Perhaps you've seen it already, but I recently commenced The Great Irish Share Valuation Project on my Wexboy blog. I'm setting a Fair Value Price Target for every listed Irish company. So far I've valued 2 dozen companies, including CRH.
I hope you'll take a look (don't hesitate to comment or email me), and perhaps become a regular reader.
The Times’s Tempus column takes a look at FTSE 100 new entrant CRH, an Irish constructions materials firm with global reach.
Yesterday it released its biannual round up of acquisitions, with the €407m split rouhgly equally between Europe and the US.
With a model that depends on buying relatively small local suppliers to the building trade the number of purchases can be dizzying, over 20 in the last six months alone.
Tempus makes the point that as a new FTSE 100 entrant CRH will be more heavily studied by analysts who may not be terribly impressed by its 17 times earnings value and a margin below 5%. Tempus says, leave well alone for now.
Building materials supplier CRH (CRH) invested 0.4 billion euros (0.33 billion pounds) in acquisition and development activity over the second half of 2011, bringing the full year total to 0.6 billion euros (0.5 billion pounds). Activities included 7 European acquisitions and 15 in the Americas, largely in the materials division. The purchases have increased the firm's aggregate reserves by around 254 million tonnes. Meanwhile, the group's 26% owned Chinese associate Yatai Building Materials completed the construction of a cement mill capable of processing 1.5 million tonnes per annum. CRH shares fell 20p to 1,285p.
Commenting on these developments, Myles Lee, CRH Chief Executive, said:
"The bolt-on transactions announced today are very much in keeping with the Group's strategy to acquire businesses which add value to our existing operations or which expand our footprint in developed markets where we see opportunities for further growth. Meanwhile we continued to grow our activities in developing economies by investing through our 26% associate in northeastern China and through a strategic bolt-on acquisition in Ukraine."
CRH ANNOUNCES SECOND-HALF 2011 DEVELOPMENT SPEND OF €0.4 BILLION BRINGING TOTAL 2011 DEVELOPMENT SPEND TO €0.6 BILLION
CRH plc, the international building materials group, today announces 23 acquisition and investment initiatives totalling approximately €0.4 billion undertaken during the second-half of 2011 as part of its continuing programme of development activity.
The development initiatives in this Update include:
· Europe Materials: 3 acquisitions, 1 investment - €195 million A significant investment in cement grinding capacity in Belgium complementing existing activities in the Benelux; strategic add-on in Ukraine for recently commissioned state-of-the-art cement plant; readymixed concrete bolt-on acquisitions in Finland and continued development by associate Yatai Building Materials in northeastern China.
· Europe Products & Distribution: 4 acquisitions - €28 million Further build-out of Sanitary, Heating and Plumbing distribution activities expanding to 20 the total number of branches in this segment in Belgium.
· Americas Materials: 9 acquisitions - €112 million (US$157 million) Active second-half bolt-on programme, adding approximately 0.25 billion tonnes of aggregates reserves, improving existing market positions and bringing total 2011 investment by this Division to approximately US$0.3 billion.
· Americas Products & Distribution: 6 acquisitions - €72 million (US$101 million) Addition of 24 Distribution branches in four transactions in the second half of 2011; in particular the acquisition in December of United Products expanded our existing positions in the Northern Plains states of Minnesota, Wisconsin, North Dakota, South Dakota and Nebraska.
Charles Stanley has initiated its coverage on newly-listed building materials group CRH with a hold recommendation after it joined the FTSE 100 earlier this month.
“On valuation the shares are probably cheap on a long term view and should have yield support but, given the economic outlook and the cyclicality of the industry there seems no urgency to buy the shares,” said analyst Tome Gidley-Kitchin.
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