Mediobanca lowers Cementir’s price target, Italy

Mediobanca lowers Cementir’s price target, Italy
Published: 12 April 2011

Analysts at Mediobanca lowered on Monday morning the price target on the shares of Italian cement maker Cementir Holding to EUR1.95 from EUR2.10, reiterating "underperform" on the group’s stock and reminding that the management had difficulties making forecasts on the group’s business in Egypt.

Mediobanca slashed its estimates on Cementir’s gross operating profit in Egypt to EUR11m from EUR23m, as a reflection of the temporary freeze of production in February and the strong cement market competition.

The analysts at the Italian bank said they were cutting Cementir’s EBITDA forecasts by an average 14% for the period 2011-12, expecting EUR113m and EUR 138m, respectively, in view of expectations for lower volumes in Egypt and minor margins in the Scandinavian states.

The major advantage of the group is its exposure to the Turkish market, where the bank foresees positive price and volume developments.

Mediobanca’s estimates on Cementir’s net profit were revised down to EUR12m from EUR20m for 2011 and to EUR27m from EUR41m for 2012. Net financial debt is expected to reach EUR340m this year, basically in line with the 2010 figure, taking into account investments for EUR20m.

Based on its updated estimates for full-2011, Mediobanca does not see an improved geographical mix despite the rush in Turkey.