House View: Coronation, PPC
Investor concern might be one of the main reasons why Pretoria Portland Cement Ltd’s (PPC’s) share price is currently struggling to recover. The company’s CEO, Johan Claassen, recently announced his early retirement after being in the position since July last year. This also means that the company will have to find its fourth CEO in as many years. Claassen will stay on until a new CEO has been found.
The construction industry has been under severe pressure in recent years, which has resulted in a gradual decline in demand for cement. Combined with rising operational costs – including from fuel price hikes – the company has been operating in a very tough environment.
It still managed to grow revenue for the six months to 30 September by 5%, to R5.6bn.
Releasing its results on Sens, the company said it expected trading conditions to remain difficult, particularly in South Africa and the Democratic Republic of Congo. According to Claassen, performance in Zimbabwe is steadily recovering and output in Rwanda is improving.
How to trade it:
PPC is trading in the consolidation phase of a huge bottoming-up pattern between 1 020c/ share and 345c/share. Having pulled back within the sideways pattern, PPC has retained support at 510c – thereby forming a rising bottom.
The current bear trend would only end above 700c/share (buying level) – potentially triggering gradual upside towards 925c/share or 1 025c/share in the short to medium-term – where PPC may encounter resistance. Refrain from going long if PPC should give in at 510c/share. It could then range between 510c and 345c in this instance. ■ edito[email protected]week.co.za