VituVingiSana wrote:moneydust wrote:Aguytrying wrote:This is the biggest chance in years to own arm cement shares if it can get to 30.00
No point in jumping into a sinking ship.This is how KQ started,small problems that appear insignificant that lead to bigger problems.
For long, I have thought this company is overvalued.Little did I know its achilles heels are foreign denominated loans,now coupled with increasing stiff competition in the sector,the road ahead is tough.
2 billion shillings in unrealized losses is no joke.
I find ARM over-priced but I think they will be OK as a business as long as they can sell the cement/clinker they produce. If demand crashes in EAC, then they are in HUGE trouble.
It seems they have excess capacity but as the EAC (KE & TZ) start building infrastructure over the next few years the demand for concrete/cement will grow & utilizing the capacity.
One huge plus for ARM vs KQ is the management-ownership. Naikuni/Mbugua were after salaries (& probably kickbacks) but Pradeep Paunrana (& family) has a lot more to lose if ARM goes down.
I listened to the Md and finance guy in a video interview with Aly Khan. I know how that already sounds. Anyway. They are not worried about the unrealized forex losses, were the shilling to strengthen they will be mitigated. If the convertible bond is redeemed as shares it will be mitigated. If the first 2 don't happen, they will use their dollar earnings to pay off the loan. It's due IFRS rules that they have to pass it through profit and loss. Also the recently completed tanga plants' borrowing is now being reflected in finance costs after being commissioned.
On management, that is the real reason I like this company. Please do not compare this with KQ. In management they are worlds apart. The company's revenues or expenses are intact. On capacity, Pradeep reckons that Kenya is far away from the global average, that could be a problem if he is wrong.
The investor's chief problem - and even his worst enemy - is likely to be himself