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PPC LIMITED

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Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa. The company operates eleven cement factories located in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia, with a combined production capacity of 11.5 million tons. It produces aggregates at its Mooiplaas quarry in Gauteng, the largest aggregates producer in South Africa, and operates 26 batching plants for ready-mix concrete in South Africa and Mozambique. The company successfully re-negotiated its lending arrangements, avoiding the need for a highly dilutive rights issue. No dividends have been paid in the last five years. PPC faces challenges from the carbon tax implemented on 1st June 2019, costing the company between R100 million and R120 million annually. PPC intends to pass this cost on to consumers, which could reduce its competitiveness against foreign imports unless tariffs are increased. The company's growth strategy focuses heavily on expansion into other African markets. PPC, like much of the construction industry, has struggled due to a lack of new government and quasi-government projects in South Africa. To compensate, the company has been cutting costs and investing in other African markets. However, the cement industry remains oversupplied, presenting ongoing management challenges. PPC has also benefited from the South African government's "localisation" policy, which requires government operations to purchase locally produced cement. In its results for the six months to 30th September 2024, PPC reported revenue down by 4.2% and headline earnings per share (HEPS) of 22 cents, compared with 20 cents in the previous period. The company stated, "Cost discipline and price growth were the main drivers of the recovery in the results and margin of the SA & Botswana group despite the lower sales volumes in the period." PPC is currently building a state-of-the-art plant in the Western Cape in partnership with Sinoma, the world's largest cement equipment producer, at a cost of R3 billion. The company has been in an upward share price trend since October 2022, which is expected to continue. PPC has conducted a R200 million share buy-back and reduced its debt by 20%. On 28th August 2024, the company announced a special dividend of 33.5 cents per share following the sale of its 51% stake in Cimerwa in Rwanda. Looking ahead, PPC is well-positioned to benefit from South Africa's new government of national unity (GNU) and the anticipated reduction in interest rates. However, the company's performance will remain closely tied to broader economic and infrastructure trends across its operating regions.
JSE:PPC
by PDSnetSA
Our opinion on the current state of PPCPPC is a major producer of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa, with a production capacity of 11.5 million tons across eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia. It also operates the Mooiplaas quarry, the largest aggregates producer in South Africa, and has twenty-six batching plants in South Africa and Mozambique. Key developments: 1. Financial Resilience: PPC has successfully re-negotiated its lending agreements, avoiding the need for a highly dilutive rights issue. However, it has not paid dividends for five years. It recently announced a special dividend of 33.5c per share following the sale of its 51% stake in Cimerwa, its Rwandan operation. 2. Carbon Tax Impact: The carbon tax introduced in 2019 costs PPC between R100m and R120m annually, potentially reducing its competitiveness against foreign imports unless tariffs are increased. 3. Geographic Diversification: PPC is focusing on growth in other African markets to offset challenges in the South African construction sector, which has suffered from a lack of government projects. 4. Government Support: PPC is benefiting from South Africa's "localisation" policy, mandating government projects to purchase locally produced cement. 5. Cost Management: In its results for the six months to 30th September 2024, PPC reported revenue down 4.2% but a modest improvement in HEPS to 22c from 20c in the previous period. The company attributed this to strong cost discipline and price growth despite lower sales volumes. 6. Debt Reduction: PPC has reduced its debt by 20% and conducted a R200m share buy-back program, bolstering its financial position. Outlook: PPC's focus on cost control, debt reduction, and localisation policies should provide a buffer against industry challenges. The company is well-positioned to benefit from South Africa's government of national unity (GNU), which is expected to stimulate infrastructure projects, as well as from falling interest rates. Technical Analysis: Since October 2022, PPC shares have been in an upward trend, driven by improved financial performance and investor confidence. This trend is expected to continue as the company capitalizes on local and regional growth opportunities. However, the over-supply in the cement industry remains a challenge.
JSE:PPC
by PDSnetSA
Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa, with operations in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia. The company operates eleven cement factories with a combined production capacity of 11.5 million tons. PPC's Mooiplaas quarry in Gauteng is the largest aggregates producer in South Africa, and it runs twenty-six batching plants for ready-mix across South Africa and Mozambique. PPC has taken several financial steps to stabilize its position. It successfully renegotiated lending terms, thus avoiding a highly dilutive rights issue, and has implemented cost-cutting measures. PPC hasn’t declared dividends in the last five years due to financial pressures. However, it announced a special dividend of 33.5c per share following the sale of its 51% stake in Cimerwa in Rwanda on 28th August 2024. Revenue and Earnings: - For the year ending 31st March 2024, PPC reported revenue up 20.6% and headline earnings per share (HEPS) of 19c, compared to a loss of 20c in the prior year. - In a 4-month update to 31st July 2024, PPC reported revenue down 2.1% and group EBITDA margin reduced from 15.9% to 13.7%. - For the six months to 30th September 2024, HEPS is expected between 20c and 23.5c. Challenges and Opportunities: - PPC faces ongoing carbon tax costs and competitive pressures from foreign imports, which might reduce its pricing advantage unless tariffs are increased. - The company is benefiting from South Africa’s localisation policy, which mandates government purchases of locally produced cement. - PPC has reduced its debt by 20% and has conducted a R200m share buy-back. Technically, PPC has been in an upward trend since October 2022. The special dividend and positive impact from government infrastructure projects provide potential support for continued growth, particularly if the new government of national unity (GNU) initiates further economic reforms or infrastructure projects. The anticipated reduction in interest rates could also support the company’s financing costs and consumer demand.
JSE:PPC
by PDSnetSA
Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa. It has eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia with a total production capacity of 11.5 million tons. It produces aggregates at its Mooiplaas quarry in Gauteng, which is the largest aggregates producer in South Africa. It has twenty-six batching plants for ready-mix in South Africa and Mozambique. Importantly, the company has managed to re-negotiate its lending so that it no longer requires a highly dilutive rights issue. No dividends have been paid for the last five years. The carbon tax which came into effect on 1st June 2019 costs PPC between R100m and R120m, which it intends to pass on to consumers. This will make its pricing less competitive against foreign imports unless tariffs can be increased. PPC is basing its hopes on growth from the rest of Africa. In our view, PPC has been suffering together with the entire construction industry from the lack of new government and quasi-government projects in South Africa. It has been compensating by cutting costs and investing in the rest of Africa, but we regard the cement industry as over-supplied currently, and therefore difficult to manage. The company has also been benefiting from the government's new "localisation" policy, in terms of which government operations have to buy locally produced cement. In its results for the year to 31st March 2024, the company reported revenue up 20.6% and headline earnings per share (HEPS) of 19c compared with a loss of 20c in the previous year. The company said, "The SA and Botswana group cement revenues increased only marginally by 5.2%, driven by price increases and increased sales of clinker to Zimbabwe, which positively offset the declining cement sales volumes. Revenue from the materials businesses declined by 6.0% relative to the prior year." Technically, the share was in a downward trend since its high of 568c in October 2021 and we advised waiting for a clear break up through a 65-day moving average which happened on 2-11-2022 at a price of 241c. Since then, the share has moved sideways and upwards to reach 369c, but remains volatile. The company is conducting a R200m share buy-back and has reduced its debt by 20%. On 26th January 2022, the company reported that the CEO and another director had sold about R240.5m worth of shares, which took the share price down sharply - but is not necessarily thought to be negative in the longer term.
JSE:PPC
by PDSnetSA
UPDATE: PPC shifted the analysis to upside target at R4.26W Formation formed on PPC and there has been a breakout of the downside since December. The M Formation that formed I expected to breakdown never confirmed and so, the analysis has switched.l It's not easy making analysis probabilities with low liquid penny stocks like PPC. Funny I never thought PPC and Penny Stock would be in the same sentence but here we are and it shows how unpredictable markets are. Price>20 and Price>200 - HPT Target R4.26
JSE:PPCLong
by Timonrosso
Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa. It has eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia with a total production capacity of 11.5 million tons. It produces aggregates at its Mooiplaas quarry in Gauteng, which is the largest aggregates producer in South Africa. It has twenty-six batching plants for ready-mix in South Africa and Mozambique. Importantly, the company has managed to re-negotiate its lending so that it no longer requires a highly dilutive rights issue. No dividends have been paid for the last five years. The carbon tax which came into effect on 1st June 2019 costs PPC between R100m and R120m, which it intends to pass on to consumers. This will make its pricing less competitive against foreign imports unless tariffs can be increased. PPC is basing its hopes on growth from the rest of Africa. In our view, PPC has been suffering together with the entire construction industry from the lack of new government and quasi-government projects in South Africa. It has been compensating by cutting costs and investing in the rest of Africa, but we regard the cement industry as over-supplied currently, and therefore difficult to manage. The company has also been benefiting from the government's new "localisation" policy in terms of which government operations have to buy locally produced cement. In its results for the six months to 30th September 2023, the company reported revenue up 20.9% and headline earnings per share (HEPS) of 26c compared with a loss of 5c in the previous period. The company said, "Increased demand is required to enable us to more effectively utilise the capacity available in our primary market. PPC Zimbabwe saw a strong recovery across all key metrics when compared to the negative impact of the planned shutdown in the prior comparative period." In an operational update for the 10 months to 31st January 2024, the company reported revenue up 27.6%. The company said, "Revenue growth in the South African and Botswana cement business continued to be driven by price increases, positively offsetting the declining sales volumes as experienced in the half year." In a trading statement for the year to 31st March 2024, the company estimated that HEPS would be between 27c and 28.5c compared with a loss of 9c in the previous period. The company said, "...the current period EPS and HEPS numbers being impacted by a strong performance by PPC Zimbabwe in the current period compared to the prior period in which it had an extended kiln shutdown. In addition, in the current period, PPC Zimbabwe changed its functional currency from the Zimbabwean dollar to the United States dollar." Technically, the share was in a downward trend since its high of 568c in October 2021, and we advised waiting for a clear break up through a 65-day moving average which happened on 2nd November 2022 at a price of 241c. Since then, the share has moved sideways and upwards but remains volatile. The company is conducting a R200m share buy-back and has reduced its debt by 20%. On 26th January 2022, the company reported that the CEO and another director had sold about R240.5m worth of shares, which took the share price down sharply but is not necessarily thought to be negative. In summary, PPC is making strides in improving its financial health and operational efficiency, particularly with the re-negotiation of its lending and the share buy-back program. The company's focus on cost-cutting and growth in Africa, coupled with the positive impact of the localisation policy, suggests a potential for recovery. However, the over-supply in the cement industry and the competitive pricing challenges due to carbon tax and foreign imports add a layer of risk. Investors should be cautious and monitor for sustained improvements in performance and stability in the share price.
JSE:PPC
by PDSnetSA
UPDATE: PPC Cup and Handle to a Diamond snoozing formationSince the price broke above the brim level for PPC, it's since formed a DIamond FOrmation. There are TWO scenarios we can see: A bullish Diamond broadening formation. It resembles a diamond with high volatility and jumpiness between the price range. We wait for the diamond to form and then wait for the breakout to the upside. A bearish Diamond broadening pattern, where the price breaks below the support of the diamond formation. TIPS FOR BOTH It is common to see Diamond formations to form in up or down trends and then break either way. So we do need to wait for the breakout. I am cautiously optimistic as the previous trend was up, the price is above the 200MA. And so the target remains at R4.40.
JSE:PPCLong
by Timonrosso
Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa. It has eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia with a total production capacity of 11,5 million tons. It produces aggregates at its Mooiplaas quarry in Gauteng which is the largest aggregates producer in South Africa. It has twenty-six batching plants for ready-mix in South Africa and Mozambique. Importantly, the company has managed to re-negotiate its lending so that it no longer requires a highly dilutive rights issue. No dividends have been paid for the last five years. The carbon tax which came into effect on 1st June 2019 costs PPC between R100m and R120m which it intends to pass on to consumers. This will make its pricing less competitive against foreign imports unless tariffs can be increased. PPC is basing its hopes on growth from the rest of Africa. In our view, PPC has been suffering together with the entire construction industry from the lack of new government and quasi-government projects in South Africa. It has been compensating by cutting costs and investing in the rest of Africa, but we regard the cement industry as over-supplied currently, and therefore difficult to manage. The company has also been benefiting from the government's new "localisation" policy in terms of which government operations have to buy locally produced cement. In its results for the six months to 30th September 2023 the company reported revenue up 20,9% and headline earnings per share (HEPS) of 26c compared with a loss of 5c in the previous period. The company said, "Increased demand is required to enable us to more effectively utilise the capacity available in our primary market. PPC Zimbabwe saw a strong recovery across all key metrics when compared to the negative impact of the planned shutdown in the prior comparative period". Technically, the share was in a downward trend since its high of 568c in October 2021 and we advised waiting for a clear break up through a 65-day moving average which happened on 2-11-2022 at a price of 241c. Since then the share has moved sideways and upwards, but remains volatile. The recent results have pushed the share price up sharply. The company is conducting a R200m share buy-back and has reduced its debt by 20%. On 26th January 2022, the company reported that the CEO and another director had sold about R240.5m worth of shares which took the share price down sharply - but is not necessarily thought to be negative.
JSE:PPC
by PDSnetSA
Our opinion on the current state of PPCPPC is a leading manufacturer and supplier of cement, aggregates, ready-mix, lime, limestone, and fly-ash in Africa. It has eleven cement factories in South Africa, Botswana, the DRC, Zimbabwe, Rwanda, and Ethiopia with a total production capacity of 11,5 million tons. It produces aggregates at its Mooiplaas quarry in Gauteng which is the largest aggregates producer in South Africa. It has twenty-six batching plants for ready-mix in South Africa and Mozambique. Importantly, the company has managed to re-negotiate its lending so that it no longer requires a highly dilutive rights issue. No dividends have been paid for the last five years. The carbon tax which came into effect on 1st June 2019 costs PPC between R100m and R120m which it intends to pass on to consumers. This will make its pricing less competitive against foreign imports unless tariffs can be increased. PPC is basing its hopes on growth from the rest of Africa. In our view, PPC has been suffering together with the entire construction industry from the lack of new government and quasi-government projects in South Africa. It has been compensating by cutting costs and investing in the rest of Africa, but we regard the cement industry as over-supplied currently, and therefore difficult to manage. The company has also been benefiting from the government's new "localisation" policy in terms of which government operations have to buy locally produced cement. In its results for the year to 31st March 2023 the company reported revenue slightly up at R9,9bn and a headline loss per share of 8c compared with a loss of 3c in the previous year. The company said, "Impairments of R145 million (March 2022: R38 million) were taken during the year under review, the largest item being R84 million. This related to an impairment at group of a portion of the premium paid on the acquisition of CIMERWA". In an operating update for the five months to 31st August 2023 the company reported revenue in South Africa and Botswana up 5%. The company said, "The average selling price increased by 10% during the period under review as bi-annual increases were implemented in January and July 2023. Notwithstanding the lower volumes, this resulted in revenue growth of 5%". In a trading statement for the six months to 30th September 2023 the company estimated that headline earnings per share (HEPS) would be between 25,5c and 26,5c compared with a loss of 6c in the previous period. The company said, "This difference is primarily due to the current period EPS and HEPS numbers being impacted by a strong performance by PPC Zimbabwe in the current period compared to the prior period". Technically, the share had been on a downward trend since its high of 568c in October 2021 and we advised waiting for a clear break up through a 65-day moving average which happened on 2-11-2022 at a price of 241c. Since then the share has moved sideways and upwards, but remains volatile. The company is conducting a R200m share buy-back and has reduced its debt by 20%. On 26th January 2022, the company reported that the CEO and another director had sold about R240.5m worth of shares which took the share price down sharply - but is not necessarily thought to be negative.
JSE:PPC
by PDSnetSA