Titan Cement: Free upside optionality (stays BUY)
We believe that Titan Cement’s recent share price weakness (down c.14% ytd) is a great entry point for long-term investors. The current valuation does not properly price in the operations in Greece and Egypt, in our view. Both markets are in a cyclical downturn and currently contribute marginal EBITDA, although they account for c.45% of total group capacity. Although the recovery of these markets is still fragile, the upside optionality for investors is substantial and not included in the current EV/EBITDA multiples or DCF valuations, in our view. At the mid-cycle level, we believe that Titan can generate EBITDA of EUR 400-450m (>50% higher than current levels), implying an EV/EBITDA of c.5.5x vs. the 10-year historic median of 8.4x. In this report, we have reduced our EBITDA forecasts (c.4%) and valuation (price target (PT) of EUR 25/share vs. EUR 27/share previously) slightly, but we remain bullish on the stock (stays BUY).Titan Cement Co. and, its subsidiaries (collectively, the Group) are engaged in the production, trade and distribution of a range of construction materials, including cement, concrete, aggregates, cement blocks, dry mortars and fly ash. The Group operates primarily in Greece, the Balkans, Egypt, Turkey and the U.S. The Group operates in 14 countries in Europe, North America and the Eastern Mediterranean and is organized in the following four operating (geographic) segments: Greece and Western Europe, North America, South East Europe, and Eastern Mediterranean.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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