The Pakistan cement industry is undergoing a consolidation phase, with major players acquiring smaller firms at lower valuations than replacement costs. Currently, the sector averages an enterprise value (EV) of about US$46/t, well below the estimated US$80/t for brownfield expansions and US$100-110/t for greenfield projects. This makes acquisitions more appealing for growth, according to a Spectrum Research report.
Maple Leaf Cement Factory (MLCF) is evaluating an acquisition of a majority stake in Pioneer Cement Ltd (PIOC) where it already holds an 18.53 per cent stake. MLCF plans to increase its ownership to approximately 88.28 per cent, potentially becoming the second-largest player in the north and fourth-largest in Pakistan, with a combined capacity of 13.4Mta and a market share of 20-22 per cent. PIOC is trading at US$43.90/t, below the market average, indicating significant upside potential. MLCF’s strategic acquisition choice is preferable to new development, enabling immediate increases in production capacity and operational efficiencies.
Meanwhile, Pharaon Investment Group Ltd (PIGL), the majority shareholder of Attock Cement Pakistan Ltd. (ACPL), is reassessing its long-term position and attracting interest in a potential sale of an 84.06 per cent stake. Despite increased valuations, ACPL still trades below its expansion costs. Fauji Cement Co Ltd (FCCL) plans to acquire ACPL in a joint venture to establish a presence in the south, further highlighting the industry's consolidation trend.
by Abdul Rab Siddiqi, Pakistan
