Ketso Gordhan, the new PPC CEO, has become one of the top 25 direct holders of shares in the largest cement manufacturing operation in the country if not the whole African content.
In a remarkable expression of confidence on the company’s future, Gordhan recently snapped R6.1m worth of PPC shares. The company announced yesterday through a compulsory JSE statement that Gordhan has purchased 200000 PPC shares on the open market.
The company said “This share purchase by Mr Gordhan indicates his confidence in the group’s future and especially its African expansion strategy. The 200,000 shares, together with Mr Gordhan’s Forfeitable Share Plan allocation earlier this year, makes him one of the top 25 direct (private) beneficial shareholders of PPC”.
The shares were acquired at a strike price of R30.65c per share. This is not cheap given the history of PPC shares whose high over the past five years is just above the R35/share level. PPC shares trade on a price earnings (PE) ratio of 20.4. This means that, when judged against its most recent annual earnings, you will have to times 20 times to cover the share price. Obviously Gordhan believes that PPC earnings will grow going forward.
The former high profiled civil servant Gordhan took over as PPC CEO in January this year after the previous CEO Paul Stuiver retired. He has promised to take the company into new heights.
Boasting a rich antiapartheid activism Gordhan moved from the office of the presidency into the PPC position. The brother of South Africa’s finance minister Pravin Gordhan has also served as an executive at Rand Merchant Bank.
PPC has characterised Gordhan’s appointment as part of a broader transformation of its business which has been readying itself to meet new challenges. PPC is emerging from a difficult phase marked by a rapid slow down infrastructure development expenditure which has hit cement sales in its primary southern African market. Faced with rising competition and the introduction of a new cement manufacturing entity in South Africa and led by Nigerian super industrialist Dangote Group, PPC is pursuing opportunities outside its traditional southern African focus.
In December last year PPC acquired 51% stake in Cimerwa of Rwanda for $69.4 million. The acquisition came shortly after PPC spread its wings into the Ethiopian market. PPC said “Combined with our recent investment in Ethiopia, the Cimerwa transaction will increase PPC revenue outside of South Africa to more than 30% by 2015/2016.”
In the financial commentary for the year ended September 2012 it finalised a number of key strategic issues. These included finalization of a second phase BBBEE transaction. The transaction which placed an additional 39.3 million ordinary shares (6.5% of PPCs increased share capital) under black ownership. “The transaction results in more than 26% effective black ownership of PPC’s South African operations and has enabled the company to meet the South African mining rights conversion requirements as set out by the Mining Charter,” said the group.