DGKC-Conference call key takeaways

1. Cement demand from local market is expected to remain flat in FY20.
2. Overall capacity utilization of the company during FY19 remained at ~80% with 54% capacity utilization of south plant vs 90% capacity utilization at plant in North.
3. Company is looking for new market in south, currently most of the cement from south plant is being sold in Balochistan.
4. Export during the year declined due to heavy duties imposed by India. Similarly, export of cement to Afghanistan has dropped due to competition from cheap Iranian cement. Currently company is only exporting clinker to Afghanistan.
5. 10MW WHR plant at Kallar kahar is under construction which is expected to be commissioned by the end of 2QFY20.
6. Company is installing 30MW coal fired power plant and 10MW WHR plant at Hub plant which management expects will collectively bring electricity cost down by ~25%.
7. For the Chakwal plant company is mostly reliant on grid as it is cheaper than in-house generation using RLNG.
8. Management expects price war to continue in FY20.

Source: Ismail Iqbal Securities

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