IGI Securities Limited – Day Break (03-04-2020)

Karachi, April 03, 2020 (PPI-OT): Cements – Lockdowns and Restrictions amid COVID-19 threat drag dispatches down by 17%YoY

As per the provisional numbers, cement dispatches for the month of Mar-20 have declined by a substantial 17%YoY to 3.58mn tons as against 4.34mn tons recorded in the similar period of the preceding year.

On a cumulative basis, this brings 9MFY20 total dispatches count to 36.90mn tons as against 34.58mn tons reported in the same period last year, marking a growth of 7%YoY.

South dispatches have fallen by a mammoth 43%YoY, largely due to complete lock down imposed in Sindh from the final week of the Month and further injury from influx of low cost dispatches from North.

Conversely, local dispatches from North only fell by 13%YoY, which is ascribed to delayed restrictions imposed by provincial governments of Punjab and Khyber-Pakhtunkhwa in comparison to Sindh.

Based on the emerging threats of COVID-19 in Pakistan and on the entire globe at large, we expect the overall cement demand to remain rather subdued in the coming months. As of late, the federal government has imposed restrictions in the entire country till 14-April-2020 making clear that the ongoing month will be quite poor with respect to dispatches.

Mar-20 dispatches down by 17%YoY amid lockdowns and restrictions imposed in the wake of COVID-19

As per the provisional numbers, cement dispatches for the month of Mar-20 have declined by a substantial 17%YoY to 3.58mn tons as against 4.34mn tons recorded in the similar period of the preceding year. On a sequential basis, total offtakes dropped by a notable 20%MoM. The decline in volumes is primarily driven by self-restricted construction activities and lockdown situation imposed in certain parts of the country due to the spread of COVID-19 pandemic. On a cumulative basis, this brings 9MFY20 total dispatches count to 36.90mn tons as against 34.58mn tons reported in the same period last year, marking a growth of 7%YoY.

South dispatches fell massively by 43%YoY amid total lockdown in Sindh

Region wise, South dispatches have fallen by a mammoth 43%YoY, largely due to complete lock down imposed in Sindh from the final week of the Month. It is pertinent to note that the Sindh government had been the initiator of lockdown policy in the entire country. Further injury to South dispatches continued to incur from influx of low cost dispatches from North which as per market sources have currently eaten away almost 25% of domestic market share of South players. The closure of plants has also resulted in decline of South export dispatches which have dropped by 5%YoY.

North dispatches trim by 13%YoY amid delayed restrictions as compared to South

Conversely, local dispatches from North only fell by 13%YoY, which is ascribed to delayed restrictions imposed by provincial governments of Punjab and Khyber-Pakhtunkhwa in comparison to Sindh.

Excess capacities protect MLCF, PIOC, CHCC and LUCK from major brunt

Company wise MLCF, PIOC, CHCC and LUCK remained the only players in our coverage companies to have posted positive growth of 15/4/1/0% respectively in the hard hit month of Mar-20 largely owing to their additional capacities available in the period as against the similar period of the preceding year. LUCK continued to retain its top exporter spot, having improved its export dispatches by almost +21%YoY whereas ACPL lost its export dispatches by 21%YoY as compared to the comparative month of the previous year.

Outlook

Based on the emerging threats of COVID-19 in Pakistan and on the entire globe at large, we expect the overall cement demand to remain rather subdued in the coming months. As of late, the federal government has imposed restrictions in the entire country till 14-April-2020 making clear that the ongoing month will be quite poor with respect to dispatches. This will be followed with the Islamic month of Ramadan and Eid festive Holidays, which naturally pull off construction activities thus depicting subdued performance in the next quarter. Beyond that it is critical how Pakistan and the rest of the world combat this virus, since any adverse outcomes could materially hamper aggregate demand let alone cement.

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IGI Securities Limited – Day Break (03-04-2020)

Karachi, April 03, 2020 (PPI-OT): Cements – Lockdowns and Restrictions amid COVID-19 threat drag dispatches down by 17%YoY

As per the provisional numbers, cement dispatches for the month of Mar-20 have declined by a substantial 17%YoY to 3.58mn tons as against 4.34mn tons recorded in the similar period of the preceding year.

On a cumulative basis, this brings 9MFY20 total dispatches count to 36.90mn tons as against 34.58mn tons reported in the same period last year, marking a growth of 7%YoY.

South dispatches have fallen by a mammoth 43%YoY, largely due to complete lock down imposed in Sindh from the final week of the Month and further injury from influx of low cost dispatches from North.

Conversely, local dispatches from North only fell by 13%YoY, which is ascribed to delayed restrictions imposed by provincial governments of Punjab and Khyber-Pakhtunkhwa in comparison to Sindh.

Based on the emerging threats of COVID-19 in Pakistan and on the entire globe at large, we expect the overall cement demand to remain rather subdued in the coming months. As of late, the federal government has imposed restrictions in the entire country till 14-April-2020 making clear that the ongoing month will be quite poor with respect to dispatches.

Mar-20 dispatches down by 17%YoY amid lockdowns and restrictions imposed in the wake of COVID-19

As per the provisional numbers, cement dispatches for the month of Mar-20 have declined by a substantial 17%YoY to 3.58mn tons as against 4.34mn tons recorded in the similar period of the preceding year. On a sequential basis, total offtakes dropped by a notable 20%MoM. The decline in volumes is primarily driven by self-restricted construction activities and lockdown situation imposed in certain parts of the country due to the spread of COVID-19 pandemic. On a cumulative basis, this brings 9MFY20 total dispatches count to 36.90mn tons as against 34.58mn tons reported in the same period last year, marking a growth of 7%YoY.

South dispatches fell massively by 43%YoY amid total lockdown in Sindh

Region wise, South dispatches have fallen by a mammoth 43%YoY, largely due to complete lock down imposed in Sindh from the final week of the Month. It is pertinent to note that the Sindh government had been the initiator of lockdown policy in the entire country. Further injury to South dispatches continued to incur from influx of low cost dispatches from North which as per market sources have currently eaten away almost 25% of domestic market share of South players. The closure of plants has also resulted in decline of South export dispatches which have dropped by 5%YoY.

North dispatches trim by 13%YoY amid delayed restrictions as compared to South

Conversely, local dispatches from North only fell by 13%YoY, which is ascribed to delayed restrictions imposed by provincial governments of Punjab and Khyber-Pakhtunkhwa in comparison to Sindh.

Excess capacities protect MLCF, PIOC, CHCC and LUCK from major brunt

Company wise MLCF, PIOC, CHCC and LUCK remained the only players in our coverage companies to have posted positive growth of 15/4/1/0% respectively in the hard hit month of Mar-20 largely owing to their additional capacities available in the period as against the similar period of the preceding year. LUCK continued to retain its top exporter spot, having improved its export dispatches by almost +21%YoY whereas ACPL lost its export dispatches by 21%YoY as compared to the comparative month of the previous year.

Outlook

Based on the emerging threats of COVID-19 in Pakistan and on the entire globe at large, we expect the overall cement demand to remain rather subdued in the coming months. As of late, the federal government has imposed restrictions in the entire country till 14-April-2020 making clear that the ongoing month will be quite poor with respect to dispatches. This will be followed with the Islamic month of Ramadan and Eid festive Holidays, which naturally pull off construction activities thus depicting subdued performance in the next quarter. Beyond that it is critical how Pakistan and the rest of the world combat this virus, since any adverse outcomes could materially hamper aggregate demand let alone cement.

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