Steppe Cement Share Discussion Threads

[king suarez] 05/7/2024 09:15

Why not post some of these concerns as questions for the AGM and see what the management response is?

A £10m market cap for a company that is still profitable and cash generative, with zero debt and plant that cost several hundred million pounds to construct seems a tad cheap imho, regardless of all the risks..

[chriss911911] 05/7/2024 08:18

If your not losing sometimes, your not trying hard enough, but in some markets, any effort how ever strong is at a big handicap, 70% of AIM investments have lost money, with 31%, lose 95% or more of capital lost, investing in an AIM stock more often than not, means losing money.

For Steppe the risk is higher as on top of being AIM listed, it is not registered in UK either, and okay, Malaysia as far as governance/corruption goes, is not so bad on that front, but it's not great either it's way down the list of least risk countries, with a score of 43, compared to over 70 for UK (out of 100), those two things, would give the idea this is a very high risk investment.

To further compound it, the business operationally is located neither in UK or Malaysia, and has entanglements, that further exasperate the geopolitical risk, they now cannot even pay dividends, for what would usually be a income play, so the main reason to invest is removed.

To nail the coffin down, inventory keeps rising alarmingly and no one explains it, so I'm concerned quality of inventory and the falling plant utilisation, the little they did export to help is gone. I doubt they will generate cash if they continue this way. If the share price is cheap enough, then I could change that view, but it will still be a no whilst dividends are land locked, as too much to get past, considering this is ultra high risk, and therefore the return needs to be very high, they will be doing well to keep current market cap of 35m, if it were 10m market cap perhaps, but that means something below 6p a share, which is where I think this is heading, unless something dramatic changes.

[1knocker] 04/7/2024 13:30

A crony company in a dubious jurisdiction. As a shareholder, I take responsibility for my own folly in chasing income and investing here.

We pay for our mistakes. Education comes expensive (even without VAT!). What matters is to learn the lessons we pay for.

[dodger777] 04/7/2024 12:11

Looks like an opportunity for those with questions and computer literate enough to use zoom 😬

[danmart2] 03/7/2024 17:07

Plasybryn , good call.

[plasybryn] 03/7/2024 11:48

Thanks for your reasoned views. Lets hope we get a bit of clarity coming from the AGM. Perhaps we should all write in ahead of the AGM expressing our concerns and in particular asking for more clarity with the aim of restoring confidence.

[wilo101] 03/7/2024 11:47

the tax issues are sorted for now, there is enough room for more capital returns, pending the restructuring, read the RNS's

[aleman] 03/7/2024 11:20

I'm not blinkered and agree with TBTT. Struggling to pay out the accumulating value is only going to be bad for for your market rating. Either you believe they'll sort the tax issues and pay out eventually or you don't - take your pick. They did manage to sort the 1.5p capital return so they are obviously trying but communication could be better. (Though look at old reports and you see it is possibly improving a little.) It's hard to argue with those that bought for dividends and get fed up of waiting and and sell, but the discount to a very solid NAV is getting quite big and the company has actually remained profitable through a tougher market so value accumulation looks set to continue. I'd just like a bit more of it in my pocket!

[plasybryn] 03/7/2024 09:46

Aleman: good post. If STCP is so considerable undervalued, do you feel anything can be done or is it a matter of waiting for sentiment to change?
Can we expect something from the AGM on 12th July?

[tigerbythetail] 03/7/2024 09:09

I've really got no idea what argument Chriss911911 is trying to make.
Can anybody translate?
I do disagree with Aleman somewhat. Yes, AIM small caps and mid caps are struggling as many investors avoid the market. But STCM's share price woes are also down to the directors and management. They NEED to sort out the company structure and to report to market better.
Still, I bet STCM would be valued very differently if the company listed in Kazakhstan!

[aleman] 02/7/2024 17:32

Ok, if you want to go back 4 years. From 2019 to 2023, equity (with pretty solid assets) has risen by $8m as the company has paid out 11.5p in dividends which is about $30m. So $38m of value has been accrued to shareholders in 4 years versus a market cap of £35m. Shocking isn't it?

The Kazakhstan econonomy is doing well. Investors have money to spend and they are putting it into the market. The UK is struggling. Investor are tending to sell small and mid-caps. That's down to liquidity/funds flow and has little to do with directors and management.

[chriss911911] 02/7/2024 16:35

Over 4 summers that were "important" Steppe's Stock going from 10m to 28m, great use of cash, whilst at same time, utilization of plant has been falling, despite over stocking, you must now doubt the quality of stock. Commodities are at relative highs of last 3 years, it isn't getting very much better than it is already, prices are stable/range bound, the answer they could no more sell then, than now, save now there is no more cash in the model to continue with the former false flag strategy.

The little cash generated is spent on stock, why, answer, if they do not then utilization is worse, so a reported profit is now a loss, the rationale, the hope prices/demand recovers, if not the problem amplifies, and so the cycle has continued for 4 years, but the cash development is not so easy to hide from, and we see that in the cull of dividends.

Just look how well the Kazakhstan stock market has done last 10 months, up almost 30%, what has Steppe done in that time, down 50%. Consumers in Kazakhstan are optimistic, index at 3 year high of 101 (low 74), and Steppe, falling faster than a lead balloon, sighting China (who are keen on a balloon or two), Russia, weather, logistics, tax, and how the market needs to improve, not so much how they have adapted model to the market conditions to produce a viable plan, just they wait for the later to respond,as they slow sink further knee deep in cement.

So no, the value is on cash, in case no cash development, no value in my book, I realise some investors are happy to do charitable stuff, but there are better options with registered charities for that type of stuff, this is not one of them.

[danmart2] 02/7/2024 11:51

This summer is important, sell the stockpile and grow the profit margin.

[wilo101] 02/7/2024 09:13

Euros350om plus was spent on the 2 new dry lines alone, replacement costs is the only realistic valuation approach

[aleman] 02/7/2024 08:12

Kazakhstan is a major commodity exporter.

Top 10 exports 2022:

Crude oil
Gold
Copper
Ferroalloys
Radioactive Chemicals
Copper ore
Petroleum Gas
Refined Petroleum
Wheat
Coal Brickettes

That's about 75% of their exports. It's almost all commodities or semi-processed commodities.

Higher commodity prices equals richer Kazakhstan.

[chriss911911] 01/7/2024 21:27

inventory rising more than 200% since 2019 is worth reflecting on the past a bit, to an eye watering 28m in USD, ah yes that will be all the profit they now dont have in cash.

The rationale, okay 1 year, maybe 2, not 4 years and counting.

The CEO said also..

"exports were reduced to virtually zero" he goes on to say.."Strong competition from other cement producers" and to cap it off, "High commodity prices are expected to improve the housing construction sector in 2024”.

Brand new concept that higher commodity prices leading to more construction, and 4 years of rising stock, spinning the same cracker jack story, you know when you have been tengied.

[aleman] 01/7/2024 16:06

You want to go back to 2009? Most investors look forward. The Tenge has been broadly stable to the $ for the last two years, mostly in the range 440-480. 474 is still within that range after the $ was a bit stronger against most currencies of late - hardly a freefall. Ravages of inflation? CPI has fallen from a peak of 21.3% to 8.4%. The recent relative exchange rate stability suggests that should continue to slowly moderate, and they have been cutting rates. (CPI target is "close to 5%".)

The shares used to be valued above a very solid NAV. They are now 1/3rd below it. The company has a history of generating profit and paying it out. Even with recent tax issues in Malaysia and the Netherlands, they just gave us 1.5p per share back - about $3m+. H1/2023 was only breakeven but H2 has generated $4.5m attributable profit and shareholders funds rose $5.6m over the year. H1/2024 does not look to have be a great cement market with iffy winter weather again but still looks likely to generate another modest profit, meaning 2024 still looks likely to be better than 2023 - not great, but making a bit of money and adding to the already strong balance sheet. Meanwhile the company has been stockbuilding clinker that will reconvert to cash when the market timing is right. These costs are already sunk in 2023 P&L and the assets will be valued at cost rather than market - so selling the accumulated clinker will accentuate the underlying profit a bit in 2024 or whenever it happens.

[chriss911911] 01/7/2024 15:03

Going back to 09', the Kazakh Tenge was worth 100 to USD, then promptly got devalued by 30% to 130, then more recently above 400 to USD, an exceptional collapse in value, no wonder they have an eye watering 124m devaluation loss on balance sheet to date, to say nothing about the ravages of inflation locally of late, what ever is going on there it is not good news.

Earnings after tax with no withholding tax on dividend barely supported 13p a share, at least they have no debt, but not looking to add these, too high risk, for very little prospect of a return, they will be doing well to hold the market cap capitalisation, but far more likely it will slide badly when they next update.

The red flag was the story behind dividend, if correct, a sell, if not correct, then they are disguising a deteriorating picture, so also a sell, either way a sell, management are not exactly sounding the assuring bells here, highlighting mostly deteriorating metrics from their last update.

Does not help also, that the Tenge has been in free fall the last week also by 10%, going from 440USD to 475 USD, someone will do well somewhere, but not UK shareholders, you can be sure we will get tengied.

[wilo101] 01/7/2024 12:09

Xi, Putin, Erdogan etc all in Astana for a major regional summit next week with Tokayev, Chinese have resumed construction of the Astana elevated railway

[mattjos] 01/7/2024 12:00

share price is now back to where it was at the depths of the financial crisis late '08 to early '09

[aleman] 01/7/2024 11:03

June manufacturing PMI for Kazakhstan 52.3 (from 52.2).

[wilo101] 29/6/2024 09:04

our interests are buying real price is north of GBP1.20p per share

[andydaf] 29/6/2024 08:40

Share price here is suffering due to the dividend issues.The actual business is in better shape than ever.Net cash,it now self funds forward production and capex,of course cement sales are subject to economic cycles but steppe as a company with no debt should be the lowest cost producer in kaz.Lets see how the update in july reads.GLA

[tigerbythetail] 27/6/2024 20:45

The fact that we don't know what to expect is, of course, a large part of the problem here.
But at this price selling is crazy. As for buying, well, I need to think about that.

[3800] 27/6/2024 20:21

I'm hoping for another dividend this year danmart2 but not fully expecting one.