With no uptick in cement dispatches and slowdown in infrastructure spending, investors remained distant from Pakistan cement sector which posted negative return of 33 per cent in 2011 YTD, said analysts. Moreover, they said global debt crisis also kept local investors at bay due to uncertainty in commodity markets. Out of 19 listed cement companies, only two companies, Kohat Cement (KOHC) and Lucky posted positive returns of 22 per cent and nine per cent respectively. “For a better comparison we have excluded Javedan Corporation (JVDC) as it has relinquished its cement operations,” said Furqan Punjani of Topline Securities.
The analyst said the worst performing stocks in the sector were Al-Abbas Cement (AACIL) followed by Bestway (BWCL). Turnaround in profitability amid higher sales in local arena, Kohat Cement stood as the best performer in the cement sector universe. Scrip posted a double digit positive return of 22 per cent in 2011 YTD outperforming the benchmark KSE 100 by 28 per cent. Similarly, Lucky, with 9 per cent return stood as the second best performing stock in cement, thus outperforming KSE-100 index by 15 per cent. The cost efficient plant not only benefited from rising local cement prices (highest share in local market) but also remained stable in export markets despite weak global demand. Javedan Corporation also posted a positive return of eight per cent during the said period but since the company has abandoned its cement operations we have not included it in our sector return calculation.
Apart from heavy weight Lucky cement and turnaround story in Kohat cement, entire cement sector posted negative returns. Al-Abbas Cement with negative 73 per cent return stood as the worst performer. Besides technical difficulties in plant, non materialisation of acquisition deal by Attock Cement remained the other major reason behind its huge underperformance.
Bestway cement posted negative return of 68 per cent over its persistent under utilisation while FCCL posted negative return of 63 per cent amid delay in commercial production of its new 2mn ton plant. “Moreover, with depressed market sentiments, DG Khan with huge investment portfolio posted negative return of 38 per cent,” said the analyst.
