Eagle Cement aims to be market leader by 2020

MANILA, Philippines ­– Eagle Cement Corporation, led by tycoon Ramon Ang, aims to be the market leader in the Philippines in 2 to 3 years’ time by offering the most affordable cement prices and having the largest capacity in the country.

Ang, chairman of Eagle Cement, said his company’s goal is to expand its market share to at least 25% by 2020, from the current 14%.

“Right now, we are already offering the most affordable price to our consumers even if the EBITDA (earnings before interest, tax, depreciation, and amortization) margin is narrowing,” Ang said after Eagle Cement debuted on the Philippine Stock Exchange (PSE) on Monday, May 29.

On the day of its listing debut, Eagle Cement opened at P16, higher than its offer price of P15. (READ: San Miguel eyeing majority stake in Cojuangco’s cement firm)

According to China Bank Capital Corporation managing director and head of origination and client coverage Virgilio Chua, the deal was more than 3 times oversubscribed. (WATCH: Eagle Cement begins aggressive expansion)

“The excellent take-up is a testament to the market’s belief in Eagle’s sound financials and aggressive expansion plan which comes amidst the increasing infrastructure spending in the country,” Chua said.

Although the Philippine Competition Commission (PCC) is investigating alleged violations of competitive practices in the local cement industry, investor confidence for Eagle Cement was not dampened as it chose not to be part of the Cement Manufacturers Association of the Philippines (CeMAP).

CeMAP members include LaFarge Holcim Philippines Incorporated, Cemex Philippines Group of Companies, and Republic Cement and Building Materials Incorporated.

Aggressive expansion

To eat up a larger share of the local cement market, Ang said his company hopes to bring down further the prices of cement to make it “more affordable to the general public.”

“Prices now are very competitive because a lot are imported from China, Vietnam, and other neighboring countries,” he added.

To provide the most affordable prices, Eagle Cement is going full blast in its expansion. 

First on its list is the 3rd production line within its facility in Bulacan, which will be completed in 2018. This will increase its cement production capacity by two million metric tons (MT).

Its Bulacan plant consists of two production lines with an annual combined cement production capacity of approximately 5.1 million MT or 130 million bags per year. This is the largest integrated single plant production capacity in terms of cement output in the Philippines.

Second is the construction of a P12.5-billion cement plant in Cebu. “It will be able to supply the Visayas and Mindanao,” Ang said.

“Our Cebu plant will have 5 times more limestone than the one here in Luzon. I think by next year, Eagle should be number one in terms of capacity. [With] 7 million metric tons next year, it will be number one right away,” he added.

Aside from the government’s plan to upgrade and build more public infrastructure, the continued boom in the real estate market and the expanding tourism sector bolsters interest in Eagle’s initial public offering (IPO) in anticipation of the expected increase in local cement consumption.

Based on industry estimates, Philippine cement consumption is expected to reach 39 million MT in 2022 from 26.7 million MT in 2016. 

“It (The infrastructure push of the government) will help, but majority of the cement market is really catering to the general public because there are many overseas Filipinos investing [in] homes here,” Ang said.

The tycoon added that his plans to build a $300-million cement manufacturing plant in Davao City within the year will still push through even as unrest continues in the island region of Mindanao. (READ: Ramon Ang to build $300M cement plant in Davao)

“For now, it will proceed. We are still not sure what is happening there,” Ang said on the sidelines of the press conference.

Eagle Cement sold 500 million common shares by way of primary offer with an overallotment option of up to 75 million secondary shares. Its market capitalization is now at P75 billion. – Rappler.com