Qena Cement

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Qena Cement

  1. 1. Department of Management School of Business, Economics and Communication FINC 540 Presented by: Alexander Guindy Mohamed Ragab Mostafa Mazen Presented to: Dr. Medhat Hassanein
  2. 2. INTERNATIONAL CEMENT INDUSTRY
  3. 3. <ul><li>World consumption rising by 9% and 6% in 2004 and 2005. </li></ul><ul><li>63 million tons in FY04 to 105 million tons in FY05 </li></ul><ul><li>Asian countries were the highest of global consumers then Gulf countries </li></ul><ul><li>Egypt accounted for 38.3 million tons of Africa’s production </li></ul>International Cement Industry
  4. 4. International Cement Industry
  5. 5. <ul><li>September 2006 cement consumption increased moderately </li></ul><ul><li>Italy consumed 46.1 million tons </li></ul><ul><li>Turkey consumed 35 million tons </li></ul>International Cement Industry <ul><li>Exporters of cement to Spain - China (2.8 million tons), Egypt (730,000 tons) </li></ul><ul><li>Spain consumed 51.5 million tons </li></ul><ul><li>Egypt consumed 28.2 million tons </li></ul>
  6. 6. EGYPTIAN CEMENT INDUSTRY
  7. 7. <ul><li>Robust growth in the 1990s. </li></ul><ul><li>Cement imports highest in 1999. </li></ul><ul><li>Slow economic growth phase during 2001/2002 . Cement consumption declining by 4% during the year. </li></ul><ul><li>10.8 million tons of oversupply in 2003. </li></ul>Egyptian Cement Industry <ul><li>Major national projects in Toshka, Suez Gulf and Sinai . </li></ul><ul><li>Price war between producers trying to gain or defend existing market share. </li></ul><ul><li>New entrants attracted to industry. </li></ul>
  8. 8. <ul><li>March 2003 12 local cement producers reached an agreement. </li></ul>Egyptian Cement Industry
  9. 9. <ul><li>Total cement exports increased from 2.7mt in 2001 to 12.4mt in 2004. </li></ul><ul><li>Increase in cement consumption during 05/06. </li></ul><ul><li>Decline in exports in 2005 to 9.6 mt tons. </li></ul>Egyptian Cement Industry <ul><li>Established 938,000 housing units to redistribute the population away from the crowded Nile valley. </li></ul>
  10. 10. Egyptian Cement Industry
  11. 11. <ul><li>August 2006 - cement price capping at LE 330. </li></ul><ul><li>Price of Egyptian cement continues to be low compared Saudi Arabia, UAE, Iran and Turkey. </li></ul>Egyptian Cement Industry <ul><li>Egyptian government forecasts that the country’s economy will expand 7.5% in the year ending June 30th, 2007, up from 6.8%. </li></ul>
  12. 12. MISR CEMENT QENA (MCQE)
  13. 13. <ul><li>17th of June 1999 a contract was concluded between MCQE and F.L. Smidth-Fuller Engineering A/S (FFE) to build the cement plant with a total value of US$150 million. </li></ul><ul><li>Located in Qeft city. </li></ul><ul><li>Capacity of 1.4 million tons of ordinary Portland cement per year. </li></ul>Misr Cement Qena Egypt <ul><li>Mazot - major source of energy. </li></ul>
  14. 14. <ul><li>Law 159 of 1981. </li></ul><ul><li>Started operations in April 2002. </li></ul>Misr Cement Qena Egypt <ul><li>Capital worth EGP 600 million and an issued and paid-in capital of EGP 300 million distributed on 30 million shares. </li></ul>
  15. 15. Misr Cement Qena
  16. 16. Misr Cement Qena <ul><li>2.9 million tons capacity by 4Q08 . </li></ul>
  17. 17. Misr Cement Qena <ul><li>Safaga Port and exported cement only. </li></ul>
  18. 18. Misr Cement Qena
  19. 19. RECENT EVENTS
  20. 20. <ul><li>February 20th 2007 - Citadel submitted a counter bid to acquire 100% at a price of LE75/share, equivalent to a total deal value of LE2.25 billion. </li></ul><ul><li>February 11th 2007 - Cimpor Cimentos de Portugal declared their intention to acquire 100% of MCQE at EGP67/share, which is a 24% premium over the closing price of EGP54/share on February 8th 2007. </li></ul><ul><li>February 25th 2007 - Cimpor raised its bid to EGP80 per share. </li></ul><ul><li>March 6th 2007 - Citadel Holding succeeded in acquiring 10% of MCQE through the Egyptian Stock Exchange. 3 million shares with average price of EGP 80 per share. </li></ul>Recent Events
  21. 21. Company Valuation VALUATION SHEET
  22. 22. <ul><li>Conclusion </li></ul><ul><li>Fair value of EGP 87 L.E </li></ul><ul><li>Stock is traded at EGP 80 L.E </li></ul><ul><li>Undervalued by 11.8 % </li></ul><ul><li>Bid offers were unreasonable </li></ul><ul><li>Explains how the market reacted to the bids by raising the stock price each time a higher bid was offered. </li></ul><ul><li>Recommended to Buy or Hold. </li></ul>
  23. 23. <ul><li>Other Scenarios: </li></ul>110 L.E Debt Weight in WACC Wd = 50% 117 L.E g = 10% Stock Fair Value Scenario
  24. 24. THANK YOU

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