A Ticket to the Philippines’ Infrastructure Growth: Eagle Cement


Local cement maker eats competitors’ lunch(es)

Eagle Cement, ₱70.9 billion Mandaluyong City-based cement maker, has fallen 4% since the start of the year.

As of its recent quarterly report that ended in September, Eagle reported ₱28.3 billion in book value with 0.3x in debt-equity ratio. This would indicate a price-book value multiple of 2.5x compared to its industry multiple of 2.7x.

What is more impressive is Eagle Cement, following its IPO last year raised about ₱7.5 billion, added a healthy ~₱10 billion in its cash and cash equivalents—that’s a good amount of liquidity.

Holcim, a competitor, has about ₱1.95 billion in cash and has ₱6 billion less in book value, and at Eagle’s current value, the company now trades ₱7 billion more than an elderly listed Holcim Philippines.

In its nine months operations that ended in September, Eagle reported 12% rise in revenue and 7.7% in profits.

Quite interesting as Holcim registered contrasting 14% revenue drop and a direr 60% decline in profits in its whole 2017 operations. Cemex Holdings, another competitor, also recorded 13% drop in revenue and 51% reduction in profits in its nine-month period that ended in September last year.

In the time of the Golden Age of Infrastructure of the Philippines, Eagle is clearly winning more business than the older company.

Last week, COL Financial, a reputable brokerage and equity research firm in the Philippines, rated Eagle Cement as a buy with a fair value estimate of ₱19/share compared to its recent ₱14.18/share. This blog’s conservative estimates indicated a per share figure of ₱18/share.

Disclosure: I have shares in Eagle Cement.


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