Capitalists And Money

Cemex shares surge amid DMCI acquisition speculation

CEMEX

THE stock price of Cemex Holdings Philippines, Inc. doubled last week following an investor rally amid speculation regarding DMCI Holdings’ planned acquisition of the cement producer.

Data from the Philippine Stock Exchange (PSE) showed that the cement manufacturer’s shares reached 214.98 million, valued at P334.34 million, from Feb. 5 to 9.

The price per share of Cemex closed at P1.80 on Friday, more than double the closing price of P0.89 the week before. Its stock price has surged from its P0.94 finish on Dec. 29, 2023.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said the increase in Cemex stock prices was due to news circulating about DMCI’s negotiations to acquire Cemex Holdings Philippines, the local unit of Mexico’s Cemex S.A.B. de C.V.

“This news has ignited a flurry of market activity, with investors closely monitoring developments and assessing the potential impact on both companies involved,” Mr. Arce said in a Viber message.

According to a Reuters report, a source said that the Consunji Group’s DMCI Holdings was seeking to acquire Cemex for as much as $714.16 million or P40 billion. This exceeded the company’s current valuation of P21 billion ($374.93 million).

If the acquisition materializes, Mr. Arce said that it would provide a competitive advantage for the two holdings.

“Investors may interpret DMCI’s interest in diversification positively, seeing it as a strategic move to expand its business portfolio and potentially tap into new revenue streams. This could lead to increased confidence in the company’s long-term growth prospects, potentially driving up its stock price,” he said.

Similarly, Aniceto K. Pangan, an equity trader at Diversified Securities, Inc., said in a Viber message that due to the speculation, “[Cemex] moved up as book value at P3.19 per share, higher than the current price.”

With this trend, Mr. Pangan saw that the acquisition price might exceed the current price.

Last week’s closing price of P1.81 was the highest in 38 months, or since it reached P1.83 on Nov. 23, 2020.

According to Mr. Arce, Cemex’s downturn in 2023 was due to oversupply in the industry, resulting in a downward spiral in prices.

“However, amidst these adversities, the potential acquisition presents an opportunity for synergy between Cemex and DMCI Holdings,” he added.

Despite this, both analysts said that the issue remained subject to validation.

“With no definitive stance, the acquisition issue remains speculative and thus bound to correct,” Mr. Pangan said.

In separate disclosures on the stock exchange, the two parties clarified that there was still no definitive transaction.

The building materials company also emphasized that they had not authorized nor issued any of the circulating information.

“While Cemex continues to explore any divestment opportunities as disclosed in the 2023 Tender Offer Report of Cemex Asian Southeast Corporation (the principal shareholder of the Corporation), the Corporation is not privy to any discussions by its shareholders and is not aware that there is any definitive transaction at this time,” the disclosure said.

Although speculations increased investor interest for the week, without any definitive transaction nor assurances, volatility was to be expected, said Mr. Arce.

He added that “some investors may have adopted a wait-and-see approach, preferring to observe further developments before making significant investment decisions.”

Mr. Pangan projected Cemex’s fourth-quarter income to be at a loss similar to the third quarter. For the full year, he foresaw a P2 billion net income, higher than in 2022.

The company’s net loss attributable to its parent totaled P582,572 for the third quarter of the previous year, exceeding the loss of P552,069 incurred from July to September 2022.

For the first nine months of 2023, the net loss totaled P1.24 million, compared to the loss of P818,773 recorded in the corresponding period of 2022.

Mr. Pangan placed Cemex’s major support and major resistance at P0.89 and P1.84, respectively. — Andrea C. Abestano