Equity Analysis /
Pakistan

Pakistan Cements: Sep’22 - Cement dispatches continue to rebound

  • Total monthly cement dispatches clocked in at 4.27mn tons up 30% compared to Aug’22, but down 7% from Sep’21.

  • Local cement dispatches have rebounded post floods and have increased to 3.8mn tons vs 2.9mn tons in Aug’22.

  • Going forward, we believe that local cement dispatches growth will likely to pick up amid higher demand

Intermarket Securities
10 October 2022

According to recent APCMA print, total montly cement dispatches have clocked in at 4.27mn tons representing an increase of 30% compared to Aug’22, but have reduced by 7% from Sep’21. Local cement sales came in at 3.8mn tons up 31% MoM (down 5.4% YoY), whereas exports have jumped by 22% MoM to 0.47mn tons (down 17% YoY). Demand which was initially hampered by the heavy monsoon spell and floods, has started picking up and will continue to rise in 2QFY23 amid increase in construction activity and rebuilding of homes destroyed by the floods. 

  • Local cement dispatches have rebounded post floods and have increased to 3.8mn tons versus 2.9mn tons in Aug’22, but down 5.4% YoY. Local utilization levels during the month approached 66% as compared with 69% in SPLY. 

  • Exports sales have witnessed a sharp recovery of 22%, in comparison to Aug’22 to 0.47mn tons. Higher international coal prices and stagnant export prices, coupled with recent floods have made export market unattractive for the Industry (especially South based players).

  • This takes total industry dispatches to 4.27mn tons (+30% MoM but down 7% in SPLY). Total industry utilization levels stood at 74% in Sep’22 as compared to 79% in SPLY.

Going forward, we believe that local cement dispatches growth will likely to pick up amid higher demand coming from existing projects, which were initially delayed due to prolonged monsoon season and floods, coupled with fresh demand related to the rehabilitation from floods. Apart from this, recent decline in international and Afghan coal prices and possible lowering of interest rates will help the sector post decent profitability in remainder of  FY23. We continue to remain Overweight on the sector.