Jump to content

The Wonderful World of Cement

Recommended Posts

What is the cement outlook in SA?


PPC is trading at a level that makes me reach for me Black jack n' rum. I am not to familiar with the cement industry and might be hangin' me self by the Hempen halter.

Dangote in Nigeria might swoop in, I don't know.


If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.

Share this post

Link to post
Share on other sites

I'm also looking at throwing some spare cash into the cement pit, but i think it should be cash once is willing to part with should the brown stuff hit.

Share this post

Link to post
Share on other sites

My argument is haters gonna hate, buildings gonna be building. And to build you need iron and you need cement.

If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.

Share this post

Link to post
Share on other sites

I haven't been following PPC for that long, but from what I've read they have been investing heavily into Africa, with around 6 - 8 new ventures coming online in the near future.


At least that's how I understood it all, for this reason I have dumped a lump sum into them. Will hopefully grow into a nice little nest egg in the next 5 years or so.

Share this post

Link to post
Share on other sites

Hmmm I wonder how low this share can go, already thought its at an all time low 5 days ago, but it just keeps dropping more and more.

Share this post

Link to post
Share on other sites

PPC interim results 31 March 2016 released 14 June 2016


Revenue for the interim period dropped by 1% to R4.501 billion (2015: R4.541 billion). Gross profit was 7% lower at R1.2 billion (2015: R1.3 billion). Operating profit decreased by 3% to R733 million (2015: R756 million). Profit for the period attributable to shareholders of PPC Ltd. rose by 35% to R369 million (2015: R274 million). Furthermore, headline earnings per share were recorded at 53 cents per share (2015: 60 cents per share).



In the short to medium term PPCÆs focus is on consolidating current expansion projects and operational efficiency initiatives introduced in the past 18 months, stabilising the company and ensuring it is able to deliver on its strategic priorities.


The group has made changes to its operating structure to ensure that it has the appropriate business model to deliver on its long-term growth strategy. Two key changes include the establishment of the materials business division, noted earlier, and a new commercial function. The materials business division is focused on expanding PPCÆs product range and service offering in aggregates, readymix, fly ash, lime and related businesses. Progress to date includes the imminent acquisition of 3Q Mahuma Concrete, the largest independently owned readymix concrete supplier in southern Africa. The new commercial function is intended to create and entrench an increased commercial perspective to facilitate PPCÆs aim to become a world-class provider of materials and solutions. A dedicated project management office now operates from this division to ensure the company realises its aspirations.


The Board approved a corporate restructure to streamline and optimise the South African and foreign operations, effective 1 April 2016. As a consequence, the legal structures and management accountability are fully aligned and Project Omega is now substantially complete.


PPCÆs 2008 broad-based black economic empowerment transaction (B-BBEE 1) matures in December 2016, however discussions to accelerate the unwind of B-BBEE 1 continues. Under the revised Department of Trade and IndustryÆs broad-based black economic empowerment codes of good practice, PPC was rerated from a level 2 contributor to level 8 in December 2015. We had anticipated this outcome and management plans to improve our B-BBEE score to level 4 over the next three years. This rating will enable our customers to claim back 100% of their spending with our group for their own preferential procurement points. To reach level 4, the company will focus on improving the score in the categories of management control, skills development, and enterprise and supplier development.

Share this post

Link to post
Share on other sites

@780 cents ... I want to take a plunge and buy.

If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.

Share this post

Link to post
Share on other sites

I will sell on 10% profit. Since in hindsight this is not a share I want to be in anymore, I might have made a mistake, lets wait and see. 780 cents was my buy price


Sold mine just now: 14% profit! score!



Share this post

Link to post
Share on other sites

Those that have not bought yet. Might be to late now.


PPC, South Africa’s largest publicly traded cement maker, said it received R4 billion ($263 million) of bank guarantees to underwrite the sale of shares to existing investors, adding to facilities it received last week to redeem bonds.


A group of lenders including Standard Bank Group, Nedbank Group, FirstRand’s Rand Merchant Bank and Barclays Plc’s Absa will lead the rights-offer process and provide the standby underwriting commitment, Johannesburg-based PPC said in a statement on Monday. Standard Bank was appointed as sole global coordinator.


The agreement comes after PPC on Friday announced that it obtained R2 billion of guarantees from Absa, FirstRand and Standard Bank to back the early redemption of bonds. PPC is being forced to raise funds after S&P Global Ratings cut its credit rating to junk amid rising debt due to investment in new African projects, combined with a difficult trading environment in its home market.


“The execution of the irrevocable and unconditional guarantee in favour of noteholders as well as the signing of the standby underwriting agreement are two major milestones,” chief executive officer Darryll Castle said in the statement. “These pave the way for the company to resolve its capital structure issues effectively, and focus its efforts on implementing its strategy going forward.”


PPC shares gained 5.5% to R7.93 as of 9:07am in Johannesburg, following three days of losses. The stock has almost halved in 2016, the worst performer on the FTSE/JSE Africa All-Share Index.

Join the official JSE Discord Channel

Share this post

Link to post
Share on other sites

A seven-notch downgrade is quite extreme and can conceivably come as a shock to both the issuer and investors. Therefore, this situation begs the question: what went wrong? It seems that in 2015, PPC became aware that it would need more capital in the future, and even considered a capital raise in September.


As part of its planning process, the company mandated the commercial (that is, non-rating) unit of S&P to come up with a dummy rating in order for PPC to determine the potential value of any capital- raising initiative. Unfortunately for PPC, the information gathered as part of this exercise was subsequently used by the S&P ratings arm to trigger an “event-driven review”, which then resulted in the company’s downgrade to junk status. What makes it worse, is that PPC was unaware of the acceleration clause in its DMTN programme.

Join the official JSE Discord Channel

Share this post

Link to post
Share on other sites

Anyone else still riding this out?


Haven't really been monitoring the share itself, but doesn't seem like it's going anywhere fast.

Share this post

Link to post
Share on other sites

See PPC share performance in graph attached.


They are not growing in South Africa and struggle to grow revenue elsewhere in Africa.


Unless they can find growth the share will just drag along and remain cheap due to EPS depression.


Not for me, next.





Share this post

Link to post
Share on other sites

I'm feeling a bit more optimistic as I think their non SA branches has far more room for growth as those countries still have around 4 - 8 percent GDP growth, plus most of them have only recently come online, with some near to completion.


Their revenue can only increase from here since they spent a ton of money developing and deploying these new revenue streams.

Share this post

Link to post
Share on other sites

Detailed Cautionary Announcement in Relation to the Proposed Merger of PPC and AfriSam Group Proprietary Limited



(Incorporated in the Republic of South Africa)

(Company registration number: 1892/000667/06)


ISIN: ZAE000170049

("PPC" or the "Company")






Shareholders of PPC are hereby advised that the Board of Directors

of PPC and the Board of Directors of AfriSam Group Proprietary

Limited (“AfriSam”) (collectively the “Parties”) have entered into a

Heads of Terms to assess the merits of a potential merger between

the two groups (“Proposed Merger”) and to enter into formal

discussions in this regard.


The Parties have independently concluded that current market

circumstances, warrant entering into formal discussions to consider

the Proposed Merger.


As part of such discussions, the Parties will jointly assess the

value that they believe can be realised for the shareholders of PPC

and AfriSam if the Proposed Merger is implemented, which the

respective Boards of Directors believe may arise from the following:

i) The creation of a South African-owned cement producer that

is financially stronger, operationally more efficient and

has deeper technical capability;

ii) The merged entity being able, by virtue of such enhanced

capabilities, to invest in future growth opportunities;

iii) The merged entity being significantly empowered, given that

Phembani Group Proprietary Limited (a major shareholder in

AfriSam) and other empowered investors (including PPC’s

existing broad-based black economic empowerment (“B-BBEE”)

shareholders) will own a significant share of the merged

entity. This will be in addition to PPC’s announced

intention to implement a further B-BBEE ownership

transaction (“PPC’s Proposed B-BBEE Transaction”);

iv) Globally the cement market is dominated by multinational and

regional players. The merged entity will be well placed and

have the balance sheet capabilities to develop as a major

African cement producer, given its complementary production

assets in six African countries outside of South Africa;

v) Synergies which might arise from a combination of the

parties’ operations.


As part of the assessment of the Proposed Merger, and as a condition

to agreeing to pursue the Proposed Merger, the following will be


i) The Parties being satisfied that, after closing of the

Proposed Merger, the merged entity will have similar levels

of gearing to PPC with sufficient financial liquidity;

ii) Agreement by the Parties on the merger ratio;

iii) The Parties confirming their preliminary view described

above that the merged entity will be significantly

empowered, including being satisfied with the potential

impact of the Proposed Merger on PPC’s Proposed B-BBEE


iv) Agreement between the Parties in respect of any potential

competition law considerations associated with the Proposed

Merger; and

v) Each Party separately conducting, and being satisfied with

the results of, a due diligence concerning the business,

assets and liabilities of the other; and

vi) Ultimately, agreement that the Proposed Merger is likely to

deliver compelling benefits for all stakeholders.


The Parties will communicate the outcome of the assessment of the

above considerations.



The discussions between PPC and AfriSam regarding the Proposed

Merger, if implemented, may have a material impact on the price of

the Company’s shares. Accordingly, shareholders are advised to

exercise caution when dealing in securities of the Company until

such time a further announcement is made.


A live investor and analyst conference call will be held at 08:30

(SAST) this morning. PPC CEO Darryll Castle will briefly address

investors and analysts and then open the floor to questions.


Live dial-in details:

South Africa: 011 535 3600 or 010 201 6800

International: +27 11 535 3600 or +27 10 201 6800

Ask to be joined to the PPC investor and analyst conference call.


Up until three days after the conference call, a recording will be

available to investors and analysts that are unable to participate

on the live conference call.

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Create New...