Lafarge
Recently released data for Jul-November 2015 period (5MFY16) about cement dispatched shows that local sales for 5MFY16 recorded increase by 15.6%YoY. As against this, exports continued their descent, down by 25.8%YoY.
Players witnessing highest overall growth in dispatches during 5MFY16 were KOHC (+61%YoY), FECTC (+53%YoY) and ACPL (+44%YoY). With these numbers backing up the bullish hypothesis on local offtake, analysts believe a relief rally is likely in the short to medium term.
Having gained 8.5%CYTD, analysts re-iterate their overweight stance, citing enticing fundamentals, where 1) weakening of coal prices (down 32.7% FYTD) due to a supply glut, 2) local cement prices holding firm (slight discount commensurate with winter season), and 3) cost curtailment measures in the pipeline (venturing into Coal Power) are to keep margins stable.
Local continue to shine, while exports whine is the expression once one goes through cement dispatches recorded more of the same. In this backdrop, company-wise dispatches (provisional data) during 5MFY16 reflect a varied scenario
While declining coal prices may help the cement manufacturers to further augment their margins, depreciation of the local currency would partially offset this. That said, companies with greater share of export sales, such as CHCC and LUCK (exports of 38% and 35%), are less likely to feel the pinch from PkR depreciation.
Having gained 8.5%CYTD, analysts re-iterate their overweight stance, citing enticing fundamentals, where 1) weakening of coal prices (down 32.7% FYTD) due to weak Chinese demand, 2) local cement prices holding firm (slight discount commensurate with winter season), and 3) cost curtailment measures in the pipeline.

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