Monday, May 23, 2011

YTL Cement

Construction materials are some of the items to be benifited from the ETP and to be specific Greater KL. If the above are successful implemented, Malaysia construction or infrastructure industry set to pick up or boom. My opinion is good time to buy YTL Cement with reasonable valuation. Talk in detail later

3 comments:

  1. Normally there are 3 types of grow a company can opt for 1st is organic grow, 2nd is through M&A and the last is combination of both. Over the years YTL Cement had grew its business mostly through M&A (Like the purchase of Batu Tiga Quarry and Perak Hanjoong Cement). Cement and quarry business is cyclical in nature, it will do better during good economy but do badly during recession. During good time, it able to obtain better selling prices thus increase the margin. However during bad times price competition is very keen. YTL Cement has proved that it had no problem compete with other players like Lafarge or Tasek. Investing in this type of company timing is essential, and you need to sell it before economy turn bad. The ETP and Greater KL shall be made its presence by 2nd half of this year, construction materials set to boom as demand will increase tremendously.

    Cement and quarry is capital intensive business, so most of them will retain bulk of its profit. As YTL Cement has more than 1 billion in cash and less that 800 million of debt, financially it is not a issue.

    Valuation wise, the diluted EPS of 21.77 (6 months ended Dec 2010) and 35.67 (9 months ended Mar 2011) seem attractive at present price of 5.50 (price has increased from 5.12 from the time i blogged it on 23 May 2011). The price is out of my control, it is purely luck.

    With the future is considered good, i think it is good time to invest.

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