Cement maker PPC presented its outlook to investors on 8 September, saying it reduced its capital expenditure guidance for the next two years, a move analysts said could help assuage fears about its liquidity position.
PPC, which is being pursued by three potential suitors, said it would cut capex by between 16% and 35% until 2019 and would now focus on bringing its other investments in the rest of Africa into operation.
PPC shareholders are considering a revised merger proposal from AfriSam. Meanwhile, Bloomberg News reported unnamed sources as saying one of the other interested parties was Nigeria’s Dangote cement.
There had been some concern about PPC’s liquidity and that was why it had to rein in capex, said Aeon Investment Management analyst Asief Mohamed. The presentation appeared to be positive, with PPC trying to tell investors how undervalued the share was on a cost per tonne basis, he said.
Mish-al Emeran, an equity analyst at Electus Fund Managers, said it would be surprising if PPC shareholders were happy with the AfriSam offer as it undervalued the share.
In a copy of a presentation to investors, PPC said capex was expected to be between R650m and R900m in 2018, and R750m and R1bn in 2019. This compared with a previous guidance of R1bn to R1.2bn in 2018 and in 2019.
