Daily Research Publication

July 31, 2015

Spectrum Securities (pvt.) Limited

1MFY16: Cement dispatches to remain subdued owing

to floods
Construction and Materials
(Cement)
Sector Market Cap.
Sector Outlook

Rs570bn
Positive

Cement dispatches for the first month of FY16 are expected to dwindle by
~11%YoY. In this report we present our review on the cement dispatches coupled
with the outlook.

Cement dispatches plummeted by 11%YoY

During 1MFY16 expected total cement dispatches slumped by 11%YoY to 2,193k
MTs as compared to cement dispatches of 2,452k MTs in 1MFY15. This slowdown
in the cement demand is linked with lower seasonal demand. Local cement
dispatches remained on lower side as cement sales took hit due to rains resultiing
in deceleration of construction activities. Similarly, local cement dispatches from
northern region also witnessed meager downfall as it dropped to 1,472mn MTs
(decline by 2%YoY) whereas in southern region cement dispatches plummeted
to 271mn MTs (down 24%YoY).
CEMENT DISPATHCES
(000's Tons) J ul-14

J ul-15

YoY

J un-15

J ul-15

MoM

1,858

1,743

-6%

2,734

1,743

-36%

South

355

271

-24%

424

271

-36%

North

1,503

1,472

-2%

23 10

1,472

-36%

Export

594

450

-24%

539

450

-17%

South

226

183

-19%

172

183

6%

North

368

267

-27%

367

267

-27%

2,452

2,193

-11%

3,273

2,193

-33%

Local

Market Share (1MFY16)

21%
33%

(1MFY16)

Total

Source: Spectrum Research

12%
4%

7%
9%

2%
LUCK
KOHC
PIOC

On the other hand, industry total monthly cement dispatches slid by hefty 33%,
where North region and South region remain aligned with the trend, however
export sales from south region increase by marginal 100k MTs (up 6%YoY).

DGKC
ACPL
Others

4% 5%
FCCL
MLCF

3%
CHCC
FECTC

Waqas Ahmed
waqas.ahmed@spectrumonline.com.pk
+ 92 (21) 32467598
www.spectrumonline.com.pk

Company wise cement dispacthes during 1MFY16

During the 1MFY16, overall expected cement industry dispatches witnessed
significant fall by 11%YoY, however KOHC, PIOC, and CHCC remained the
exception where these companies dispatches increase by 28%YoY, 1%YoY, &
Page 1 of 2

Daily Research Publication

July 31, 2015

Spectrum Securities (pvt.) Limited

1%YoY respectively. ACPL took the worst hit as its dispatches fell by 26%YoY,
followed by FCCL and LUCK with cement dispatches falling by 13%YoY and
8%YoY respectively. Early heavy rains and floods plummeted cement
dispatches this year as contrary to last year where in floods occurred in
September and impacted areas adjacent to River Chenab and River Jhelum.

1MFY16: COMPANY WISE CEMENT DISPATCHES

('000) MTs

J ul-14

J ul-15

YoY

J un-15

J ul-15

MoM

LUC K

501

461

-8%

589

461

-22%

DGKC

286

267

-7%

373

267

-28%

FC CL

177

154

-13%

269

154

-43%

CHCC

56

57

1%

95

57

-41%

KOHC

84

108

28%

183

108

-41%

AC PL

126

93

-26%

135

93

-31%

MLCF

218

204

-6%

271

204

-25%

FECTC

44

43

-2%

64

43

-32%

PIOC

91

92

1%

128

92

-28%

Source: Spectrum Research

During the month under review, provisional local cement dispatches of FCCL,
KOHC, CHCC,and LUCK significantly dropped by 43%, 41%, ~41%, & ~22%
respectively.

Outlook: Positive
Going forward, we expect local cement demand to depress further as witnessed
in the current month. Seasonal phenomena will hinder the growth in the
cement dispatches arising from countrywide slump in construction activities.
Moreover, with monsoon season ending in last week of August or in early
September, we expect rebound in cement dispatches as construction activity
resumes coupled with reconstruction need in flood affected areas further
boosting demand of cement therefore, cement sector stocks will catch
investors' eyes. Availability of credit at lower rates coupled with lower
inflation will likely to push up cement consumption of private sector.

www.spectrumonline.com.pk

Page 2 of 2

Daily Research Publication

July 31, 2015

Spectrum Securities (pvt.) Limited

About the Company:

The company Spectrum Securities (Private) Limited was acquired from M/S
Mazhar Hussain Securities (Private) Limited. Mazhar Hussain Securities
(Private) Limited was constituted in December 19, 2000. Later, Spectrum
Securities took over Mazhar Hussain Securities on October 27, 2014 and
registered in the name of Spectrum Securities(Private) Limited. The
management of spectrum securities has stepped into the industry with its
agenda to attract the Corporate Clients therefore they decided to come up
with the new outlook, introducing a new management team of professionals.
Spectrum Securities (Private) Limited is TREC Holder of Karachi Stock Exchange
Limited and Lahore Stock Exchange Limited.

Disclaimer:

This report is for information purposes only and does not constitutes an
offer, or invitation to make an offer, to buy or sell any securities. All facts and
figures have been taken from the sources that are considered reliable. This
report is prepared for the use of Spectrum Securities clients and Spectrum
Securities reserves the right for its distribution. Opinions and
recommendations provided does not take into account specific investment
objectives or particular investment needs of any specific person or group of
persons who may receive this report.

Analyst Certification:

I, Waqas Ahmed, certify that all the views expressed in this report about the
subject matter are an accurate depiction of our personal views and no part of
my compensation or any other benefits, was/will be, directly or indirectly,
related to the specific recommendation expressed in this report.
Furthermore, I do not hold any beneficial holding in the scrip.

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