Dear Clients,

Pakistan’s Cement sector earnings are projected to increase considerably during 3QFY21 supported by: 1) a sharp improvement in domestic retention, 2) elevated industry dispatches, and 3) lower interest rates.

Industry dispatches remain at elevated levels

Pakistan’s cement dispatches continue to remain at elevated levels during 3QFY21, rising by 20% Y/Y to 14.7mn MT. Bulk of the increase was witnessed in the domestic market, which grew by 23% Y/Y within the timeframe. We believe the overall growth was aided by: 1) the construction amnesty package incentivizing liquidity into the construction sector, 2) recovering economic activity, 3) increased income following record-high remittances inflows, and 4) lower interest rates in tandem with loan schemes for housing projects.

Pricing improves amidst the elevated demand

The cement sector’s retention has improved considerably during FY21 post the aforementioned improvement in cement demand. Bulk of the increase in cement prices has been witnessed in the northern region where prices have increased by 18% Y/Y to PKR 595/bag during 3QFY21. Southern region’s prices, however, have remained relatively constant at PKR 630/bag.

Regards,
KASB Research