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MCEMENT (3794) : MALAYAN CEMENT BERHAD
petracot
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02 Aug 2012, 01:30 PMPost #1
A tale of two cement companies: There are only 2 pure cement companies listed on the Bursa, Lafarge and Tasek. Share price of Lafarge keeps rising hitting the high of RM8.60 this morning while the price of Tasek seems stagnating. Here's the explanation: As the demand and price of cement increase, Tasek can only benefit from price increase. Lafarge will reap profits from both increased demand as well as price because Lafarge has excess capacities of 3.6 million tons.
petracot
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08 Aug 2012, 04:17 PMPost #2
Lafarge is charging again, moving up by 41 sen to hit the high of RM8.70 this afternoon. On the other hand, Tasek drops 9 sen to RM9.90 per share. As explained earlier, Lafarge has the excess capacity to capitalise the booming construction industry. RHB predicted the target price of RM9.05 for Lafarge. I think the target price of RHB will soon be breached.
petracot
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29 Aug 2012, 12:38 PMPost #3
Lafarge registered improved half-year result from 15.2 sen to 17.3 sen per share, which represents an increase of 14% over that of last year. At the same time, the company declared a quarterly single tier dividend of 8 sen.

The 3Q and 4Q results should improve further due the 6% cement price increase which took effect from 1 Aug 2012. As more construction contracts are awarded, the demand for cement will increase further. As pointed in earlier postings, Lafarge is currently the only cement manufacturer that has excess capacity to meet the rising demand.
petracot
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06 Sep 2012, 12:49 PMPost #4
In time of market volatility, a blue-chip high-dividend stock like Lafarge gives one some peace of mind. Lafarge pays out quarterly dividends of 8 sen nett for first 3Qs and 10 sen nett for 4Q giving a total of 34 sen, which works out to a yield of 4%, quite decent compared with FD rate of 2.8%.

There could be higher dividend payouts in the next few years due to the following factors:

a) Earning is increasing as a result of higher sales and higher margin
b) By this September, the company is debt free with nett cash in the coffer.
c) There is a recurring free cash flow of 180 million generated by depreciation in addition to normal earning, which works out to about 20 sen. This amount can be distributed as capital repayment on top of normal dividend.
petracot
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14 Sep 2012, 11:35 AMPost #5
Lafarge goes ex-dividend today. It is interesting to note that share price went up as high as RM8.79 this morning, a hefty gain of 37 sen from the reference price of RM8.42 per share. what's going on? Normally price would dip upon ex-d.

Without the encumbrance of dividend, Lafarge is free to chart a new uptrend. The global economy is slowing including that of Malaysia but the country is embarking on multi-billion mega infrastructure projects; MRT, TRX, high-speed train, oil & gas storage etc. The total spending runs into more than 100 billion RM. It does not matter at all which construction company gets the project; all of them need cement for their construction works. Hence the sure winners are the material suppliers, especially cement manufacturers.

Things may get even hotter as more project works are awarded. Keep your eyes on the news flow of new project launching and keep track of the cement prices.
ILoveDividend
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14 Sep 2012, 12:34 PMPost #6
Lafarge goes ex-dividend today. It is interesting to note that share price went up as high as RM8.79...petracot @ 14 Sep 2012, 11:35 AM

A very good fundamental stock, but i think it is a bit overprice?
petracot
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14 Sep 2012, 03:21 PMPost #7
With the current earning of under 40 sen and dividend of 34 sen per share, The share price of Lafarge at RM8.70 looks fully valued and may even be overpriced. I think the investors are buying based on the future earning. Below is the probable basis:

Lafarge's 3.6 million tons of exported cements are priced at around USD45 per ton or around RM140 per ton. This is about the break-even cost. The domestic cement price is about RM340 per ton.

Here lies the gold mine. If all the exported cements are diverted to domestic market when demands pick up, there is a potential additional gross earning of RM200 per ton. That would work out to total additional net pretax earning of RM720 million or net additional earning of RM540 million or 0.63 per share.

Hence, Lafarge has the potential of hitting net earning of 0.98 (0.63 + 0.35) per share. Of course, this is just on paper. How high can the actual earning be in the longer term? It depends on the local demand for cement and how much Lafarge can divert the exported cement to domestic market.

The above argument is purely theoretical and please take it with a ton of salt. Try to make your own assumptions and do your own calculations to arrive at a practical intelligent guess.
petracot
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18 Sep 2012, 09:50 PMPost #8
Lafarge moved up 18 sen to close the day at RM8.78 per share with a volume of more than 2 million shares. Examining the trade details, looks like big timers are buying. Many deals were in the multiple of ten thousand and there was a single deal of 121,900 in the afternoon.
petracot
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24 Sep 2012, 11:37 AMPost #9
In the midst of market doom and gloom this morning, Lafarge holds on tenaciously at RM8.76 apiece, unchanged from last week's close. Such phenomena is termed resilience. On top of that, two cross single trades took place with 200,000 and 372,900 shares changed hands respectively. The stock price reflects the bullishness of construction sector in the near future.
petracot
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28 Sep 2012, 12:34 PMPost #10
By this evening, the 2013 budget will be tabled. Lafarge has shot up 29 sen to close the morning at RM8.89 apiece. The market is probably anticipating more infrastructural spending which would exert pressure on the demand of cement. Is the market right in its assessment of the budget? Let's sit back and watch the presentation of the budget. If the market is wrong, price of Lafarge will fall on Monday. If the market is right, price of Lafarge may be sustained or inch up further.
petracot
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02 Oct 2012, 12:40 PMPost #11
There was no surprises of infrastructural spending in the 2013 budget. Most people think that present mega projects such as MRT, TRX, PNB Tower, Oil & Gas projects and other developments are more than sufficient to sustain the current construction industry at least for the next few years. Most of these projects have just been launched and are about to go into full swing development. Hence the demand pressure for cement is yet to be felt. The mad rush for cement would probably occur sometime next year onward. Cemex, one of the leader in providing ready-mixed concrete in Malaysia is optimistic of the growth for cement.

Share price of Lafarge is being maintained at pre-budget closed of RM8.90 apiece. It is flirting with the all-important resistance of RM9 per share. In order for Lafarge to pierce through this barrier, there must be substantial real demand for cement in the next few months.
petracot
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04 Oct 2012, 11:16 AMPost #12
Bingo! Lafarge has just broken through RM9 barrier touching RM9.02 per share at the time of writing. I am not a contractor or cement dealer so I don't have the actual feel of cement demand on the ground.

I would appreciate if some readers who have direct contact with cement dealings or first hand knowledge in the construction industry to give some feed back on the situation. That will benefit members of this forum.
kkchong
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04 Oct 2012, 03:37 PMPost #13
Bingo! Lafarge has just broken through RM9 barrier touching RM9.02 per share at the time of writing....petracot @ 04 Oct 2012, 11:16 AM

Thank you so much for the nice call. Running wild now. thumbup
petracot
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04 Oct 2012, 09:52 PMPost #14
Wow! It was quite a spectacular trading day for Lafarge. As soon as Lafarge broke through the RM9 barrier, pople were scrambling to snap up shares, particularly in the morning and late afternoon. The share price was pushed up to an all time high of RM9.41 per share.

Well, I do not know of any specific reasons for the sterling performance apart from those which were shared in this forum. If there is any information which is known to insiders, it would surface in due time. As it is, I think the price is chased up as a result of continuous news flow of MRT contract awards.

You see, as soon as a contractor receives a job of say a few hundred million Ringgit, he needs to think about sourcing of building materials, such as steel and cement. As mentioned before, at the height of construction boom (yet to come), there would be a mad rush for cement.
petracot
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05 Oct 2012, 10:24 AMPost #15
The price movement of Lafarge this morning defies its fundamentals and even surprises technical chartists. It shot up 60 sen to touch RM10 this morning. I have studied this company for many years and the price movements for the last few days throw my thinking off balance. The rapid rise of Lafarge price is unusual and beyond fundamental and technical analysis. Looks like something significant is brewing.

Does anyone know anything this forum does not cover? Please share your view.
petracot
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06 Oct 2012, 12:57 PMPost #16
As I look through all the information related to Lafarge, there is one aspect I have not mentioned - quarry and ready-mixed concrete. Quarry operation provides aggregates of various sizes for purposes of concrete mixing and road construction. This division has not been contributing much to the bottom line of Lafarge.

However, with the infrastructural construction boom which will last through 2016 (CIDB source), ready-mixed concrete can be a new money spinner for Lafarge. Lafarge ready-mixed concrete is reputed for its high quality and reliability which will attract large and reputable projects.

Recently, Lafarge provided a record-breaking 30-hour non-stop pouring of concrete for the foundation of CIMB Tower in KL Sentral. Currently, Lafarge is the sole supplier of ready-mixed concrete for the Sepang LCCT project. The contract is to supply 600,000 M3 of concrete. This is equivalent to 75,000 truck loads of concrete (8 M3 per truck). Lafarge has 30 concrete batching plants throughout the country and they will be kept busy for quite a few years.
petracot
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08 Oct 2012, 03:06 PMPost #17
Last week saw the spectacular rise of Lafarge from RM9 to the high of RM10. However, the share price retreated to RM9.40 at the close of the week. Judging from today's recovery to RM9.60 with strong volume (at 3.05), it appears that appreciation of Lafarge share price is more than just a flash in the pan. There was a single cross trade deal of 500,000 shares at RM9.59 early in the afternoon session.

We do not know exactly the reasons behind the recent price rise of Lafarge. It could be any of the following factors: tight cement supply, increasing cement demand, foreign fund buy, potential high dividend payout and capital repayment or even possibility of privatization. Really, nobody knows. As long as the momentum continues, there is money to be made. Happy trading!
petracot
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08 Oct 2012, 11:00 PMPost #18
Another good day for Lafarge, climbing 40 sen to closed at RM9.80 per share. Incidentally, Maybank IB recently has a write up on Lafarge, painting a rosy picture for the next few months. Maybank has a target price of RM10.10 for Lafarge. They opine that there is possibility of Lafarge to distribute capital repayment of 58 sen in addition to 38 sen of annual dividend. The decision could be made by the Board of Lafarge as soon as November 2012, according to the report.

This is just an analysis and opinion of the Maybank IB. The probability is there but please take it with a pinch of salt.
petracot
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12 Oct 2012, 12:44 PMPost #19
Lafarge has come to the great wall of RM10 apiece. It touched and bounced back, several times. For Lafarge to punch through this great wall, it requires very very bullish factors. One of the following could do the job: announcement of big capital repayment or exceptionally good 3Q results to be released end of November. These are all uncertain and unknown factors. Sit back and watch if anything would happen.
petracot
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25 Oct 2012, 11:42 AMPost #20
Lafarge broke through the RM10 barrier yesterday,but the victory was short-lived. The share price fell back to under RM10 level this morning again. It would take more than speculative interest for the counter to push through and maintain above the RM10 level.

One other factor that may positively influence Lafarge performance is Iskandar development in Johor. With Singaporean investors flocking to the region to develop industrial, commercial and educational properties, the demand for cement will inadvertently increase. Iskandar Region is a massive development corridor; when constructions are in full swing, lots and lots of cement will be required. Perhaps, this is one factor that will provide the catalyst needed to propel Lafarge beyond the RM10 mark.

yeah doh drool lol mad notworthy question rant rolleyes sad shutup shy smile star sweat thumbup wub cry


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