Analyst Vanessa Quiroga mentioned that competition had intensified in Cemex’s key high margin markets of Mexico and Colombia, which was diluting profits from Cemex’s value-before-volume strategy.
In Mexico, the company has been able to boost EBITDA by 18 percent; in MXN terms, 9M15 as compared to 9M14.
“However, this has come at the cost of losing 5.8pp of market share to 39 percent in 3Q15, and with new capacity expected to come on stream during 2016-2017 increasing industry supply by 10 percent, we believe Cemex runs the risk of losing more market share in the coming quarters,” Quiroga stated.
In Colombia, Cemex has lost significant market share, which is likely to offset price increases. This implies that EBITDA has declined 7.6 percent year-on-year, in COP terms, in 9M15.
Quiroga believes that the current risk and growth adjusted stock valuation is unattractive, especially given the tough comparables.
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