BROKERAGE IS MORE THAN COMMISSION
October 2011
Weak 9 months: Dampening domestic infrastructures demand, high operating leverage receivable to excess capacity, clinker and crude oil price further and currency depreciation hurt the earnings harvest of cementum companies. We are bearish for cement scrip in 2011.
Industry Highlights
analyst Contact
Ashaduzaman Riadh Senior Research Analyst & In-Charge ashaduzaman@lbsbd.com
? With growing infrastructure bespeak of the country, cement demand growth surpassed economic growth tell of Bangladesh over the years. The Industry is highly concentrated. Out of 34 cement companies, large 10 companies control more than 70 share of the total cement production in Bangladesh. Though the assiduity has supply overhang, which is more than 12 mn mt and broadly belong to tiny players, Incumbent players are investing severely in capacity additions to meet the expected demand from near mega projects. But the bubbles in the real estate sectors, inefficient adenosine diphosphate (Annual Development Program) implementation and mega projects uncertainty hurt the top extraction growth of the companies. Contractionary monetary policy discouraging credit strike to the unproductive sectors akin real estate will light upon the housing loan more bellly.
However, the government investment on transportation and housing infrastructure development is expected to contain the demand growth intact for that sector. Being highly heartiness-intensive, with energy constituting ~40 percent of total cost, cement industry is highly disrupted by the erratic power supply. Power hoo-hah and energy price hike have been taking a toll on capacity utilization and operational cost in this sector. Key input costs hike like the prices of clinker & freight and currency depreciation have already hurt the 9 months bottom line in 2011. We cover optimistic about the demand of cement given Bangladesh infrastructure and real estate development needs. But the demand growth is expected to be slower...If you want to get a spacious essay, order it on our website: Ordercustompaper.com
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