casestudyguru.com
Home

Nick Sleep (Index)

Union Cement
x-1997
Industry: Cement
Category: Distressed/Replacement Cost/International

Context
Largest cement company in Philippines
Share price had fallen from 30 cents to 1-2 cents

Why the Company is Mispriced
Asian Crisis
Foreign company in a weak/unstable economy and unreliable governance
Highly illiquid security, share turnover implied an average holding of 40+ years

Alternative View
Priced at 1/4 replacement cost, assets are relatively new
"Deep discount to replacement cost with latent pricing power"

Result
Holcim, world largest cement company eventually placed a bid for the whole company at 10 cents in 1997, a 5x return on Nomad's average cost of 2 cents

Notably
Nomad had put in bids, raising prices to 0.025 cents, purchasing 1m of stock, extremely illiquid despite 200m market cap and 700m book value