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Flash Note Cemargos: The Company will acquire cement assets in Honduras from Lafarge(September 04, 2013)
Flash Note Cemargos: The Company will acquire cement assets in Honduras from Lafarge
Cementos Argos will acquire a 53.3% stake of Lafarges cement assets in Honduras for EUR 232mn.
Closing Px (CEMARGOS): COP 9,300 /share
T.P. 2013YE (CEMARGOS): COP 8,641 / share - Rating: SELL
September 4, 2013 (www.investorideas.com newswire) Credicorp Capital Equity Research: We expected an acquisition by Cemargos more towards 2014; hence, this news is positive in the sense that the Company should start consolidating these assets before year end and investors funds (from May-13 issuance) should start perceiving higher returns in a shorter term.
Cemargos should not have trouble consolidating the new operations as it has been an active M&A player throughout its history and it has experience in the Caribbean & Central American Region.
Albeit the acquisition does not promise aggressive volume growths as Honduras historical cement consumption shows a 3.4% CAGR (5.4% in the last 3 years) we highlight the impressive efficiency of the operations which reflect in a 49.6% EBITDA margin, well above the industrys margins in the LatAm, Caribbean and US Regions.
Initially, the price per ton of USD 439 seems expensive. However, adding port facilities and limestone reserves, and taking into account the assets profitability, the price seems fair.
Although the transaction has not been closed and thus, cannot be included in our valuation yet, we anticipate this event could have a double positive effect on our current price 2013 T.P. (COP 8,641 / share) and rating (SELL), given: 1) the anticipation of the transaction according to our estimates, which will imply a faster-than-expected use of cash funds, and 2) the profitability of the acquired assets.
To view complete report: Flash Note Cemargos
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