The increase in the prices of raw materials, as well as in energy costs, as a result of high levels of inflation, will affect the operating margins of cement companies listed on the Mexican Stock Exchange (BMV), in the first quarter of 2022, stock market analysts indicated.
Jacobo Rodríguez, Director of Economic Analysis at Black Wallstreet Capital, explained that, “despite the fact that companies are slow to transfer the increase in their costs to their final products, we will see pressure on their margins in their results for the first quarter of the year. and from now on”.
Heriberto Sandoval, investment advisor at the consulting firm Increase Capital, said for his part that “the cement industry is strongly affected by the increase in the cost of energy and, considering that the pressures of high costs worldwide will be more longer-lasting than originally thought, this will lead to a decline in its EBITDA this year.”
The cement companies registered a drop in the price of their titles between January and March of this year. The Monterrey-based Cementos Mexicanos (Cemex) leads the quarterly falls with a drop in the price of its titles of 23.59%, with a market value of 157,453 million pesos.
The second biggest decline is that of GCC (formerly Grupo Cementos Chihuahua), which reflects a loss of 9.49% with a market capitalization value of 47,497 million pesos.
Both cement companies are part of the main index of the Mexican Stock Exchange, the S&P/BMV IPC, which means that they are among the 35 issuers with the highest market volume.
Cementos Moctezuma shares, for their part, lost 3.05% of their value in the first quarter of 2022. Their market value is 55,454 million pesos.
Jacobo Rodríguez said that the issuer’s shares in circulation are few, in addition to the fact that “the volume operated by the company is extremely low, being very little stock market.”
looking to get out
Fortaleza, another firm in the construction materials sector, despite the fact that it intends to delist from the BMV, the price of its shares has risen 2.7%, with a market value of 11,139 million pesos.
“Fortaleza has more national presence, what is holding it back is that the price of its shares does not reflect the valuation that they should have, this is one of the main considerations that the partners have to make the decision,” added Rodíguez.
He stressed that “we are facing an unexpected event (conflict between Russia and Ukraine) that has caused the prices of raw materials to grow rapidly. Given this, although companies have forecasts, they face an additional shock that is outside of the plans they have.
Delisting process of shares in the Stock Exchange
The issuer publishes a relevant notice in the BMV about its plan to launch a Public Acquisition Offer (OPA) of shares representing 100% of its outstanding capital stock, which are in the hands of investors.
- Through the notice, it announces the price it would pay for each of its shares and then the Board of Directors decides on the price of the offer.
- The issuer begins the procedures, before the National Banking and Securities Commission (CNBV) and the Stock Exchange where its shares are listed, to carry out the OPA.
- At the same time, it begins the process to obtain the corporate, regulatory and third-party authorizations involved.
- The issuer launches the OPA, which includes terms and conditions of the operation, such as the purchase price of shares and the period that the offer will include.
- At the end of the OPA period, the company launches an announcement about the results of the same and in case it has not acquired all the shares, the issuer could launch a new offer to acquire the remaining shares.
- If there is still a percentage of shares floating in the market, the firm will continue to acquire its papers at the same price as the OPA, for which it will create a trust that will have the resources to pay for the titles.
- Once the issuer has acquired a sufficient number of shares, it will then proceed to request the cancellation of the registration of the shares representing its capital stock before the National Securities Registry with the subsequent cancellation of its listing on the Stock Exchange.