Peer Group Analysis and Replacement Cost – EV/tonne

Key message: On a peer group or replacement cost comparison, PPC is very cheap. PPC is trading on an EV/tonne of USD51/tonne, with replacement costs over USD200/tonne. Global peers trade currently at USD85-260/tonne.

  • In this report we look at cement peer group valuations, using EV/tonne and EBITDA/tonne measures.
  • PPC is cheap on an EV/tonne basis, trading at a current USD51/tonne. The average for the global peer group is USD161/tonne.
  • On a global average EV/tonne, PPC should trade at R13.68.
  • The global peer group generates EBITDA of between USD12-25/tonne. PPC (on FY20 numbers) generated USD13/tonne. On forecast FY21 EBITDA numbers PPC should generate USD16/tonne.
  • Replacement capacity is just over USD200/tonne, based on 6 new integrated plants constructed recently in Africa.
  • The addition of a kiln to an existing plant, as PPC recently completed at its Slurry plant, cost just over USD100/tonne. This does not include the grinding plant and associated infrastructure that would be required to build a new integrated cement plant.
  • On a full replacement cost basis (integrated capacity), PPC should trade at R17.80.
  • PPC is currently well off the global peer and replacement cost valuations.
  • The data and charts are shown in the body of this report.

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