Wapco

[hispy99]

WAPCO's Analyst Report courtesy of IBTC

[solainvest]

Lafarge Cement Wapco Nigeria Plc is to raise N75 billion fresh funds through a hybrid offer of raising of debt and/or issuance of Equity not exceeding the number of un-issued shares in the company’s authorised share capital.

Proshare News

[BLUEMONEY]

Originally Posted by solainvest

Lafarge Cement Wapco Nigeria Plc is to raise N75 billion fresh funds through a hybrid offer of raising of debt and/or issuance of Equity not exceeding the number of un-issued shares in the company’s authorised share capital.

Proshare News

very interesting, this portends more downturn for the secondary market. expect a chain reaction from this sector. the much awaited OBAJANA CEMENT will follow and who knows ASHAKA CEMENT may also do a right issue like CCNN.

[zainabusman]

Originally Posted by BLUEMONEY

very interesting, this portends more downturn for the secondary market. expect a chain reaction from this sector. the much awaited OBAJANA CEMENT will follow and who knows ASHAKA CEMENT may also do a right issue like CCNN.

WAPCO is already selling at a reasonable PE of 16.7 and a rights issue possible at a lower price should be attractive. My only problem with WAPCO in the last two years has been the low dividend yield. They need to improve it.

It might not be a bad idea to buy a few WAPCO shares now so as to qualify for any rights. One could then ask 4 more rights during the offer. I have noticed that rights are not usually all taken up and one could squeeze in a few thousand extra.

[BLUEMONEY]

Originally Posted by zainabusman

WAPCO is already selling at a reasonable PE of 16.7 and a rights issue possible at a lower price should be attractive. My only problem with WAPCO in the last two years has been the low dividend yield. They need to improve it.

It might not be a bad idea to buy a few WAPCO shares now so as to qualify for any rights. One could then ask 4 more rights during the offer. I have noticed that rights are not usually all taken up and one could squeeze in a few thousand extra.

you are right, most investors dont take up thier right & are not aware they can sell thier right, & the dividend payout must also increase. as for buying WAPCO now, i wonder if you can get it because the volume traded has been on the decrease even before the news broke out. but you can still place your order, you never can tell. CHEERS

[riskreturn]

Originally Posted by BLUEMONEY

you are right, most investors dont take up thier right & are not aware they can sell thier right, & the dividend payout must also increase. as for buying WAPCO now, i wonder if you can get it because the volume traded has been on the decrease even before the news broke out. but you can still place your order, you never can tell. CHEERS

I do not anticipate any problem getting as much quantity of WAPCO to buy as you want. The price is even declining, suggesting that it must be on net offer.

[Apache]

Hello Guys,
Thought I should share this courtesy of Aktopgun on the sister site. It is his analysis and brainwork.

Morning guys. i would lke to share my research on Lafarge Wapco done over the last one week. Enjoy it, i did.

LAFARGE WAPCO (New name from Feb 2008)
Established 1959, Listed on the NSE Feb 1959 under Building materials sector
MD-Mr George Lourandous (Greek fella)- This guy for former DMD/Chief operating officer of AshakaCem
Yr end: DEC 31ST
Registrars: City Securities
Outstanding Shares: 3,001,600,004.
Owned by Larfarge France when Larfarge bought Blue Circle UK on 1st July 2001. (Blue Cricle were the former owners). So u could say WAPCO came with the deal.( Lafarge France also own Ashaka Cement by the way.). Lafarge are the world’s largest cement producers and are in the top 3 of each sub-sector of the building materials sector in the world.

Share holding structure:
Foreign investor holding company- Lafarge France thru the following:
AIC UK-36.481%
AIC NIGERIA-23.041%
Lafarge Nigeria-0.480%
Total % owned by Lafarge: 60.002%
Other Share holders:
O’dua group of companies-11.765%
Nigerian Public- 28.233%
Its interesting that the Chairman of the board as at 2005 owned 0 shares in WAPCO until yr end when he bought a whole 25,000 (yes 25,000 units only)

Subsidiaries: Portland paints & Product Nig. Ltd., Portland Electrical repairs Ltd., and Nigeria Kraft Bags ltd.

Cement plants in Ewekoro(established 1960, upgraded August 2003) and Sagamu ( established in 1978) in Ogun State.
As at the end of 2005 both plants had a combined capacity of 2.1 metric tonnes (1.32 metric tonnes from ewekoro, the larger of the 2).

Turnover:
2001 13,410,247,000
2002 12,459,539,000
2003 13,729,548,000
2004 22,095,823,000
2005 26,626,109,000 (this is where u start to see the effect of the upgraded ewekoro plant on turnover)
2006 39,647,000,000
2007 38,665,000,000
Turnover increased from 9.52billion in 1Q 2007 to 11.03billion in 1Q 2008

Point to note here is in 2007, WAPCO had 75 days in total that production was suspended due to gas disruptions – an unresolved problem, a microcosm of the general power problem in Naija. An estimated 350kilo tonnes lost in 2007

PBT:
2001 1,079,903,000
2002 21,512,000million (eventually made a loss before tax for this yr cuz of an exceptional item of 1,132,896,000. Net operating loss
after exceptional item was 1,111,384,000 for 2002)
2003 loss of 3,070,884,000
2004 loss of 1,711,977,000 (total loss before tax was 3,159,346,000 cuz of another exceptional item)
2005 3,194,635,000 (from here the dividends of the new plant becoming apparent)
2006 11,856,000,000
2007 12,536,000,000

PAT:
2001 980,266,000
2002 loss of 1,392,050,000
2003 loss of 3,174,956,000
2004 loss of 3,401,129,000
2005 2,763,164,000
2006 10,678,000,000
2007 10,679,000,000 (PAT was N10,946,000,000 in 3Q 07 but WAPCO made a loss in 4Q 07. This continued into 2008 as the
PAT fell by 35% in 1Q 2008 from 2.64billion in 1Q 2007 to 1.95billion in 1Q 2008. This worries me as turnover increased in 1Q 08 but PAT went down for the same period. That suggests to me that the cost of production and or distribution has increased of late.

DPS EPS ROE Profit Margins
2001 0kobo 86kobo 9% 7%
2002 0kobo -81kobo -15% -11%
2003 0kobo -N1.85kobo -53% -23%
2004 0kobo -N1.98kobo -129% -15%
2005 30kobo 92kobo 19% 10%
2006 N1.00 N3.56 42.68% 26.9%
2007 N1.20kobo N3.56 42.68% 27.62%

Highlights:
1.As at half year june 2007 Long term debt stood at N7.9billion (current estimates are about N5billion, AGM is in May 2008)
2.Planned to add 300kilo tonnes capacity in 2007 but plans stalled, not expected to happen earlier than 3Q 2008 now.
3.Multiple factors put the company’s future in doubt:
-the coming on stream of several other compatitiors, notably the Dangote group (BCC (900,000 tonnes/yr),OBAJANA with 4.7Metric tonnes in kogi, its ibese Ogun state plant with 2.3 metric tonnes, its odukpani plant in Cross river with 2.3metric tonnes, a dangote group total of 11.2metric tonnes compared to WAPCO’s 2.1metric tonnes from its Ewekoro and Sagamu plants). In 2005, a yr after BCC came back online for example, BCC cornered 8% of the entire cement market from a position in 2004 where they had no functioning plant in 2004.(turnover for BCC in 2004 was 0!!)
Remember that competition in the Cement market is mostly region based due to the high costs of production and distribution ie WAPCO now has competition in the South West from Dangote as Dangote now has a cement plant in Ogun state like WAPCO. Dangote is in 2 other regions ie middlebelt competing thru BCC and Obajana against CCNN and possibly Ashaka Cement.

The FGN also ordered the reopening of a cement baging plant in Ibeto Portharcourt mid last yr as well, adding to the proliferation of
New cement manufacturing companies in several parts of the country.

WAPCO is expected to gradually lose the most market share to the dangote group in the future and may lose less to the other cement companies.

4.A meeting with foreign fund managers Renaissance Capital, WAPCO management admitted the possibility of a shrinkage in the company’s lime stone reserve following a feasibility study conducted by WAPCO that showed that about 50% of its limestone deposit was underwater. Management says there is a 50-50 chance that the impaired limestone cannot be used for cement production. According to them this may lead to significant limitation to medium term capacity expansion, the key driving element of the company’s growth. I wrote above that the company’s planned expansion by 300 kilo tonnes has been delayed for a yr now. – Rennaissance Capital Research portal.

@Zainabusman,
When making this post, I had you in mind cos I thought you had indicated earlier that you bought this stock although going through the thread, I can't seem to find that post. (or maybe I'm mistaking you for someone else)

[Apache]

More from Aktopgun

On WAPCO still, found out that they were granted a 5yr tax holiday on the upgraded Ewekoro plant which is due to expire August 2008, meaning they will have a higher tax bill probably from 3Q '08.

Lafarge Cement Wapco Nigeria Plc is also to raise N75 billion fresh funds through a hybrid offer of raising of debt and/or issuance of Equity not exceeding the number of un-issued shares in the company’s authorised share capital - proshare.

that piece of news leads me to do this calculation on WAPCO:

authorized share capital currently is N2,266,933,000
therefore, total shares ISSUABLE given the 50kobo nominal price of each share on the NSE is 4,533,866,000 shares
Current issued shares for WAPCO is 3,001,600,004, leaving only 1,532,265,996 shares that can be issued in any rights offer as the company say they arent going to exceed the number of un-issued shares in their authorised share capital.

Now that also leads me to calculate that if a rights offer does happen, it will be at around 1 for 2 at about N48.97 per share to raise N75billion.

The reason i think the management will go for the rights offer instead of going borrowing is that they are still struggling under the burden of a similar debt they went into in 2002 (thru a consortium of 27 banks). They tried a rights offer before the loan then as well, to try to raise the funds to finance its plant reconstruction in 2002 but it failed to raise enough funds so they still had to go borrowing. That debt has been an achilles heel for them cuz of the interest payments which until 2005 were shylock-like. The rates are better now but they still have like N5billion of that loan to pay back.

[zainabusman]

Originally Posted by Apache

Hello Guys,

@Zainabusman,
When making this post, I had you in mind cos I thought you had indicated earlier that you bought this stock although going through the thread, I can't seem to find that post. (or maybe I'm mistaking you for someone else)

Thanks. Indeed i bought a little WAPCO at N54 to qualify for rights if any.

The Cement business is tough like all manufacturing in Nigeria.

Please see today's business day for ARM analysis on WAPCO. They are forecasting a worst case EPS of N2.78 and best case of N4.14. The actual will probably be in bw.

[Apache]

Originally Posted by zainabusman

Thanks. Indeed i bought a little WAPCO at N54 to qualify for rights if any.

The Cement business is tough like all manufacturing in Nigeria.

Please see today's business day for ARM analysis on WAPCO. They are forecasting a worst case EPS of N2.78 and best case of N4.14. The actual will probably be in bw.

No shaking definitely for Wapco. As long as demand continues to outstrip supply, Competition takes a backstage.

[riskreturn]

Originally Posted by Apache

More from Aktopgun

On WAPCO still, found out that they were granted a 5yr tax holiday on the upgraded Ewekoro plant which is due to expire August 2008, meaning they will have a higher tax bill probably from 3Q '08.

Lafarge Cement Wapco Nigeria Plc is also to raise N75 billion fresh funds through a hybrid offer of raising of debt and/or issuance of Equity not exceeding the number of un-issued shares in the company’s authorised share capital - proshare.

that piece of news leads me to do this calculation on WAPCO:

authorized share capital currently is N2,266,933,000
therefore, total shares ISSUABLE given the 50kobo nominal price of each share on the NSE is 4,533,866,000 shares
Current issued shares for WAPCO is 3,001,600,004, leaving only 1,532,265,996 shares that can be issued in any rights offer as the company say they arent going to exceed the number of un-issued shares in their authorised share capital.

Now that also leads me to calculate that if a rights offer does happen, it will be at around 1 for 2 at about N48.97 per share to raise N75billion.

The reason i think the management will go for the rights offer instead of going borrowing is that they are still struggling under the burden of a similar debt they went into in 2002 (thru a consortium of 27 banks). They tried a rights offer before the loan then as well, to try to raise the funds to finance its plant reconstruction in 2002 but it failed to raise enough funds so they still had to go borrowing. That debt has been an achilles heel for them cuz of the interest payments which until 2005 were shylock-like. The rates are better now but they still have like N5billion of that loan to pay back.

I really cannot understand this your analysis. Has it been said that the options being considered are combinations of only debt and rights issues? What of the offer for subscription financing? Why must there be right issue, in the first palce? Lafarge can still preserve its existing proportionate holding without going via rights issue - e.g. getting a special waiver from SEC for preferential allotment or even through a private placement to be made to Lafarge. While,as an existing shareholder, I would prefer 100% rights issue financing, I am not taking it for granted that there will be any rights issue in raising the 75 billion Naira funds.

[Apache]

Originally Posted by riskreturn

I really cannot understand this your analysis. Has it been said that the options being considered are combinations of only debt and rights issues? What of the offer for subscription financing? Why must there be right issue, in the first palce? Lafarge can still preserve its existing proportionate holding without going via rights issue - e.g. getting a special waiver from SEC for preferential allotment or even through a private placement to be made to Lafarge. While,as an existing shareholder, I would prefer 100% rights issue financing, I am not taking it for granted that there will be any rights issue in raising the 75 billion Naira funds.

It's not my analysis. got it from the sister site. I know they will definitely explore the options available to them and come out with that which suits them best. This was just giving a scenario of what it will be if they decide to go sorely by rights issue.

[knightofdelta]

The share price of this company is dropping despite the news of the planned public offer. Is there anybody in the forum who have a soft copy of their annual report for the December 2007 year end?

Will appreciate it if it can be uploaded. I have not been able to lay my hands on the hard copy.

[rose]

Lafarge to double cement production in Nigeria

06.06.2008

The world’s biggest cement maker, Lafarge, has signed an agreement with Chinese supplier, CBMI Ltd., to expand its Nigerian plant and double output to four million tonnes a year, Larage’s Nigerian unit said on Thursday.

Lafarge said the deal, signed in Paris, France, on Monday was a demonstration of its faith in the Nigerian economy and a response to ballooning local demand for cement.

Nigeria’s Lafarge WAPCO did not state the value of the contract or say when it would be completed by CBMI, which is part of China’s Sinoma International Group.

“This investment is expected to increase the company’s production from the present two million tonnes of cement per annum to four million tonnes per annum,” Lafarge said.

The deal is part of Lafarge’s programme to build 45 million tonnes of new cement capacity between 2006 and 2010, in order to meet growing construction needs in emerging markets.

Two weeks ago, Lafarge WAPCO shareholders gave company directors the go-ahead to raise N75 billion ($637 million) in new equity to build a new production line.

Nigeria has seen a strong construction boom in the last six years, which has driven demand for cement to around 14 million tonnes per year from eight million tonnes previously.

NIGERIAN TRIBUNE - News

[hispy99]

Originally Posted by rose