Of course, I could stand accused of finessing things (my $2.80 entry price being within coo-ee of today's $3.30), which might be true, but its just that I can't see any incremental buying emerging for ABC in any meaningful way for the foreseeable future.
Why, I expect that even the deep value investors will be unlikely to step up out of uncertainty around the earnings outlook, based on the shocking nature of yesterday's trading update.
But whenever there is blood on the floor, my instincts start to twitch.
Because there is also the following not-insignificant picture to consider:
View attachment 1675789
And I suspect that lot of the activities highlighted in that chart would be more cement-intensive than the kinds of residential construction projects which have driven demand fr ABC's products over the past several years.
ry
For the first time in, maybe half a decade, ABC is I think at fair value, or even maybe slightly below fair value.
I see it now being the closest it can be to being a BUY, without actually being a BUY.
@madamswer
The graph from CIMIC is very interesting. What worries me is the peak is just 4 years away and what then?
Putting aside my concerns about the Barro family I think the public will by then have infrastructure fatigue. Certainly you cannot drive or go by tram or train anywhere in Melbourne without having your travel time impacted. Weekday evening peak hour starts at 3pm.
I think state governments will soon reach the limit of their capacities to borrow to build without impacting credit ratings. Victoria is on notice from the ratings agencies.
The federal government seems to be the one with funding capacity but I believe the desperate state of our electricity distribution systems in southern and eastern Australia is going to require ten’s of billions so that the transition to renewables from fossil fuel generation is manageable. At present the transition is running out of control and the distribution system is not coping. This coming summer Victoria will not produce enough electricity for itself. The rush to renewables is so great that the grid is not coping. Some new solar farm projects are experiencing 6 month delays to connect to the grid.
The funding for electricity distribution will detract from projects requiring sand and cement.
Interesting and very challenging times for investors in companies like Adelaide Brighton Cement.
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