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Jakarta Post

Analysis: Consolidation is happening: Holcim is up for sale

  • Ricky Ho

    Bahana

Jakarta   /   Thu, July 12 2018   /  03:10 am

According to Bloomberg, Lafarge Holcim is considering the sale of its Indonesian subsidiary, Holcim Indonesia (SMCB) for US$2 billion. This follows Lafarge Holcim’s decision to shed 3.8 billion Swiss francs ($4.1 billion) in assets in March, with two-thirds of the impairments concentrated in Algeria, Malaysia, Iraq, Brazil, Indonesia and Egypt. With 15 metric tons of total capacity it owns, Lafarge Holcim’s asking price implies an enterprise value per ton (EV/t) of approximately $133 per ton, a 60 percent premium compared to what SMCB trades at present. However, it is still at a 30 percent discount from the average investment cost of the new entrants, excluding Conch’s Manokwari plant in Papua.We note that implied price-earnings ratio (PER) and EV to earnings before interest, taxes, depreciation and amortization (EBITDA) of the asking price is extremely high, as SMCB has booked los...