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petracot
Lafarge had been sold down with price closed to RM9.20 per share. No thanks to EPF who had been selling the shares aggressively. However, with announcement of 4Q result and increased quarterly dividend of 13 sen, the share price has rebounded to RM9.80 per share. With the earning of 41 sen, the PER is close to 24 which is deemed high by many people. There are several reasons why market is attaching a premium to Lafarge share:

a)The company is backed by advanced R&D of Lafarge International which is the 2nd largest cement company in the world.

b) The company has niche market products for special projects such as cement for high-rise buildings, bridges and airport runways. The company is currently the exclusive supplier of concrete to KLIA2

c) The company is debt free and has a pile of cash of a few hundred million RM. It has no problem of paying regular and consistent dividend.
03 Mar 2013, 03:40 PM
petracot
RHB is Recommending Lafarge as "trading buy" with resistance level of RM11.30 and final target price of RM12.50 per share, as long as share price remains above RM10. This price seems a bit far-stretched.

However, anything is possible with the current media hype of construction sector, particularly the announcement of the High Speed Rail between KL and Singapore. Building material, especially cement seems to be the flavour of the year. Steel is out of the race because of cheap imports from China, despite levy of anti-dumping tariff.

Cement is a good story to tell, coupled with limited stocks available because there are only two listed cement companies - Tasek & Lafarge. RHB may be quite right in their observation but exercise caution!
15 Mar 2013, 12:00 PM
petracot
While the market is swimming in the red sea due to uncertainty of election, Lafarge is bouncing back from post dividend downward price adjustment.In the last few weeks, share price has jumped from the low of RM9+ to this morning's high of RM10.40 apiece. What's going on? Nothing fundamental has changed. My take of the situation is this:

Whoever wins the election, Iskandar Development Region (IDR) will move on and Singapore Government will establish friendship with Malaysia even if there is a change of regime. IDR has reached a stage self-propelling motion; nobody can stop it now and nobody will because it is too big and too much to fail!

The amount of cement required for IDR is humongous and the only Cement company that has excess capacity big enough to meet the demand is Lafarge. As mentioned before, Lafarge will divert its 30% export quota to local market when the need arises, which is about 3.6 million tons.
05 Apr 2013, 12:05 PM
petracot
With political uncertainty removed from the local scene, construction activities are poised to take off in a big way, particularly those related to Iskandar development and MRT as well as other infrastructures. Cement is the most basic building ingredient for all types of development and there will be increased demand resulting from the current construction boom. As mentioned before, Lafarge is the only cement company with excess capacity of cement production. That is probably the reason behind the strong price appreciation of Lafarge share. It moved up as much as 76 sen today to touch the high of RM10.98 per share.
10 May 2013, 04:13 PM
petracot
Many people know Lafarge as a supplier of cement and ready-mix concrete. There is one hidden business in this company not many people know about - aggregates or quarry products with processing factories located in Ipoh.

This subsidiary supplies stones of all grades for purposes of concrete, roads and other infrastructure constructions. It is reported today in Business Time that gravel or stone prices has tripled this year due to excessive demand.

This piece of news augurs well for the growth of Lafarge Malaysia. Quarry products can be a significant source of revenue.
08 Jun 2013, 12:04 PM
petracot
At around RM11 per share, Lafarge share price seems to be on the high side judging from 2012 earning of 41 sen and net dividend of 37 sen per share. The PER is about 27 and dividend yield is 3.4%.

However, there is very strong buying support even at this price. A casual check with Bursa announcement revealed that EPF, which is already a substantial shareholder, has been buying Lafarge shares aggressively. Just within last two weeks, EPF has purchased a total of more than 2.5 million shares in the open market.

We do not know the rationale of EPF purchases. Only time will tell. Perhaps, by August this year, the picture will be clearer as the Board will announce the company's expansion plans.
11 Jun 2013, 09:01 PM


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