Risk of new entrant (larger developed ctr) ex Paksitan, India, China -> excess
production capacity low operational and production cost + FTA
Any regulatory change on import tax? High capital requirement, small mkt size, price regulated environemtn Any companies signed agreement to commission a cement grinding plant? Who is the second largest player? How about supplier? It depends on port availability? What are the COGS contract? Where do they import clinker from? Hows clinker price like and whats the driver of clinker price demand? Exchange rate? Cliner is made of global limestone. What is global limestone price? Tax holiday? When does the tax holiday end? How many capex spent? Net debt to equity? Interest rate environment like? Dividend payout (0.4-1.5/share) Adverse weather? Tax any pattern? PE EV/EBITDA Headwind: slowdown in construction, regulated pricing reduction (more competition), (+) brand equity from 3 decades; (ii) market positioning); (iii) gov ramp up p Sri lanka ->importer Manufacturers, grinders, importers Why holcim and larfarge merger wont affect? Cement consumption SL Larfarge -> own bulk storage facility Bulk vs bagged (bulk cheaper) bulk vs bag 40: 60 -> lots of large scale projects more bulk Bulk:retail 25:75 Cement controlled price goes dwon Clinker price=limestone+energy (energy turun) Raw material:40-50% freight
Will depreciation stop?
Operating income: biomass (no clear sustainability)c Cash conversiosn cycle Flagship megapolis Cement: local vs improtg Vat, port authority tax, general corportat eax Expansoin process: funding Lafarge-holcim exit? -> why market not incorporate it? KKS -> not operating factory -> why regulation so stacked? 50mn plan -> margin and econ of scale Retail demand drives growth despite price cut, infra slowdown We highlight that this year 1) the maximum retail price of cement was cut by ~6%, and 2) there was a general slowdown in infrastructure led cement demand. In this backdrop growing revenue by 1.4% is a significant positive to us. Our discussions with the company indicated that this was driven by retail demand while the commercial side also played a part. Towards 2H FY16 the company showcased a solid growth of 6.2% YoY.