Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
Challenging market dynamics weigh on cement sector’s performance • Total sector demand likely to hover around 50-51mn tons in FY19. • Sector dynamics remain exceptionally challenging and could possibly lead to more shutdowns. • Margins are likely to remain extremely low given the current nameplate capacity/demand gap (roughly 35mn tons). • Excluding capital gains and other unusual items, most players are likely to remain in negative territory throughout FY19.
Margins dive on unfavourable market conditions. Margins dived across the board on the back of unfavourable market dynamics namely entrance of new capacities and almost no volume recovery. Looking ahead, we expect margins to remain pressured in H1 19, profitability to decline further, and we do not rule out that some players will be in negative territory.
In our view, negative developments are currently overly discounted. Cement companies are trading at unrealistically depressed prices. For instance, if SUCE divested non-core assets in 2019, namely Minya white plant and Tourah land plot, its cash/share will likely rise to EGP9.63 (73% of market cap). Additionally, SVCE’s market cap is almost equivalent to its investment portfolio and MBSC’s net cash position accounts for 69% of market cap.
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