ARM,BMBC,DANGCEM,PPC,WAPCO | Separating the wheat from the chaff
Cement is a pure play on urbanisation, with Sub-Saharan Africa offering investors exceptional access to long-term dynamic growth driven by rapidly expanding populations in need of infrastructure. Cement consumption ranges between 25kg/capita in the DRC to 333kg/capita in the Republic of Congo, and there is still scope to grow to the world average of over 500kg/capita. Nonetheless, cement prices have proven to be highly volatile in the short-term, which often exposes the more levered players. Despite a strong outlook for Western Africa, particularly Nigeria, we favour companies with greater potential for operational turnaround. Particularly where aided by macro tailwinds and where competitive dynamics are more favourable. In our view, there are two key factors for a successful cement producer: low levels of gearing and a conducive operating environment. In this report, we focus on the latter and assess the key markets in which our counters are exposed.
PPC operates cement, lime, aggregates and readymix and other. Co.'s core activities comprised of: Exploration, which is involved in source and secure limestone deposits; Procurement, which is involved in other input materials, consumables and equipment; Mining, which is involved in extracting limestone and deliver to factory; Manufacturing, which is involved in converting limestone into cement/lime; Distribution, which is involved in facilitating transport of cement to customers in bulk and bag format; Sales, which is involved in executing customer orders; and Marketing, which is involved in building brand value.
Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.
Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.
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