A proxy play on strong Egyptian cement industry dynamics
Strong industry upcycle ahead. Existing cement producers in Egypt face low threat from new supply simply because the state lacks the natural gas to suffice existing players. The Investment Ministry’s recently disclosed plan to issue new cement licenses is, in our view, likely a mid-2015 event because the government has to clarify its policy on coal usage ahead. Given the lead time to construct new capacity, we expect no new supply before the end of 2016. Against this, we see pent-up residential construction demand (85% of aggregate consumption) driving cement demand at a 2013-18e CAGR of 9%, leaving consumers with no choice but to import cement and, more importantly, at prices 11% higher than ACC’s spot levels. Because import parity is higher, we are not concerned about a government-imposed price cap being restrictive. Ultimately, the state cannot afford a shortfall of cement, in particular given its dire need to kick-start the sizeable budget housing projects pledged.
Arabian Cement Co SAE is an Egypt-based company engaged in the manufacture of cement and concrete. Its products include: Clinker, the raw material for the production of Portland types of cement, used in different percentages depending on the properties sought for the final product; Al Mosalah Cement, used for concrete with special needs, concrete pump, shotcrete, mortar and supporting floors, among others; Al Tahrir Cement, used for general construction purposes, general concrete works, reinforced and ordinary concrete, buildings, tanks, reservoirs and culverts; El Sadd Cement, used in all concrete works that are exposed to sea water or soils of high sulphate content, and Ready Mix Concrete, offered through the Company's subsidiary, Andalus Ready Mix Concrete. The Company offers its products in a variety of formats such as, bagged, bulk, big bags and in containers, among others.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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