Bulls n Bears:::: On A Date with On a Date with Lafarge

Wed Nov 9 15:19:54 CAT 2022

On A Date with On a Date with Lafarge ZWE 

1 in 5 builders in Zimbabwe are smart, they use differentiated cement brands from me. Be smarter own me 👇

Welcome to On a Date with a listed company on the Zimbabwe Stock Exchange (ZSE)

THREAD: On a Date with Lafarge Cement Zimbabwe  Limited (LACZ)

#1. History

Joseph Aspdin a driven bricklayer and plasterer is experimenting in his kitchen

He wants a better cement to lessen building time. One day in his kitchen lab he finds out, 

Heating clay and limestone at high temperatures can make strong cement

1824 "Portland Cement" is created and patented by Joseph Aspdin in Britain.

The innovation forms the bedrock of Britain's cement industry giving it comparative advantage in production of cement.

Many small cement plants are opened across Britain.

1900, Henry Osborne O'Hagan a financier seeks to consolidate the cement industry by creating an enterprise which operates all cement plants in Britain

The British market was under threat from Europe and US based competitors who were increasing their capacity

Associated Portland Cement Manufacturers Limited (APCM) is born out of 24 cement companies. 

APCM sets up a sales arm Cement Marketing Company (CMC) with its leading brand being Blue Circle.

Cement production is directly related to economic activity

Exposed to the uncertainties of the British market APCM expanded its operations across the world including Zimbabwe.

1954, Salisbury Portland Cement (SPC) is incorporated as a unit of APCM coinciding with an infrastructure project boom of the Federation

1978, Blue Circle Industries (BCI) is the new name for APCM taking it from its popular brand.

1980, SPC is listed on the @ZSE_ZW 3 years later renamed to Circle Cement.

2001, Lafarge SA of France takes over BCI becoming world's largest producer of cement.

2007, Circle Cement is renamed Lafarge Cement Zimbabwe (LACZ).

2015, Lafarge SA and Holcim a Switzerland based cement company merge to form Holcim Group. 

2022, Holcim Group is in the process of selling off its 76% stake in LACZ to Fossil Mines.

#2. Operations,

LACZ is producer and supplier of 

*	Cement
*	Dry Mortar
*	Aggregates
*	Soil Strengtheners 

It has two limestone extracting mines at Sternblick Quarry in Harare and Mbudu in Mashonaland East.

Cement 

Its plant was reported to produce 450,000 tonnes of cement per annum. 

However, it was working on increasing its capacity to 800,000 tonnes per annum through installation of the vertical cement mill.

The cement produced by LACZ is tailor made,

Dry Mortar

Dry Mortar is term given to readily mixed raw materials in dry form.

It is made of cement, sand, mineral and functional additives.

100,000 tonnes of dry mortar products can be produced by LACZ annually.

Aggregates

Aggregates are raw materials that are produced from natural sources and extracted from pits and quarries.

These are produced from Sternblick Quarry and Mbudu Quarry.

Soil Strengthening Compounds

LACZ produces agricultural lime which is a calcitic grade soil additive.

It is made from pulverized limestone. Enhance crop yields as it increases the pH of acidic soils.

This helps uptake of nutrients by plants.

#3. Competitors,

LACZ controls 20% of the cement market in Zimbabwe, the 80% is shared by,

° Pretoria Portland Cement 

*	50% market share of the cement market. 

° Livetouch Cement

*	Chinese owned company based in Redcliff, Kwekwe. Producer of Diamond Cement

° Sino-Zimbabwe Cement Company (SZCC)

*	A JV between China Building Material Corporation (CBMC) and the Industrial Development Corporation of Zimbabwe (IDC)

° Pacstar Cement & Concrete

° Imports

Zimbabwe can produce +2,6 million tonnes of cement annually.

#4. Share Price

120 ZWL per share as at 09 November, 2022

80 ZWL per share as at January 3, 2022

22nd on ZSE ranking in terms of year to date performance as of 8 November, 2022

40th most traded stock over the past 3 months to Nov 4.

31st most valuable stock on the ZSE as of 8 November.

ZWL9.6bn market cap (US$13.1m @RBZ Interbank)

#5. Shareholding,

76.45% of LACZ is controlled by Holcim Group through Associated International Cement.

Fossil Mine's bid to acquire 76.45% owned by Holcim won ahead of Huaxin Cement of China.

The deal is backed by local banks and asset managers.

#6. Management,

Geoffrey Ngugwa - CEO

Appointed in December 2021. He is an experienced executive who has had a successful career at Lafarge.

Joining LACZ at a challenging time due to the roof collapse at the plant in Harare. The incident halted production

#7. Pitch,

LACZ is about to transition to a wholly owned Zimbabwean cement company. 

Innovative product portfolio which speaks to the specific needs of builders - Roadcem

The country's largest producer of dry mortar products in Zimbabwe.

Positioned to benefit from the government led infrastructure projects due to its increased capacity. 

Binastore, the e-commerce platform which supports multi currency transactions and opens to diaspora customers.

Pursing 3D printing to housing

Each week will be on a DATE with a company listed on the ZSE with Martin Mataga an Investment Democrat. Twitter @MartinMataga. The purpose of this thread is to assist investors to have a minimum appreciation of listed firms. Bulls n Bears has made reasonable effort to validate and update the information before circulation but the onus is on the investor consult their financial advisor. 

Disclaimer: Do not misconstrue this thread as investment advice. DATE companies before you buy their shares. For comments and questions reply to  <mailto:bulls at bullszimbabwe.com> bulls at bullszimbabwe.com

Invest Wisely!

Bulls n Bears 

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