AUNT (SEP, recommended at 650 cps)
It appears that 2015 will be the year where everything will come together for Sephaku Holdings, which has been in a start-up phase over the past few years. Its recently commissioned cement plant will be up and running for a full year, the company will benefit from cost savings as a result of using its own clinker raw material and its Gauteng presence, through Métier, will be expanded to four plants. The reported numbers will become clearer from 2015 as the company moves to stable-state production, and the pending share issue as part of its payment for the Métier transaction will be something of the past. This is likely to result in a reassessment of this counter by the market and a better appreciation of its potential. Early indications are that Sephaku’s cement is well received by customers. An experienced management team, the backing of Dangote Cement (Africa’s largest cement player owned by Africa’s richest person) and a new, more efficient plant all add to the appeal of this counter. The current internal focus of its largest competitor, PPC, also plays into Sephaku’s hands for now, as Sephaku is entering new markets to sell its products. While Sephaku still faces some uncertainties as part of its ramp up, in our view the potential upside is attractive, which makes this a great gift for Aunt’s Christmas stocking.
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