Analyst:

Muhammad Sarfraz Abbasi

Summit Capital
Sarfraz.abbasi@atlascapital.com.pk
(+92-21)-111-226-100 Ext 404
Update Pulse Mar 9, 2011
(Formerly Atlas Capital Markets (Pvt.) Limited)

BUY
Cement Sector: Export demand India. During 8MFY11, total dispatches increased by 17%
YoY to Afghanistan and decreased by 24% YoY to India.
Market Snapshot
bounces back… However, export to India was observed to be higher by
40% YoY in the month of Feb’ 11. In addition to this, as
Index Chg %
KSE 30 11641.19 -49.22 -0.42
Synopsis… per the news report, Indian builders prefer Pakistani KSE 100 11940.01 -34.54 -0.29
All Pakistan Cement Manufacturers Association cement over their local cement due to high quality and KSE ALL 8287.92 -23.60 -0.28
Pakistan Research

(APCMA) has released monthly numbers for the month low price. Indian locally manufactured cement is selling
of February’11. As per the data, during the 8MFY11 total a 50/kg bag at a price ranging from INR235 to INR265 Key Data (DGKC)
industry dispatches declined by 10% YoY to 19.69m tons while Pakistani cement costs them only INR210 to Market Cap(PRs bn) 9.00
against 22.01m tons in the corresponding period of last INR220. Bouncing back of export demand from India is Shares Outstanding (m) 365.10
year. In this report we will discuss industry dispatches Bloomberg DGKC PA
a good omen for the industry. GCC was considered to
12M Avg. Volume (m) 3.79
performance in the February ’11 and future outlook. be a heaven for the local cement exporters; however,
Total dispatches in 8MFY11 from about past one year Gulf has become self- Key Data (LUCK)
sufficient as they have installed additional capacities Market Cap(PRs bn) 21.79
Tons 8MFY10 8MFY11 Y-o-Y which are enough to meet their domestic demand. hares Outstanding (m) 323.38
Local 15,073,785 13,794,408 -8% Bloomberg LUCK PA
Future Outlook and recommendations… 12M Avg. Volume (m) 1.49
Exports 6,930,782 5,904,365 -15% We believe that demand from India and Afghanistan
Total 22,004,567 19,698,773 -10% will continue its current pace. However, the Pakistani Key Data (ACPL)
Tons Feb FY10 Feb FY11 Y-o-Y
players have diverted their focus from GCC countries to Market Cap(PRs bn) 4.40
Iraq, Sri Lanka and some African countries (Tanzania Shares Outstanding (m) 87
Local 1,777,564 1,778,343 0%
and Kenya) for an augment in exports. As far as local Bloomberg ACPL.PA
Exports 667,958 709,506 6% 12M Avg. Volume (m) .084
demand is concerned, floods in July ‘10, made more
Total 2,445,522 2,487,849 2% than 10m people homeless. Consequently, caused
estimated US$9.7bn damage to infrastructure, farms, 12M relative performance vs KSE
Tons Jan FY11 Feb FY11 M-o-M 150%

Local 1,907,353 1,778,343 -7%

homes, as well as other direct and indirect losses. We LUCK
DGKC
KSE-100
ACPL
125%
believe that construction activities for flood affected
Exports 565,852 709,506 25%
people are inevitable and we also expect normal 100%

Total 2,473,205 2,487,849 1%

construction activity in the country is going to be 75%

Source: APCM A, Summit Capit al Research

initiated once the post harvesting Rabi crops farmers 50%

are in a better position to carry out construction

Apr-10

Aug-10

Oct-10

Feb-11
Jun-10

Dec-10
Sep-10

Jan-11
Nov-10
May-10
Mar-10

Mar-11
Jul-10
Export up, local dispatches still down…
activities.
During the 8MFY11, total local dispatches witnessed a
decline of 8% to 13.79m tons against 15.07m tons in Our top picks from the sector are LUCK, DGKC and
8MFY10. However, local dispatches in Feb ‘11 remained ACPL. We recommend a BUY stance for the LUCK (Fair Summit Capital (Pvt.) Ltd
flat as against Feb ‘10 mainly because of slow down in value of PKR85, upside potential 26%), DGKC (Fair value B-209, Park Towers, Clifton, Karachi
construction activities across the country. On the of PKR39, upside potential 58%) and ACPL (Fair value of Equity Research: Equity Sales:
export front, in 8MFY11, cumulative dispatches were PKR69, upside potential 36%) Tel: 92 (21) 5376125 Tel: 92 (21) 5368261-8
recorded 15% YoY lower, whereas export dispatches Fax: 92 (21) 5376126 Fax: 92 (21) 5376122
recorded an improvement of 6% YoY and 25% MoM in Money Market: Corporate Finance:
Feb’ 11 due to demand upsurge in Afghanistan and Tel: 92 (21) 5376128 Tel: 92 (21) 5824991
Fax: 92 (21) 5376129 Fax: 92 (21) 5376122
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Tel: 92 (21) 5376125
accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is
Fax: 92 (21) 5376126
provided without warranty and Summit Capital (Pvt.) Limited makes no representation of warranty of any kind as to the accuracy or completeness of any
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