PPC chief splashes out on cement firm’s stock

CAPE TOWN — CEO of PPC Ketso Gordhan has put his money where his mouth is by spending close to R10m on buying shares in the cement giant.

The dour mood in the broader infrastructure sector might have tempered enthusiasm for building supplies stocks, but Mr Gordhan has talked a good game around PPC’s longer-term prospects — especially its plans to expand into the rest of the African continent.

Yesterday, PPC reported that Mr Gordhan — appointed to head PPC at the start of this year — had acquired another R3m worth of shares on the open market between September 4-5.

This means Mr Gordhan has accumulated about 330,000 shares worth nearly R10m at prices from R29.30 to R30.65 in the last month, making him one of the top 25 shareholders in the

JSE-listed cement company.

Shawn Stockigt, senior portfolio manager at Momentum, said it was encouraging to see Mr Gordhan buying a “serious” quantity of shares. “The CEO is paying cash for his shareholding … it’s not an award of share options.

“Basically Gordhan is backing himself and, more importantly, aligning himself with the shareholders. That is what you want to see as an investor.”

Mr Gordhan said the latest share purchases underlined his confidence in the medium-term prospects of the cement company.

“We have an incredible team at PPC, and I’m here until at least 2017. “I want to send a message internally and externally that I believe in the company.”

But he conceded that the next two years would be tough for PPC with muted gross domestic product growth constraining cement demand growth and with a significant new competitor, Sephaku, entering the market. In addition, cement imports were keeping pressure on the price.

Mr Gordhan said despite challenges PPC could double the size of its business. This it could do through its planned aggressive expansion into Africa in the next five years.

In a presentation to the Exane BNP Paribas Conference in London this week, PPC emphasised the importance of expanding its operational footprint into other parts of Africa. The cement giant said its first step was to get revenue earned outside of SA to 40% of the total by the end of 2016.

Projects and feasibility studies are already under way in Ethiopia, Rwanda, Zimbabwe and Mozambique as well as the Democratic Republic of Congo.

Mr Gordhan said that the company would commit itself further to new markets in Africa in the next three to six months.

Independent construction analyst Janine Weilbach said it could be perceived as a good time to buy into PPC given the share price weakness and single-digit growth expected in local cement sales for the remainder of this year. “Recent results and prospects from the large construction counters point to the market bottoming out (with low margin contracts being worked out) and more optimistic prospects going forward.

“However, we are probably looking at a gradual recovery, so no need to rush in.”