AKD Quotidian about — Cement Sector: Aug’13 Cement Dispatches

Karachi, September 11, 2013 (PPI-OT): The listed cement sector gained 4.2% yesterday with names such as LUCK, KOHC and MLCF closing at their upper circuits.

According to AKD Securities in this regard, channel checks have confirmed an increase in cement prices in the south by PkR5/bag i.e. by -1% instead of the PkR3O/bag-PkRS5/bag price increase demanded earlier by the smaller players after the recent hike in electricity tariffs. While this is a modest price increase, it eases concerns emanating from recent market noise regarding an imminent price war among cement manufacturers.

That said, concerns have not completely been put to rest where AKD Securities understands that cement manufacturers will continue to hold talks in the days ahead. Within this backdrop, AKD Securities retain preference for the larger, more cost efficient producers such as LUCK and DGKC.

Prices and demand: Going forward, industry sources suggest that cement prices will likely be increased in a phased manner so as not to affect demand. In this regard, according to data released by the AF’CMA, cement dispatches during Aug’13 clocked ri at 2.25mn tons, down by 1 %YoY/1 3%MoM.

The sharp decline on the domestic front where dispatches registered at 1.57mn tons (down by 1%Y0Y/15%MoM) was primarily attributable to widespread rains and flooding in various parts of the country. At the same tune, Aug’13 exports clocked in at O.68mn tons, down by 3%YoY/1O%MoM due to lower exports to neighbouring countries particularly with increasing competition from Iranian cement in Afghanistan. However, exports by sea have surprised positively, comEng in at 343k tons in Aug’13, up by 18%YoY/33%MoM.

Auto Sector: Aug’13 Sales Volumes Update

According to latest data released by PAMA, Aug’13 industry volumes (Cars+LCVs) increased by an encouraging 7%YoY/5%MoM to 11,096 units. Tractors sales for Aug’13 recorded at 1,938 units, up by 48.9%MoM but lower by 32%YoY. Coming back to auto sales, AKD Securities believes the sequential improvement in sales volumes may be attributed to the continued increase in auto financing where the outstanding stock of auto credit has risen by +14.8%YoY/1.9%MoM in Jul’13 to PkR5I.4bn.

PSMC: Sold 5,982 units in Aug13, up by 5.O%MoM but lower by O.3%YoY.The sequential increase was primarily driven by higher sales of the Swift and Bolan models while the Cultus and Mehran variants disappointed. PSMC (CY13F PIE: 5Qx) remains AKD Securities preferred play in the auto sector where AKD Securities TP of PkR1 78/share offers 25% upside.

INDU: Sales increased by 1 .O%MoM but were lower by 5.5%YoY with voluiries of 2,923 units in Aug’13. The sequential increase was largely driven by higher Corolla sales while sales for the recently introduced Fortuner have simmered down with just 46 units sold in the previous month.

AKD Securities are in the process of updating AKD Securities investments case for INDU and will update investors shortly.

HCAR: Relative outperformer with volumes growing by 8.4%MoM to 2,127 units, largely attributed to sales of Civic (+19.4%M0M to 955 units) while City sales remained flattish.

Tractors: Sales of 1,938 units in Aug’13 are up by 489%MoM but lower by 32%YoY. Drilling down, while AGTL’s sales have continued to come off (-11%M0M to 516 units), volumes for MTL almost doubled sequentially to 1,422 units.

The post AKD Quotidian about — Cement Sector: Aug’13 Cement Dispatches appeared first on AsiaNet-Pakistan.

The post AKD Quotidian about — Cement Sector: Aug’13 Cement Dispatches appeared first on AsiaNet-Pakistan.

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