Blominvest raised the target for Holcim, the largest cement company in Lebanon, to US$16.6 per share due to the steady performance of the firm over the past few years.
“We valued Holcim share at $16.6 using a Discounted Cash Flow (DCF) method based on a five-year forecast and a discount rate of 15 per cent. We assumed that revenue would increase by an annualised two per cent over the five-year period and determined the terminal growth rate at three per cent, taking into consideration the outlook of the company,” Blominvest said in its report.
Revenue at Holcim Liban (HL) is dominated by grey cement sales, around 84 per cent of revenues in 2009. White cement sales are much less common with 100,000t having been sold in 2009.
Revenue has been traditionally weighted toward local sales with international revenue, driven mainly from markets in Syria, Iraq and Cyprus, where the firm’s grinding plant is located.
In 2010, export sales have been nil as the capacity of the company turns primarily toward the satisfaction of the Lebanese market’s growing demand. HL has purposely limited exports as falling prices in Syria presented a less attractive market.