Riad Kamal, the CEO of Arabtec (ARTC), said in an interview with the Gulf News, published this morning, that there were another 12 cement companies starting up in the UAE in the next 2 years.
Gulf News 13 June 2008:
What about setting up your own cement plant to secure supplies and reduce risks of the fluctuating cement price?
Setting up a cement plant involves heavy capital. Even acquiring stakes in them is very expensive.
However, I think the cement price is due for a correction as the current prices are highly inflated, partly due to the higher oil price and transportation cost and partly due to demand.
Besides, a dozen new cement plants are coming on stream within the next 24 months and that will help the price stabilise.
That could dent revenue and profits for companies like (ARKAN), (RAKCC), and other cement companies in the UAE. I picked those two as examples because their share price has been skyrocketing the past month or two.
On second thoughts, maybe it won't affect RAK Cement that much since most of their profit comes from investments .
No mate, RAK Cement is one of the only cement producers without any stake in the stock market. Most of their income is from core cement operations. As of March, 2008 investments as a percentage of total assets stood at about 3.99%.
The movement in their share price is however not justified because their profit fell by 63% in the first quarter. Moreover they have the distinction of not having ANY expansion plans. With a dismal financial performance, their share price has followed Arkan which too declared a 55% fall in net profits.
In RAKC's case, I believe it is a strategic investor increasing its stake, namely Hydra Properties. If anyone thinks there is a fundamental reason behind this then it has to be INSIDER trading. Why? Pick up any CFA Level 1 text: the company did not disclose any publicly available information which can have a positive impact on stock price.
In Arkan's case, it is clearly insider trading. They have MASSIVE expansion plans however very few people were supposed to know about them. Moreover those plans will take years from being pieces of paper to money. This is just pure speculation and highlights the weakness of valuations in an emerging market.
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
Disclaimer: Investing in stocks is risky, you can lose some or all of your money and/or other assets. Anything you read on this site should be regarded as the opinion of the author only and is not to be taken as advice to buy, sell, or hold stocks and/or any other investments. Seek professional advice and do your due diligence before making investment decisions. In particular, do not assume anything you read on this site is correct or accurate. You should accept that only you can be responsible for any investing decisions you make.
2008 FY
FAQ
Search
Print-friendly
Profile
Private messages
Register
Log in
.
.
