Steppe Cement Share Discussion Threads

[wilo101] 06/4/2024 14:44

350,000 tonnes of clinker is akin to cash in the bank, that is where the balance has been deployed, makes eminent sense as for the company to borrow would cost north of 20%...

[premium beeks] 06/4/2024 14:28

The issue could be if they are seen as a transit state to avoid sanctions to Russia. The West turning a blind eye to this at the moment for various reasons but that could change.

[danmart2] 06/4/2024 13:33

I dont think political risk is significant in Kazakhstan, it may not be Europe or North America but there is little organised opposition to the current government

[aleman] 06/4/2024 10:54

This company rarely explains anything. Get used to it. You have to work it out for yourself. A permanent rise in transport costs might cause a permanent loss of some marginal southern markets but does not mean expansion in the North (growing population, etc.) ceases from a slightly lower base. The company did not lose money in a tough H1 last year and H2 is yet to be confirmed but I think should be satisfactory. They've had a tough (quietist quarter) Q1 this year with weather and transport costs. How Q2 onwards will progress remains to be seen but FY2023 results should make that clearer (as H2 presumably will also reflect higher transport costs) . Rightly or wrongly, I remain optimistic, if only because they do not look to be losing money in tough times, the general market trend is up as the economy grows strongly, and the shares trade well below the book value of the assets attributed to them. (Political and majority shareholder risk remains, though, so I would avoid an overweight investment.)

[return_of_the_apeman] 06/4/2024 10:22

The southern market has now been declared off limits due to higher transportation costs - presumeably they can't just increase the price for consumers as producers in the South don't have the same costs and so are more competitive there. The opposite should also be true that southern producers would have less of a share of the central market due to the same higher transport costs but this doesn't seem to have balanced out with Steppe's overall market share still falling. Steppe does not seem to be winning and in a shrinking market why will this trend not continue?

I get they don't want to sell at lower margins as this did not work during the 1st qtr last year and H1 ended with just 100k in profit so atleast they are trying something different however, if it was such a good strategy why have they never done it before? Also the reduction in capital return does not translate into any confidence in this years numbers to me as

The last dividend was paid in 2022.
In july 2023 2-3p was stated as put asside to be paid as a divi.
9 months of production and sales later, last years payout has dropped to 1.5p with no explanation - the read through is just not positive.

[tag57] 06/4/2024 01:11

What is the value of clinker per tonne?

[wilo101] 06/4/2024 00:39

350,000 tonnes of clinker will become cash in July and August and the companies have no debts

[aleman] 05/4/2024 22:24

If the 1.69m tonnes national figure for Q1 is correct, then March nationally was over 18% down on last year. That's a big drop so it would be hard for any company to buck the trend. I've searched for weather issues and there seems to have been a lot of snow and rain in mid-month as a storm with warmer,moister air tried to break through. It follows bad freezing weather in February after a decent January.

January to March are typically months 12,10 and 8 in terms of output magnitude nationally, and the weather trend in the North would typically magnify the national variation, so do not read to much into their drop for STCM in isolation. It's a less important quarter. Q2 will be much higher sales with less weather disruption (and lower transport costs?) and the stockbuild of clinker might help boost sales then. That stockbuild sounds significant and the drain on cash to working capital could be why the payout is smaller. It might mean very good cash generation from Q2 onwards if reduced sales to the South now mean higher margin summer sales in the North. (Being my usual optimistic self here, bad weather is bad weather and it might turn out what the company has done makes good commercial sense.)

Edit - apparently Kazakh rail freight might be seeing higher demand and prices as cargo from China/Asia to Europe is rerouted from ships sailing through the Red Sea. That's one to investigate.

[wind dancer] 05/4/2024 21:33

Nothing here but a gamble for loose money.

[wilo101] 05/4/2024 17:58

I'm buying such nonsense is written here, really, cheap as chips, 350,000 tonne clinker stockpile all paid for always best produce flat out store and save and wait for the price to crescendo in July and August as supplies become scarce, STCM needs HCC to close its wet-lines at Ust and Semey

[danmart2] 05/4/2024 17:27

Concrete Market is down but construction spend is up.

Its back to pre covid levels, which is pretty normal

I don’t actually think this is a bad update when you take consideration of the covid spike and its affect on interest rates

If Kazakh APR is below 10% by end of year, Steppe will get more profitable

[dodger777] 05/4/2024 13:26

Not defending management but you wonder how much pressure that largest shareholder has put on company to play it this way especially if he plans a low ball offer. He’s played a blinder if he’s behind a lot of this.

[zangdook] 05/4/2024 13:11

"the Board believes that the proposed Capital Reduction is worth the extra time and expense."

They don't quantify the expense but surely one 3p payment would be cheaper than two of 1.5p

[tigerbythetail] 05/4/2024 12:49

My guess is that STCM have tipped their hand as to what to expect when the 2023 annual results come out in June - that is, another 1.5p pay-out via the same capital reduction process. (That's why we're only getting 1.5p now; they're saving the rest of the money for later).
3p in total near-term pay-outs against a 17p share price is tempting. But I'd welcome management and board changes as well - i.e. sackings. Current management have trashed investor confidence over this delayed and reduced payment needlessly.

[zangdook] 05/4/2024 12:15

The circular is up:



I would have appreciated a paragraph explaining what their thinking is about shareholder returns going forward and more explanation of why they're only giving us 1.5p.

I hope "do a capital reduction" is not the sum total of their advisors' solution to our problem.

[stun12] 05/4/2024 12:03

I had rather more of these than I should have done so lightened up somewhat in the low 17s. Did reasonably well out of it on the way up so probably not too bad overall, but I can't bring myself to look into it further. Comfortable with my remaining holdings and will wait and see what happens over the rest of the year.

[purplerain2] 05/4/2024 10:27

Great timing. Topped up yesterday Happy Friday everyone

[rjmahan] 05/4/2024 10:27

£40m MCAP earnings of £10-20m per year, over most years.

Asset rich business, 8-10% yield.

Fall in revenue, mostly down to volumes, prices only down a touch.

Lot to like here, thinking longer term.

Dividend being lower than anticipated is an unpleasant surprise.

[the dart] 05/4/2024 09:57

Even at 10m market cap not exactly excited for any holders it's going to be very painful I'm afraid to get a few pence then nothing for years and who knows Private at a fraction of the price now...

[tigerbythetail] 05/4/2024 09:55

Obviously both the trading update (although it's winter and the business is seasonal) and the pay-out announcement (what happened to the guided 2p to 3p?) are poor. In particular, the one-off nature of the capital reduction concerns me - what happens in the future?

I do wonder if minority shareholders aren't being "softened up" for a low-ball buy-out from the majority shareholder. The right decision was to sell several months ago, but that's spilt milk.

This is at a long-term low now - just take a look at the five year share price graph. And yet the underlying business is stable and rich in assets. So it's either a time to do nothing except collect the pay-out and wait, hoping for another pay-out in a few months' time and better trading in summer, or (for the brave) it's time to add.

[premium beeks] 05/4/2024 09:10

Have had these on the watchlist waiting for news for ages. Pretty poor outcome if you ask me.It's not off the list yet but need to be cheaper to tempt me and I suspect a lot of others.Buying before this news was just gambling.

[return_of_the_apeman] 05/4/2024 08:48

The first qtr has been compared to the first qtr last year so only the severity of the winter or if transport is being used for say coal instead has any real bearing

Even if transport costs reduce in the future, construction of a competitors plant in the Jambyl Region is expected to be completed by mid-2024. Upon completion, the Korcem plant will have an annual cement production capacity of 1.5 million metric tonnes

[dodger777] 05/4/2024 08:42

Isn’t the first quarter always pretty poor due to their winter etc. All the same, very disappointing with the way the ‘dividend̵7; payment is being handled. I’m not sure if it’s incompetence from the management or they are being manipulated by the biggest shareholder.

[spawny100] 05/4/2024 08:20

Suspect will drop to 15p now to make the 1.5p a 10% yield.