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ARM Cement FY 2014 earnings up only 9.8%
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muganda
#1 Posted : Wednesday, March 25, 2015 3:17:24 PM
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Joined: 9/15/2006
Posts: 3,907
Okay, ARM has spoilt us (and it shows in its P/E). I do not remember when it last grew only 9% and a 3% revenue decline to boot. Presage of the slowing construction industry.
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Ericsson
#2 Posted : Wednesday, March 25, 2015 4:13:37 PM
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Joined: 12/4/2009
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Location: NAIROBI
To support its continued expansion,ARM has appointed an group of mandated arrangers (Barclays Bank of Kenya,CFC Stanbic and Standard Chartered Bank)to assist the company raise medium to long terms funding requirements and to refinance its short term borrowings.

Cash flow looks strained coz of the huge debts it has taken.
Dividends will be paid on or about 20th August 2015.
Yaani when it will be announced half year results.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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innairobi
#3 Posted : Wednesday, March 25, 2015 4:59:50 PM
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Maybe the revenue dip is due to loss of market share to fast growing new players like Savannah Cement and National Cement. According to the KNBS, cement production and consumption actually skyrocketed in 2014.
All my friends are heathens, take it slow. Wait for them to ask you who you know. Please don't make any sudden moves.
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Gatheuzi
#4 Posted : Wednesday, March 25, 2015 7:14:03 PM
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Reduction in long term loans by nearly 4b seems to have been financed by short term borrowings which grew by more than 10b. What @Ericsson noted about conversion of short term to long debts will save ARM from high financing costs.

How near completion is the clinker in Tanzania? It's completion will help bost revenues. This will offset the loss of market share in Kenya.
Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.
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Kausha
#5 Posted : Wednesday, March 25, 2015 8:51:17 PM
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Clinker plant completed and commissioned in nov 2014. Grinding capacity to follow in tanga.
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obiero
#6 Posted : Monday, October 12, 2015 11:42:06 AM
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Joined: 6/23/2009
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Location: nairobi
this share

KQ ABP 4.48; MTN ABP 5.20
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Pesa Nane
#7 Posted : Monday, October 12, 2015 4:41:05 PM
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Joined: 5/25/2012
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obiero wrote:
this share

what about it elder @obiero?
Pesa Nane plans to be shilingi when he grows up.
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hisah
#8 Posted : Monday, October 12, 2015 5:53:01 PM
Rank: Chief


Joined: 8/4/2010
Posts: 8,977
obiero wrote:
this share

This counter had two vol spikes last year. In Dec the 2nd vol spike (7M shares) appeared with an average of KES 85. Since then the price has failed to reclaim the 90 handle and now it trades sub 40. Solid distribution in 2014.

I recall in Dec asking in NSE max thread why last Dec was exhibiting massive vol activity. I found it strange while I kept tabs on the counters which were hitting unusual vol spikes.

KCB - large vol in Dec 2014 at 60. Sub 40 today.
BBK - vol spike in Sept 2014 at 17 - 18 range. Sub 13 today.
BRIT - vol spike in Dec 2014 at 30. Almost sub 15 today.
Centum - vol spike in Nov 2014 at 65. Sub 50 today.

And the special one. Look at NMG - massacre from 300. Massive vol spike appeared in 2013. Jumbo distribution!

And so forth. Take time to read the charts.

2014 was a solid distribution year and the failure of 5499 on NSE20 this year confirms that sellers were busy in 2014.

Now we wait for buyers (accumulators) to come back towards election time. If the election fever will be so bad that will present very ripe ground for accumulation with extremely bad negative sentiment in the market!

@Obiero, I hope KQ registers another nasty result this FY so that the sentiments break the negative meter! Then you can buy as much as you want for outsize gains in 3 - 4yrs!

$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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sparkly
#9 Posted : Monday, October 12, 2015 6:21:18 PM
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Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
I have a problem with the debt on ARM balance sheet. A broker friend tried to talk me into buying last year at 60 but I wasn't convinced. Went up to 90 yes but am not sure if I would have bailed out in time.
Life is short. Live passionately.
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obiero
#10 Posted : Monday, October 12, 2015 6:37:08 PM
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Joined: 6/23/2009
Posts: 13,972
Location: nairobi
Pesa Nane wrote:
obiero wrote:
this share

what about it elder @obiero?

It has killed peoples money as @hisah has elaborated. Bloody murder.. It doesnt make sense for it to be trading at 30s while it increased profitability and is bound to continue doing so based on increased construction activity in E.A

KQ ABP 4.48; MTN ABP 5.20
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VituVingiSana
#11 Posted : Monday, October 12, 2015 6:47:41 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,265
Location: Nairobi
obiero wrote:
Pesa Nane wrote:
obiero wrote:
this share

what about it elder @obiero?

It has killed peoples money as @hisah has elaborated. Bloody murder.. It doesnt make sense for it to be trading at 30s while it increased profitability and is bound to continue doing so based on increased construction activity in E.A

Lots of debt on its books. That level of debt [some of it USD] makes folks nervous. Unlike KQ, its EBITDA is positive but loan servicing takes a huge chunk out of gross profit. The demand for cement is growing but so is competition & this has reduced margins.

A good buy at lower prices which reflect a lower EPS thus a more reasonable PER.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Aguytrying
#12 Posted : Tuesday, October 13, 2015 2:51:15 AM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
VituVingiSana wrote:
obiero wrote:
Pesa Nane wrote:
obiero wrote:
this share

what about it elder @obiero?

It has killed peoples money as @hisah has elaborated. Bloody murder.. It doesnt make sense for it to be trading at 30s while it increased profitability and is bound to continue doing so based on increased construction activity in E.A

Lots of debt on its books. That level of debt [some of it USD] makes folks nervous. Unlike KQ, its EBITDA is positive but loan servicing takes a huge chunk out of gross profit. The demand for cement is growing but so is competition & this has reduced margins.

A good buy at lower prices which reflect a lower EPS thus a more reasonable PER.


I have publicly expressed my reservations with ARM vis a vis the debt. Even when guys were harping about ARM even issuing buy recommendations at 75. As the price approaches 30 I will be buying. I feel they will learn there lesson on debt as companies such as kk learnt. A comeback yes, but hard to resist
The investor's chief problem - and even his worst enemy - is likely to be himself
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VituVingiSana
#13 Posted : Tuesday, October 13, 2015 6:45:29 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,265
Location: Nairobi
Aguytrying wrote:
VituVingiSana wrote:
obiero wrote:
Pesa Nane wrote:
obiero wrote:
this share

what about it elder @obiero?

It has killed peoples money as @hisah has elaborated. Bloody murder.. It doesnt make sense for it to be trading at 30s while it increased profitability and is bound to continue doing so based on increased construction activity in E.A

Lots of debt on its books. That level of debt [some of it USD] makes folks nervous. Unlike KQ, its EBITDA is positive but loan servicing takes a huge chunk out of gross profit. The demand for cement is growing but so is competition & this has reduced margins.

A good buy at lower prices which reflect a lower EPS thus a more reasonable PER.


I have publicly expressed my reservations with ARM vis a vis the debt. Even when guys were harping about ARM even issuing buy recommendations at 75. As the price approaches 30 I will be buying. I feel they will learn there lesson on debt as companies such as kk learnt. A comeback yes, but hard to resist

@Aguy, you must be young chap. In the 1990s, ARM was in deep trouble & ended up taking a convertible loan (& supply of clinker on credit) from Bamburi.

Microsoft (Bamburi) gave Apple (ARM) a loan/equity as well as developed (supplied) Office (clinker) to appease the competition authorities instead of letting the competition die. What Microsoft (Bamburi) didn't realize was how large Apple (ARM) would become. Microsoft (Bamburi) sold its shares in Apple (ARM) at a profit but it would have made much more had it waited a few more years.

Paunrana understands the risk of debt but he did not have the financial muscle to grow without debt hence his focus on growth using both conventional & convertible debt. He has skin in the game.

Things to look out for [I'd appreciate Wazuans collaboration, with facts & data]
1) What is the USD non-working capital debt?
2) What's the outstanding Convertible Debt?
3) What's the strike price of the Convertible Debt?
4) Production capacity in KE, TZ, RW?
5) Margins in KE, TZ, RW?
6) Competition's capacity in each market?
7) Competitors projects & capacity coming on-stream in the next 3 years?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Aguytrying
#14 Posted : Tuesday, October 13, 2015 11:24:52 AM
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Joined: 7/11/2010
Posts: 5,040
@vvs. Yes Im young smile. Thanks for the history lesson. It's a risky way to grow but seems he's done well so far. This gives me perspective
The investor's chief problem - and even his worst enemy - is likely to be himself
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Aguytrying
#15 Posted : Wednesday, October 14, 2015 4:43:17 PM
Rank: Elder


Joined: 7/11/2010
Posts: 5,040
VituVingiSana wrote:
Aguytrying wrote:
VituVingiSana wrote:
obiero wrote:
Pesa Nane wrote:
obiero wrote:
this share

what about it elder @obiero?

It has killed peoples money as @hisah has elaborated. Bloody murder.. It doesnt make sense for it to be trading at 30s while it increased profitability and is bound to continue doing so based on increased construction activity in E.A

Lots of debt on its books. That level of debt [some of it USD] makes folks nervous. Unlike KQ, its EBITDA is positive but loan servicing takes a huge chunk out of gross profit. The demand for cement is growing but so is competition & this has reduced margins.

A good buy at lower prices which reflect a lower EPS thus a more reasonable PER.


I have publicly expressed my reservations with ARM vis a vis the debt. Even when guys were harping about ARM even issuing buy recommendations at 75. As the price approaches 30 I will be buying. I feel they will learn there lesson on debt as companies such as kk learnt. A comeback yes, but hard to resist

@Aguy, you must be young chap. In the 1990s, ARM was in deep trouble & ended up taking a convertible loan (& supply of clinker on credit) from Bamburi.

Microsoft (Bamburi) gave Apple (ARM) a loan/equity as well as developed (supplied) Office (clinker) to appease the competition authorities instead of letting the competition die. What Microsoft (Bamburi) didn't realize was how large Apple (ARM) would become. Microsoft (Bamburi) sold its shares in Apple (ARM) at a profit but it would have made much more had it waited a few more years.

Paunrana understands the risk of debt but he did not have the financial muscle to grow without debt hence his focus on growth using both conventional & convertible debt. He has skin in the game.

Things to look out for [I'd appreciate Wazuans collaboration, with facts & data]
1) What is the USD non-working capital debt?
2) What's the outstanding Convertible Debt?
3) What's the strike price of the Convertible Debt?
4) Production capacity in KE, TZ, RW?
5) Margins in KE, TZ, RW?
6) Competition's capacity in each market?
7) Competitors projects & capacity coming on-stream in the next 3 years?


Thanks. I watched the rich tv mindspeak and i now understand the debt strategy of this company.

The investor's chief problem - and even his worst enemy - is likely to be himself
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faa
#16 Posted : Wednesday, October 14, 2015 5:46:16 PM
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Joined: 5/8/2007
Posts: 709
less that 5 months ago this share was trading at 80-90 bob.

Faida investment bank had it in their recommendations, for over 6 months,as a BUY.

I bought it at an average of 82.5 but luckily some problems come as a blessing, I sold it later at an average 84.00

Neglible profit but the right decision either way.

Had i not sold it, God knows.
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hisah
#17 Posted : Wednesday, October 14, 2015 6:36:50 PM
Rank: Chief


Joined: 8/4/2010
Posts: 8,977
3) What's the strike price of the Convertible Debt?

The convertible debt was $50M when USDKES was 84 approx KES 4.2B with a 6yr term back in 2012. At current $KES value of 103 the loan is KES 5.15B. Approx a billion KES on top as forex losses pile up. The strike price per share was set at $3.20 which was KES 269 ($KES = 84). Current $KES means the strike price is KES 330.

So working with the initial terms ($KES = 84) the strike price post split is 53.80 (269/5) - Share split of five-for-one.

Current share price is 37.50. Quite a distance from the strike price at 54 (30.6% discount). This is assuming all the forex losses are wiped out as KES recoups all the losses vs the USD by 2018 when the 6yr term expires. And also assuming that ARM continues to post profits by 2018.

Feels like a forex trade smile
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Aguytrying
#18 Posted : Wednesday, October 14, 2015 8:15:56 PM
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Joined: 7/11/2010
Posts: 5,040
@hisah.
1. What does it mean by unrealized exchange losses? Is it a paper loss or a real loss and when will it be realised?

2. About the strike price, will new shares need to be issued, or have they already been issued? Does it also mean that until the share reaches 53.80 (1$= 103 Kes) that the debt can't be converted? Or can the company be forced to pay the difference to convert the debt into shares?

I'm getting interested as price tanks, hence the many questions.
The investor's chief problem - and even his worst enemy - is likely to be himself
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hisah
#19 Posted : Wednesday, October 14, 2015 11:39:23 PM
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Joined: 8/4/2010
Posts: 8,977
Aguytrying wrote:
@hisah.
1. What does it mean by unrealized exchange losses? Is it a paper loss or a real loss and when will it be realised?

2. About the strike price, will new shares need to be issued, or have they already been issued? Does it also mean that until the share reaches 53.80 (1$= 103 Kes) that the debt can't be converted? Or can the company be forced to pay the difference to convert the debt into shares?

I'm getting interested as price tanks, hence the many questions.

I can't recall all the details, but it may have been structured like that of TCL i.e. payable in 2016. I think the Nigerian firm (bond holder)was to get 13% shareholding and a board seat. Forex losses if I'm not wrong are still paper losses.

Not sure if the new shares are already issued. I think it'll depended on the debt being converted to equity at maturity.

But I'm sure by 2018 ARM will have rebounded from this market smackdown. The magic number is 54 for the conversion.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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murchr
#20 Posted : Thursday, October 15, 2015 12:34:01 AM
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Joined: 2/26/2012
Posts: 15,980
hisah wrote:
Aguytrying wrote:
@hisah.
1. What does it mean by unrealized exchange losses? Is it a paper loss or a real loss and when will it be realised?

2. About the strike price, will new shares need to be issued, or have they already been issued? Does it also mean that until the share reaches 53.80 (1$= 103 Kes) that the debt can't be converted? Or can the company be forced to pay the difference to convert the debt into shares?

I'm getting interested as price tanks, hence the many questions.

I can't recall all the details, but it may have been structured like that of TCL i.e. payable in 2016. I think the Nigerian firm (bond holder)was to get 13% shareholding and a board seat. Forex losses if I'm not wrong are still paper losses.

Not sure if the new shares are already issued. I think it'll depended on the debt being converted to equity at maturity.

But I'm sure by 2018 ARM will have rebounded from this market smackdown. The magic number is 54 for the conversion.


If they for instant borrowed $1M which was kes 85 back then, but they now have to pay $1M+interest when the $ is trading at 105 how is that paper loss?
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
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