reports
- Dave Nicoski
- Ross LaDuke
Vermilion Compass: Weekly Equity Strategy
Upgrading Financials To Overweight; Downgrading Communications To Market Weight We continue to see a steady flow of risk-on signals that have us moving toward an outright bullish outlook for the broad US equity market. Below we discuss several bullish developments that leads us to believe we are close to exiting the "mixed market environment" that we have referenced since late March. Financials, Copper, US Dollar. These three areas were a primary focus in last week's Compass, and they have sin...
MOS MOSAIC COMPANY
LXU LSB INDUSTRIES INC.
CODI COMPASS DIVERSIFIED HOLDINGS
CIT CIT GROUP INC.
CF CF INDUSTRIES HOLDINGS INC.
ASPN ASPEN AEROGELS
ALLY ALLY FINANCIAL INC
BCPC BALCHEM CORPORATION
WD WALKER & DUNLOP INC.
A114AS ARABIAN CEMENT CO
CACC CREDIT ACCEPTANCE CORPORATION
LPLA LPL FINANCIAL HOLDINGS INC.
WRLD WORLD ACCEPTANCE CORPORATION
ATLC ATLANTICUS HOLDINGS CORP
ASIX ADVANSIX INC.
HWKN HAWKINS INC.
JHG JANUS HENDERSON GROUP PLC
ICL ICL GROUP LTD.
KKR KKR & CO. INC.
TROX TRONOX HOLDINGS PLC
LC LENDINGCLUB CORP
IPI INTREPID POTASH
APA APA CORPORATION
SOM SOMEC
UAN ARCADIAN PARTNERS LP
- Zeyad Ahmed
Egyot: Long-Awaited Cement Quota Allocation Is Finally Here
The Egyptian Competition Authority (ECA) has approved a request by 23 cement producers to reduce production volumes “temporarily” to help reduce a glut in output. The current production capacity of the Egyptian cement industry is c.83-85 million tonnes per annum while local demand was only at c.46 million tonnes in FY20 and c.49 million tonnes in FY19, which resulted in a recurring stream of losses for most players in the industry due to price wars and fierce competition. Losses were exacerba...
- Dave Nicoski
- Ross LaDuke
Vermilion Compass: Weekly Equity Strategy
Commodities Improving As US Dollar Simmers Despite a more mixed and highly rotational market across Sectors, market-caps, and growth/value, not one Sector or widely followed index is breaking down; to the contrary, more are beginning to break out to new all-time highs. Overall, the weight of the evidence remains positive, and our outlook remains constructive for the weeks and months ahead; buy pullbacks. S&P 500, Nasdaq 100, Dow, Mid-Caps, Russell 2000. Large-cap (S&P 500, Nasdaq 100, and Dow)...
EME EMCOR GROUP
SON SONOCO PRODUCTS COMPANY
PKG PACKAGING CORPORATION OF AMERICA
UFS DOMTAR CORPORATION
SEIC SEI INVESTMENTS COMPANY
PWR QUANTA SERVICES INC.
MERC MERCER INTERNATIONAL INC.
J JACOBS ENGINEERING GROUP INC.
IVZ INVESCO LTD.
IP INTERNATIONAL PAPER COMPANY
DY DYCOM INDUSTRIES INC.
BWXT BWX TECHNOLOGIES INC.
BCC BOISE CASCADE CO.
AMG AFFILIATED MANAGERS GROUP INC.
FLR FLUOR CORPORATION
WY WEYERHAEUSER COMPANY
A114AS ARABIAN CEMENT CO
LPLA LPL FINANCIAL HOLDINGS INC.
LPX LOUISIANA-PACIFIC CORPORATION
RFP RESOLUTE FOREST PRODUCTS INC.
VRTV VERITIV CORP
WPC W. P. CAREY INC.
JHG JANUS HENDERSON GROUP PLC
WRK WESTROCK COMPANY
APO APOLLO GLOBAL MANAGEMENT INC. CLASS A
- Zeyad Ahmed
Egypt Cement 4Q20 Wrap – Building activity aided volume, but didn’t ev...
RESUMPTION OF BUILDING ACTIVITY AIDED VOLUMES RECOVERY BUT DIDN'T EVADE LOSSES Egypt’s local cement sales volumes in 2020 declined to 45.9 million tonnes (-5.6% YoY) but were higher than our expectations of 44 million tonnes, due to the resumption of building activity in 4Q20 which led to a rebound in volumes, while cement exports grew by 4.0% in 2020 to 1.18 million tonnes, representing 2.5% of total sales. Hence, total cement sales (local + exports) for the year stood at 47.13 million tonne...
- Zeyad Ahmed
Arabian Cement: Management webinar key takeaways
VOLUMES TO RECOVER SLIGHTLY IN 2021 * ARCC management sees that things got a bit clearer in 4Q20 from the perspective of construction sites since the ban on construction has been waived. They mentioned that the local demand has started to recover gradually since then. * Local demand was 3.1 million tonnes in August, 3.6 million tonnes in September, 4.0 million tonnes in October, 4.3 million tonnes in November, and December expectations are 4.3-4.4 million tonnes. So, there is a clear re...
- Zeyad Ahmed
Egypt cement: 3Q20 wrap – muted volumes and declining prices hamper re...
ANOTHER WEAK QUARTER FOR EGYPT'S CEMENT INDUSTRY, PAUSE ON BUILDING ACTIVITY DRAGS DOWN VOLUMES Total cement sales (local + exports) stood at 10.5 million tonnes in 3Q20, down 14.2% YoY but up 3.6% QoQ. Utilization rates recorded 57% in 9M20 and 58% in Sep-20. 3Q20 volumes were weakened on an annual basis, by the halt of building permits in Egypt’s capital cities and the government’s focus on fighting illegal building activity, which definitely weighed down on building materials demand and ce...
- Zeyad Ahmed
Egypt Cement 2Q wrap: Depressed volumes hammer revenues, yet losses av...
CHALLENGING QUARTER FOR CEMENT DEMAND AND PRICES ON SEASONALITY, GLOBAL MARKETS AND REGULATORY CHANGES Total cement sales (local + exports) stood at 10.1 million tonnes in 2Q20, down 12.0% YoY and 61.4% QoQ and utilization rates recorded 59% in 1H20 and 55% in Jun-20. 2Q20 was definitely a challenging quarter for the cement sector’s sales performance since it included the peak of the pandemic lockdowns and the narrow window for construction between Iftar and the curfew during Ramadan (less th....
- Mark Adeeb
Egypt Cement 1Q20 Survival Themes: Costs efficiency and preserving cas...
Sales volume improve YoY in early 2020, weakness expected going forward Total cement sales (local + exports) stood at 13.2 million in 1Q20, up 4.9% YoY and down 1.8% QoQ. The annual increase was partially driven by 1) recovery in purchasing power in early 2020 coupled with 2) accelerating informal construction activity towards the end of March. Looking ahead, we expect sales volume to decline on the back of Ramadan and Eid holidays in addition to the narrow window between Iftar and the curfew...
- Ahmed Soliman
Egypt cements quarterly update | Further demand weakness in 3Q19
Demand down 7.9% y-o-y in 3Q19; Full year 2019 demand highly likely to miss our c51mn tonne estimate. Local cement demand continued to deteriorate in 3Q19, falling by 7.9% y-o-y to 11.9mn tonnes. We assume flattish cement demand over 2019-22e at c51mn tonnes, but the weakness seen in 9M19 (-6.7% y-o-y) implies that our numbers for full year 2019 and beyond are likely to miss. For our valuation of Arabian Cement Company (ACC) [Underweight | TP EGP3.20], we assume a cement capacity utilisation of ...
- Ahmed Soliman
Egypt cements quarterly update | Demand weakness, inventory pile-up co...
Demand falls 3.2% y-o-y in 2Q19; Full year 2019 demand likely to miss our estimate. Local cement demand dropped by 3.2% y-o-y (-7.4% q-o-q) to 11.3mn tonnes, putting 1H19 local cement demand at 23.5mn tonnes (-6.3% y-o-y). This comes against our expectation of flattish cement demand, meaning full year 2019 cement demand is likely to miss our 50mn tonne estimate. Arabian Cement Company (ACC) [Underweight | TP EGP3.2]’s current share price is in line with our TP. However, there could be more downs...
Cut to UW, on worsening industry dynamics
Industry demand, margins continue to deteriorate; Further capacity exits unlikely to alleviate pressures. Cement demand continued deteriorating in 2019, falling by 8.8% in 1Q19. A growing supply/demand gap and heavy competition led the industry’s margins and profitability to maintain a downward trend in 2019. 6.8mn tpa of cement capacity shutdowns over 2018-19a were insufficient to support margins. We change our demand forecasts to assume flattish demand at 51mn tonnes p.a. over 2019-22e, and a ...
- Ahmed Soliman
Egypt cements quarterly update | Further demand deterioration; Distres...
Demand continues falling, against our estimates. Local cement demand fell by 9% y-o-y (-8.5% q-o-q) to 12.2mn tonnes in 1Q19, coming against our expectation of the start of gradual recovery in 2019 (thanks to improving top down dynamics, the resumption of monetary easing and purchasing power recovery). The drop in 1Q19 demand signifies continued weakness throughout 2019. Our Overweight call on Arabian Cement [Overweight | TP EGP8.30] assumes industry demand should gradually recover over the long...
- Ahmed Soliman
Egypt cements quarterly update | Industry demand continues to weaken; ...
Demand contraction continues into 4Q18. The Egyptian cement industry’s production and sales volumes are back. Cement demand has been contracting since the EGP floatation in Nov-16. The latest data shows a continued decline in 4Q18, at 13.3mn tonnes, down 10.8% y-o-y (-3.5% q-o-q). Our conversations with cement companies indicate demand contraction continued into 1Q19, particularly given few days of exceptionally cold weather. We believe demand recovery will be gradual (2018-23e CAGR of c5.2%) an...
- Ahmed Soliman
Bleak industry outlook; Upgrade to Neutral post-share price drop
Upgrade to Neutral on valuation. We cut our DCF-EV by c5%, as we reflect further industry deterioration, but raise our TP by 11%%, as we account for EGP479mn (EGP1.30/share) net debt reduction, which was driven by exceptionally strong 1Q18 performance. We previously held a non-consensus Underweight call on ACC, as of Aug-16. We turn Neutral on the stock after the share price dropped 12.8% y-t-d, underperforming the market by 17.6% and c88% in total since we first called our Underweight. We maint...
- Ahmed Soliman
Egypt natural gas outlook | Sector developments reconfirm long-term de...
Maintain expectation of a sustained long-term gas deficit. We cut our demand estimates by 4-7% over 2018-21, mainly due to the impact of global externalities (higher oil prices and capital outflows from EM economies), on economic growth and gas demand. We hold our supply and pricing forecasts roughly unchanged. We also maintain our view that Egypt will remain a gas deficit nation beyond 2020e, despite the drastic supply improvement – Egypt’s natural gas supply should grow at a 2017-20e CAGR of 1...
- Ahmed Soliman
On a rocky road; Remain Underweight
Nearer start of mega cement plant 1Q18e to deepen industry woes. Egypt’s idle capacity widened to 27% in 2017 from 20% in 2016, reflecting the 6% demand drop post the EGP flotation. However, we expect this gap to further widen to 31% in 2018 when the Ministry of Defence’s 13.2mn tpa cement plant comes on line. This widening gap incorporates our expectations that improving macro dynamics and personal income recovery should lead to 7% demand CAGR over 2018-22e, 1.7x GDP; c0.7t/capita by 2022e up f...
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
- Alia El Mehelmy
First-mover advantage paying off more on coal dynamics
This stock stands out from the crowd; reiterate Overweight. Our 12-month target price is EGP21.7/share. We see an industry upcycle ahead, with ACC best positioned to benefit. The stock trades on an EV of USD193/t, a 2016e P/E multiple of 7.7x, and offers a 5% dividend yield, with dividends paid on an interim basis.
- Alia El Mehelmy
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 ...
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