Rwanda Stock Exchange has said Cimerwa PLC reported a net profit of Rwf1.95billion but faced a drop in earnings per share down -43% as a result of due to difficult times at the end of 2020.
“Results were below expectations, in part explained by the difficult operating environment that prevailed in the last 6 months of operations for the financial year ended September 2020,” RSE said in a statement released to shareholders.
The company was listed on the local bourse in August 2020, managing to collect impressive revenues amounting to Rwf63billion against the Rwf61billion that was targeted in just a few months, mainly boosted by demand for cement to construct 20,000 new school classrooms.
RSE said that the company, which is in the construction domain, still has chances of boosting its market share considering the infrastructure needs and business environment in the post COVID-19.
“As market conditions begin to normalize, we believe CIMERWA can leverage its market leading position and least cost producer status to capitalise on,” RSE said.
Some of these include: the growing infrastructure and home builder demand for cement in Rwanda, rising demand from regional/ export markets and pricing strength as witnessed post-lockdown with upside risks on prices as volume demand returns.
Based on this outlook, the company management retained its buy rating with revised target price of RWF 126 and adjusted EPS estimates to RWF 3.77/7.56 for 2021/22 respectively.
According to the RSE report the cement sector faces key risks including; a weak macro environment leading to stagnant demand growth, pressure on margins from rising input costs and deterioration in competitive environment including from pricing pressure triggered by regional players importing into Rwanda.
Howev Prime Minister Édouard Ngirente, said on Thursday last week that due to COVID-19 restrictions businesses were negatively impacted thus a need to increase the funding from Rwf100billion to Rwf350billion.
The Manufacture and Build to Recover Program aims to fast track private sector investments in manufacturing and construction and will play a big role in reducing the cost of setting up industries of essential products as well as facilitate expansion of small and medium businesses, Ngirente stated.