Nov-21, MRPs in across the country increased by PkR28/bag (north) and PkR29/bag (south) to average PkR734/bag and PkR749/bag respectively as the sector started to pass on the impact of higher coal prices on to end customers.
· With international coal prices easing off considerable, down 44% from their high on 5th Sept’21 to currently stand at US$132/ton, we expect the cement prices to stabilize somewhat around the current levels. With coal prices on the downtrend, further decline in prices will help shore up the margins going forward
· Recent volatility is a good opportunity to accumulate in our view as coal prices are expected to ease off post winter. In this backdrop, we advocate for building positions in stocks having strong balance sheet and opting for an expansion in the next expansion cycle hence our top picks include LUCK (TP: PkR1289.2/sh) and MLCF (TP: PkR80.1/sh).
Courtesy – AKD Research