CPAC - Cementos Pacasmayo Margins Are Still High But The Stock Is Not An Opportunity
2024-05-05 07:49:57 ET
Summary
- Cementos Pacasmayo is a cement manufacturer with a quasi-monopoly in the Northern region of Peru.
- The Peruvian cement industry has been shrinking in 2023 and 2024, leading to lower volumes for Pacasmayo.
- Pacasmayo's higher prices and cost-saving measures have helped maintain margins.
- However, if demand continues to shrink, I believe Pacasmayo will need to reduce prices and its margins will shrink. Under that scenario, the dividend is not covered.
- Although the company trades at low multiples even under my more bearish scenario, I do not believe it is an opportunity, given there is still room for demand to shrink.
Cementos Pacasmayo ( CPAC ) is a cement manufacturer from Peru. The company has a geographical quasi-monopoly over the Northern region of the country....
Cementos Pacasmayo Margins Are Still High, But The Stock Is Not An Opportunity