Top Story



By Arra B. Francia


Eagle Cement shares ride on ‘positive prospects’




Posted on May 30, 2017


SHARES of Eagle Cement Corp. -- the second company to debut on the Philippine Stock Exchange (PSE) this year after Wilcon Depot, Inc. in March -- sizzled at the opening of trades on Monday but eventually pared gains in step with much of the bourse.

Eagle Cement raised over P8 billion in its maiden listing. EAGLE CEMENT
The cement manufacturer of tycoon Ramon S. Ang -- which listed on the Main Board under the symbol EAGLE -- saw its shares open trading at P16 apiece, 6.67% more than a P15 offer price, peak for the day 7.47% higher at P16.12, then close at P15.30, still up 2.0%.

The PSE index edged up 0.24%, while the industrial sectoral index to which Eagle Cement now belongs finished just 0.03%up. The six industrial sectors were equally divided between gainers and losers.

Eagle Cement, which plans to ride the government’s massive infrastructure buildup over the next five years, raised over P8 billion in its maiden listing.

Net proceeds of the initial public offer will be allotted for the construction of Eagle Cement’s fourth production line in Cebu that will bring its total capacity to 9.1 million metric tons (MT) by 2020. The completion of its third production line in Bulacan in 2018 is expected to make it the country’s number-one cement maker in terms of capacity, at 7.1 million MT or 180 million bags annually.

“By next year, Eagle should be number one in terms of capacity. We hope by volume we will be able to sell all of it. So if we sell all the 7 million tons next year, Eagle will be number one right away,” Mr. Ang said in a mix of English and Filipino in a press conference after the listing ceremony in PSE Plaza in Makati City.

DRIVERS
Following the completion of the new plants, Eagle Cement looks to hike market share to 25% within the next three years from 14% currently.

“We hope to become at least 25% market share by two to three years... More volume will drive growth -- because of our new factories in Bulacan, in Cebu -- to supply the Visayas and Mindanao markets,” Mr. Ang said.

Asked if the government’s infrastructure push will contribute to the firm’s growth, Mr. Ang said it will, but noted that household demand has been a main driver.

“But majority of the cement market are really catering to the general public kasi napakarami nating OFW na nagpapatayo ng bahay (because we have a lot of overseas Filipino workers who are building houses) everywhere,” Mr. Ang said.

Analysts cited the company’s good fundamentals that fueled demand for its shares, as well as the government’s infrastructure program that should help ensure positive performance in the longer term.

With the current administration’s plans to spend around P8.4 trillion until it ends its term in mid-2022 for the construction of roads, tollways and airports, among others, cement consumption in the country is expected to rise to 39 million MT in 2022 from 26.7 million MT in 2016.

“As of 2 p.m., EAGLE’s market performance is a testament to the company’s perceived intrinsic value. Despite Eagle Cement capturing only a particular market in the overall Philippine cement industry, they are still the leading brand within Northern Luzon,” Regina Capital Development Corp. Head of Research Luis A. Limlingan said.

Eagle Cement’s position is mainly due to the accessibility of its products in the market, as all of the firm’s plants are currently in Luzon. “This makes them more accessible to place orders,” Mr. Limlingan said.

“Demand was driven by investors who couldn’t get their entire allocation during the offer period. In a sense, a lot were buying to add to their positions on the back of positive prospects for infrastructure development in the next few years,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a mobile phone message.

“Its performance today is already good, given that it’s higher than the listing price,” Summit Securities Inc. President Harry G. Liu said in a phone interview, noting Eagle Cement’s potential for the long term.

“We have to see the next few days. As far as the company is concerned it’s okay, because the company is earning, it has potential long term, so I don’t see it as long-term issue because of its fundamental reports, so it’s okay.”

While actual construction of the projects lined up for President Rodrigo R. Duterte’s term has yet to start, Mr. Liu said the outlook for the company remains bullish.

“Definitely as a player in cement manufacturing, it’s going to be a major player to the infrastructure requirements supply, so I don’t see any problems as far as fundamentals are concerned,” he added.