Steppe Cement Share Discussion Threads

[scrwal] 19/9/2023 13:23

The board had already flagged that sales had fallen and that to recover lost market share they had cut prices. This means it is difficult to predict what the results going forward will be as we don't know how revenue recovers nor do we know the revised margins going forward.
Is it a recovery play - probably but what is the recovery. Only a clean set of 6 months of results under the new revenue/costs pricing/margins will give an indication.
In isolation the results are bad and you have to question paying any dividend at this point in time even though it's based on the prior year figures but that shouldn't matter as the immediate cash position is more important.

[tigerbythetail] 19/9/2023 11:08

Zangdook - I hear you!
I always under-estimate Mr. Market's bi-polarity. In the good times he gets more euphoric than I could ever believe, and in the bad times he plumbs almost unimaginable depths of depression. Currently, Mr. Market thinks it's the end of the world for STCM. Which, objectively, it isn't.

[elpirata] 19/9/2023 11:06

lol you beat me to it apf, its a buy for recovery at this level over a 12 months plus timeline imo.

fwiw a 2p divi equates to a £4.38m cash payout, would you sanction this as a STCM director?

[zangdook] 19/9/2023 10:58

the frustrating thing about these 'moments to buy good companies cheap', which seem to come around like London buses, is that I already identified them as good companies and picked up a lot of stock at higher prices.

[apfindley] 19/9/2023 10:57

Aleman Your posting is becoming frequent, showing your insecurity in your investment.If you're so confident in the outlook here then there's no need to pump as it will naturally climb back over a period of time.Or do you want to pump fast and exit.

[aleman] 19/9/2023 10:42

The current objective is to pay a dividend of 2 to 3 pence per share before November 2023.

They released this comment on July 7th - after H1 had finished. They will already have known that they made little in H1 and been hoping for better volume, higher prices and lower costs for H2. Today's positive trends reported for these comes half way through H2 so the basis for the dividend comment does not seem to have changed.

[tigerbythetail] 19/9/2023 10:23

My gut instinct says this is a moment to buy a good company whilst it is cheap.
But feeling a bit bruised today - maybe tomorrow I'll follow my instinct.

[aleman] 19/9/2023 10:17

Here's the crazy increase in Kazahk fertility over the last couple of decades, going from 1.8 to 3.3. This is highly unusual. It is driving an acceleration in population growth. Cement production WILL keep going up - possibly very quickly. It's already bounced back a bit this summer after the winter disruption. It should be back to record levels in a year or two. Today's results were looking backwards.



Here is the only forward looking statement:
Volumes are recovering in the second half of the current year and prices have been slightly increased, while the cost of production is improving as well.
General inflation in Kazakhstan was 17% during the period, but the situation has improved in the second half of 2023.

Inflation peaked in February at 21.1%. August was 13.1%. Target is "close to 5% in the medium term". They have already started cutting rates, which should further help the recovery in cement volumes already seen this summer.

[aleman] 19/9/2023 10:11

They cite spare parts as part of the reason for production costs rising. Clearly the weather and rail disruption created unusual production downtime and an opportunity to do extra maintenance. Plants like this run non-stop and downtime and parts for maintenance are expensive. It will usually take place during the quiet winter months. The national winter disruption allowed the opportunity to get ahead on maintenance but at an extra hit to production costs. It should mean less downtime and maintenance cost in the near future.

[king suarez] 19/9/2023 10:00

Yes, numbers aren't THAT bad really. The company is still in a strong financial position with current assets far exceeding total liabilities (a surplus of over $15m).

They didn't make a profit this half-year, but they did still generate $5.2m in operating cash flow. The borrowings may be up slightly from June 2022, but have not increased from Dec 22.

The good news is that they avoid income tax for this half-year, so that is $1.8m saved in cash going forward v the prior period.

For reference operating cash flow for H1 2022 was $8.4m, H2 2022 was $10.5m and H1 2023 $5.2m.

I think they will still pay a dividend, particularly as H2 conditions improve and usually sales and cash flow are better. It might be the lower end at 2p though - will see.

[aleman] 19/9/2023 09:59

It's trading over 30% below a very solid book value which actually rose marginally in H1. They said volume, prices and costs are all improving in H2. This is in line with economic numbers which seem to be improving and there has just been a rate cut.

Cement demand will continue to improve. The population is rising strongly as birth rates have risen very strongly in the last couple of decades. Demand is already recovering. It will soon hit new records again. To trade nearly 1/3rd below book value is offering a great long term bargain.

[lloydypool] 19/9/2023 09:51

Looks like June to June the net cash position is down by circa $10m having paid out around $14m in divi (fag packet calculation). They may been a bit gung ho in paying out 5p last time & this looks like any divi now would be a bonus, 2-3p as suggested is very unlikely(that fear held me from buying back until last week). Whilst I’ve obviously been early I don’t think today’s RNS is as bad as the share price drop suggests, price now hitting Covid lows and whilst clearly the world has got new problems now I say low 20’s here represents a good prospect for the long term investor, wait for conditions to improve & you’ll be buying in at a much higher price.

[danmart2] 19/9/2023 09:50

Bad results, bad numbers, will hold for now but certainly this is not a share to invest in at present.

I expect this will go under 20p

[aleman] 19/9/2023 09:36

"Volumes are recovering in the second half of the current year and prices have been slightly increased, while the cost of production is improving as well."

[1knocker] 19/9/2023 09:33

Borrowing up, cash in hand substantially down.
All the other metrics, price, cost, volume unfavourable too.
I am afraid anyone who bought ahead of those results has caught a nasty cold.
Pretty much back to all time lows.
Lets hope that the only way is up from here, but if there is a recession coming the worst may still lie ahead of us as shareholders,
I shall continue to hold for the time being, but see no reason to buy more.

[aleman] 19/9/2023 09:31

Stupid price. Topped up.

[apfindley] 19/9/2023 09:25

Looks terrible.

[miti 1000] 19/9/2023 09:18

Any comments on the borrowings ? Look pretty poor at first sight.

[zangdook] 19/9/2023 09:08

Volumes are recovering in the second half of the current year and prices have been slightly increased, while the cost of production is improving as well.

A bit more emphasis on "the past is tense, the future perfect" would have been nice.

[11_percent] 19/9/2023 09:05

Don't look good.


During the six-month period to 30 June 2023, the Group posted revenue of USD36.9 million, a decline of 14% from USD43.1 million in the corresponding period in 2022. The decline was mainly attributable to the 11% lower sales volume. The drop was concentrated in the first few months of the year when cement prices were maintained. Consequently the Company decided to adjust pricing to recover the volumes.


6 months 6 months % of
ended ended change
30 June 30 June
2023 2022
Sales (Tonnes) 749,034 837,063 -11%
------------------ -------------------- ---------------------
Consolidated Turnover (KZT
million) 16,702 19,779 -16%
------------------ -------------------- ---------------------
Consolidated Turnover (USD
million) 36.9 43.1 -14%
------------------ -------------------- ---------------------
Consolidated profit after
tax (USD million) 0.1 10.2 -99%
------------------ -------------------- ---------------------
Earnings per share (Cents) 0.1 4.7 -99%
------------------ -------------------- ---------------------
Average exchange rate (USD/KZT) 454 449 1%

[aleman] 18/9/2023 07:47

I think they will be wary of rail and energy disruption again and the economy stumbled but seems to be recovering some. National cement volumes have already recovered to a decent level through the summer but that does not mean pricing necessarily has. It's a bit of a commodity industry and not that easy to predict but, from what I can see, things seem to be improving rather than deteriorating. Maybe they won't feel comfortable until the winter outlook looks less disrupted than last.

[1knocker] 17/9/2023 20:34

I can't see why they are so coy about the dividend. They ought to be able to see the way ahead (for 3 to six months at least) sufficiently clearly to have stated a figure. Even if they had fixed on a figure at the low end of the range they indicated and said they were being cautious, it would have shown decisiveness.

Failure to do so leaves an impression that the outlook is more uncertain than probably it is.

Against which some will say they have given guidance and the dividend declaration date is called that for a reason. No need to remind me!

[thordon] 17/9/2023 20:05

Still a good pick , every year follows same pattern.

[1knocker] 17/9/2023 15:10

Most of this year I have been tempted to buy more Steppe on the basis that they are cheap and can't get much cheaper. Once, I gave way to temptation. I have lived to regret that. The rest of the time I have resisted temptation. that has proved to be the right call so far.

Perhaps clarity about the dividend will steady the ship. At present the impression is that its a tough market for their product and an expensive time to have borrowed money, and the management does not expect either to change any time soon. That is not a backdrop against which one is likely to wake up one morning to find that the share price has leapt and a buying opportunity has been missed. Patiently sitting on the sidelines will probably continue to be rewarded.

How different things looked a year ago. I recollect seeing Steppe a pick in one of the New Year'23 'big risers for 2023' competitions, though I have no recollection whose pick it was.

[dodger777] 15/9/2023 15:23

I should of waited 24 hours before I bought ..typical 🙄 ..but still, I think a decent small bet for a medium hold.