This news is from 2005. Sugar prices are falling in Vietnam. Refer article below.
We should see increased demand for cement in the medium term.
dispatches of sagar cements are very healthy for month of feb - this is one indication of demand in the AP/Telangana region.Eagerly waiting for KCP cement details…Below are the details as posted by @basumallick on sagar cement thread -
Could someone tell how is coal prices and freight faring now compared to last quarter.
As per my little understanding and based on what little bit Ive read, coal prices will only fall over the next 1-2 years but of course I could be completely wrong.
Can anyone please share the link to the concall of the company. its not on the website.
Here is some insight on coal prices currently -
This states that most fertilizers plant and cement plants in general are importing coal because of the quality and the price of coal is lower and is expected to fall due to china shutdown.
According to data available with CEA, renewable energy generation increased by nearly 49 per cent during April-December 2017 against the same period in the previous year.
I believe there was no conference call scheduled for Q3 - any conference call scheduled will be reported on BSE site.We don’t see for Q3.
Can you please share the link to read past concalls?
Thanks - can you also share the link for past Con calls?
Do they have a captive Limestone mine as well?
This can effect the revenue of Sugar business in Vietnam substantially
yes they have a captive limestone mine in Mukthyala. Past concalls I havent found in there website
You can go to research bytes to find past con calls…
Genuine query- A lot of investors on this thread have mentioned that KCP’s current market capitalisation equals the value of their cement division. The remaining businesses are available for no cost. In my limited understanding, KCP is a relatively small producer with around 430 crore kilogram of cement production capacity. There’s ample supply of cement in the market. For a bigger company it makes sense to acquire a plant instead of constructing it from scratch. However, would a bigger player actually be willing to pay for KCP’s cement capacity? Would bigger players be interested? The price of 80$ per tonne capacity may be only for the larger acquisitions. Would it be correct to extrapolate it and apply it here?
If the cement division isn’t considered acquisition worthy it may not be able to attain a much higher market capitalisation. It’s entirely possible that on the books it’s valuable but in reality there’s no buyer or if there is, the buying price offered is significantly lower than our expectations. And it sure seems that their cement doesn’t command a premium over others. Definitely seems like they don’t possess pricing power.
80$ per ton is low. Recent deals were concluded at far higher numbers. Even assuming 80$ per ton they are cheap. Assuming 80$ per ton and taking a 4.3m ton capacity which is expected by FY19 they should be valued at EV of some 2000cr. Add to that the other businesses and growing demand for cement in APT. KCP have been showing volume growth this FY. They can also go in for further brownfield expansion if needed.
Deals may have taken place at 80$ per tonne. But,the question is for what capacity?
We must acknowledge that in the overall Indian cement market KCP is a relatively small player. There are many small cement plants in the country. Larger cement companies may not be interested in acquiring multiple smaller capacitities. That’s precisely what we should be trying to find out. A deal may have taken place but what’s pertinent is to note it’s capacity. If it’s comparable we can extrapolate the price of 80$ per tonne. If there’s no buyer it’s worth nothing.
And, apart from their cement division there’s not much allure to the company.
One could expect around 110-140$ per ton…so 80$ is very cheap and plausible for a small cement company like KCP.
You’re not getting my point. I’m in agreement that 110$ per tonne is common. But, for what capacity would the buyer be willing to pay such prices.
I’ll explain what I’ve been trying to say:
Say there’s a company called Shreys Cement Ltd. I have a capacity of 30 MTPA. I’m desirous of expanding my capacity by another 10 MTPA. I could, in theory, acquire 10 plants of 1 MTPA capacity, 5 plants of 2 MTPA capacity and so on.
Now, what is more convenient for me.
Buying 1 plant of 10 MTPA capacity or buying 10 plants of 1 MTPA capacity. Obviously acquiring 1 plant is a much better proposition. Hence, I’m willing to pay top dollar for it. For the ease, for the convenience. Now, only the massive cement players will go for such large scale expansions. KCP is a relatively small producer of cement. To expand my capacity meaningfully I’d have to acquire multiple plants of KCP’s capacity to attain my required capacity. Would I be willing to do that? If not, the plant is worth nothing.
What I’m asking you is- Has there been any acquisition of a plant whose capacity is in congruence with KCP’s. Let’s consider acquisitions of this size. Not some behemoth acquisition. Price is what the buyer is willing to pay. If there’s no buyer it probably is worthless. So, let’s try to find out acquisitions of plants in the range of 4-5 MTPA.
you can take a look at sagar cements from the same region. As you may already know that cement is a local play, as logistics is a big cost. We have taken 80$ per ton as it is on the lower side. KCP dont have any plans of selling their cement business. They have a sugar business in Vietnam that generates decent profits in addition to their engineering, Five cail JV and hotel that is a drag on profitability. You cannot say the plant is worth nothing as the cement business does generate profits.