YTL Cement Bhd’s plan to acquire the remaining stake in Perak-Hanjoong Simen Sdn Bhd from Gopeng Bhd will have a positive impact to the earnings of the group.
However, the acquisition will not change YTL Cement’s position as the second largest cement producer in the country.
An analyst from ECM Libra Investment Research said that Lafarge Malayan Cement Bhd was still the industry leader with about 40% market share, while YTL Cement had about 24%.
“The exercise is only to acquire the remaining stake that they do not already own, and not new capacity per se. Therefore, market share is not affected,” the analyst told StarBiz yesterday. Following the acquisition, ECM expects YTL Cement’s earnings to increase by 5.7% in financial year ending June 30, 2011 (FY11) and 7.6% in FY12 and FY13.
YTL Cement posted a net profit of RM266.9mil in FY10. The group is currently the second largest cement producer in the country with a total output of 5.3Mta.
Last Friday, YTL Cement told Bursa Malaysia that it offered to acquire the remaining 35.16% stake not already owned by the group in Perak-Hanjoong for RM200m.
The acquisition would allow YTL Cement to integrate in full Perak-Hanjoong’s operations and recognise a larger portion of its profits.
Perak-Hanjoong, which is in Padang Rengas, Perak, has a plant capacity of 3Mta for clinker and 3.4Mta for cement.
Though a formal sale and purchase agreement has yet to be signed, Gopeng had undertaken to deliver an irrevocable and unconditional undertaking to the group by the two largest shareholders of Gopeng – Datuk Mohd Salleh Hashim and Fortuna Gembira Enterprise Sdn Bhd.