Cements look much better than before
Despite a significant deleveraging in the cement sector and utilization approaching 75%, domestic expansions have not been announced yet. The major cement players are eyeing a cement price of PKR600/bag for new expansions to become viable. This indicates room for further increase in prices and margins. Coal prices have fallen to below USD80/ton and would deliver 12% earnings growth for the sector in FY14 even without assuming further increases in cement prices. Our top picks include KOHC, DGKC and LUCK.