This article dissects $MCEM's superior cement business where operating earnings has risen 11x in the last 10 years. Is it pricing, volume, margin? Acquisition driven?
Many thanks for sharing your analysis, great to see how the growth can be explained by a combination of price, volume, and margin improvement! I became quite interested in the company, but two concerns hold me back from investing.
1) How do you judge the risk contained in the equity investments, only in Q1 2024 the posted USD 10.9mio profit? But that profit can also turn into a loss and increase the cylcal risk in a downturn.
2) Any idea where the large local demand over the last 10yrs did come from? Was it mainly coming from public projects and is there any chance to estimate the pipeline for the next years? Were there some large projects in the area that might be finished in the next years and could cause lower demand in the future?
Would highly apricated your thoughts on these two points!
I do not considered the equity gain or loss in my evaluation. This is the reason i used EV/operating income as my main criteria for evalaution. This is also why I dont use the PE ratio which take into account the unrealized gain or loss of the equity portfolio. I do consider the equity portfolio as a whole in the EV calculation. I substracted both the cash and long term investment of the market cap to calculate the Enterprise Value. Kansas state for example is experiencing a large real GDP growth in recent years for some reasons. Most of it is coming from private investment iI believe. But i agree i have limited visibility there since I am not from there. This is something to investigate further
Great-write up. I have been a shareholder for 5 years (I suspect we both learned about this company through OTC adventure blogpost) so I have been the lucky beneficiary of their great operating performance. I made the mistake of cutting my position in half at the beginning of the pandemic... live and learn.
Contrat !! I thought I have first heard of monarch cement from gabelli at the annual roundtable in the Baron's but you could be right ! OTC adventure could be it. I also sold some at.some.point ... Patience is so difficult.
Many thanks for sharing your analysis, great to see how the growth can be explained by a combination of price, volume, and margin improvement! I became quite interested in the company, but two concerns hold me back from investing.
1) How do you judge the risk contained in the equity investments, only in Q1 2024 the posted USD 10.9mio profit? But that profit can also turn into a loss and increase the cylcal risk in a downturn.
2) Any idea where the large local demand over the last 10yrs did come from? Was it mainly coming from public projects and is there any chance to estimate the pipeline for the next years? Were there some large projects in the area that might be finished in the next years and could cause lower demand in the future?
Would highly apricated your thoughts on these two points!
I do not considered the equity gain or loss in my evaluation. This is the reason i used EV/operating income as my main criteria for evalaution. This is also why I dont use the PE ratio which take into account the unrealized gain or loss of the equity portfolio. I do consider the equity portfolio as a whole in the EV calculation. I substracted both the cash and long term investment of the market cap to calculate the Enterprise Value. Kansas state for example is experiencing a large real GDP growth in recent years for some reasons. Most of it is coming from private investment iI believe. But i agree i have limited visibility there since I am not from there. This is something to investigate further
Many thanks for the quick reply! I agree on your point, important to focus on EV/operating income as PE a bit distorted.
Great-write up. I have been a shareholder for 5 years (I suspect we both learned about this company through OTC adventure blogpost) so I have been the lucky beneficiary of their great operating performance. I made the mistake of cutting my position in half at the beginning of the pandemic... live and learn.
Contrat !! I thought I have first heard of monarch cement from gabelli at the annual roundtable in the Baron's but you could be right ! OTC adventure could be it. I also sold some at.some.point ... Patience is so difficult.
Thank you for that write up !