- According to market rumors, retail cement prices have come down to PKR 280 per bag in the north zone, from ~PKR 330 per bag.
- However, channel checks revealed that some smaller players have cut their prices to as low as PKR 280 per bag, due to the ´end of quarter phenomenon´ whereby smaller players try to sell their closing stock at a discount. Due to the reason, both LUCK and DGKC have also reduced their prices by only ~PKR 5-10 per bag during the week. As we believe the decline is temporary, we choose not to incorporate it in our valuation as we believe prices would revert back to their original levels in Jan11.
- Retail prices for LUCK are currently hovering at PKR 325 per bag, while DGKC is selling in the local market at PKR 300 per bag. Our full year retail price assumption for LUCK is PKR 320 per bag and DGKC is PKR 310 per bag.
- We continue to maintain liking for LUCK (TP: PKR 95 per share) and DGKC (PKR 38 per share), as we believe demand could pick up post Jan11, which could give a significant push to dispatches coupled with strengthening of prices in the local market.
IGI Research
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