HeidelbergCement increases after finding support 09 October 2019

NEWS BITES - EUROPE

HeidelbergCement AG (ETR:HEI), Germany's largest Building materials company by market cap, has increased 0.6% after hitting the lower Bollinger Band three times in the last ten days. This is a bullish signal. The lower Bollinger Band marks the trajectory of support on a stock price. HeidelbergCement's stock price has increased 34.0c (0.6%) from its previous trading session to close at EUR60.70. Compared with the DAX Index which rose 88.4 points (0.7%) in the day, the relative price change was -0.2%. There were 732,167 shares worth EUR44.4 million (US$48.7 million) traded today. The volume was 0.1 times the average daily trading volume of 5.1 million shares.

BULLISH TURNING POINT

Price/Earnings

The P/E of 10.5 is 0.4 times the highest average P/E of 27.3 in the last five years. This is a value criterion, according to Benjamin Graham who described as a value criterion "A P/E ratio down to less than four-tenth of the highest average P/E ratio the stock attained in the most recent five years".

Stock Summary

CurrencyEuro (EUR) 1 EUR = 1.1 USD
Today's close (EUR)60.7
52-Week Range (EUR)50.3-73.0
SectorBuilding Materials sector
Shares Outstanding198,416,000
Market CapEUR12 billion (US$13.2 billion)

Highlights in today's Report:

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

SECTION 2 TODAY'S BULLISH SIGNALS

SECTION 3 TODAY'S BEARISH SIGNALS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF EUR60.70):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

[Volume Index or VI in brackets; 1 is average]

+ Xetra: HEI.ETR 730,100 [VI of 0.1] volume 99.72% of aggregate. Price: EUR60.70.

+ Frankfurt: HEI.FRA 1,930 [VI of 1.6] volume 0.26% of aggregate. Price: EUR60.94.

+ Aggregate volume: there were 732,030 shares of HeidelbergCement worth EUR44.4 million traded today. The aggregate volume was 0.1 times average trading of 5 million shares.

SECTION 2 HEIDELBERGCEMENT BULLISH SIGNALS

2.1 Undervaluation [compared with sector average]:

Earnings Yield

+ Earnings yield of 9.5% is 790.8 times the 10-year bond yield of 0.01%.

Dividend Yield

+ The relative yield of HEI, defined by its yield of 3.5%, divided by average yield of dividend yielding stocks in the DAX Index of 3.4% is 103.3%. This suggests HeidelbergCement stock is undervalued in dividend yield terms.

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.3. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

2.2 Undervaluation Indicators and rank of HeidelbergCement in the German market:

DescriptionValueRank In Market
* EV/EBITDA23.1In Top Quartile
Dividend Yield %3.5In Top Quartile
Price/Earnings10.5In Top Quartile

* Enterprise value of EUR23 billion is divided by Earnings before interest tax depreciation and amortization of EUR994.8 million.

2.3 Uptrend:

Price/Moving Average Price:

+ The Price/MAP of 0.96 for HEI is higher than the Price/MAP for the DAX Index of 0.42.

2.4 High Price Performance Indicator and rank of HeidelbergCement in the German market:

DescriptionHEI ValueRank In Market
Today's Trading TurnoverEUR44.4 million (US$48.7 million)In Top 2%

Oversold/Bullish Signals:

+ The Relative Strength Index (RSI) of 28.3 has breached the oversold line of 30, suggesting the price decrease of 28.3% in the last 14 days is unusually high.

+ The stock is oversold according to the Williams % R indicator of -89.5, suggesting the price is close to its 14-day low of EUR59.86.

+ The Stochastic indicator of 10.0 has pierced the oversold line of 20; this indicates the price is close to its 14-day low and is likely to revert to an uptrend.

SECTION 3 HEIDELBERGCEMENT BEARISH SIGNALS

3.1 Overvaluation Indicator and rank of HeidelbergCement in the German market:

DescriptionValueRank In Market
Price to Sales3.9In Bottom Quartile

3.2 Downtrend:

Price/Moving Average Price and MACD:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 63.31 minus the 26-day EMA of 64.1 is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

+ The price to 50-day EMAP ratio is 0.9, a bearish indicator. In the past 200 days this ratio has been under 0.9 13 times suggesting further downside. The 50-day EMAP has decreased to EUR64.47. A decrease is another bearish indicator.

+ The price to 200-day MAP ratio is 0.96. In the past 200 days this ratio has been under 0.96, 50 times suggesting downside. The stock is trading below both its MAPs and the 50-day MAP of EUR61.78 is lower than the 200-day MAP of EUR63.56, a bearish indicator. The 200-day MAP has decreased to EUR63.56. A decrease is another bearish indicator.

Past Week:

+ HeidelbergCement AG is placed 521/601 in BuySellSignals' ranking of German performers in the past week, a percentile ranking of 14.

+ In the past week, volume was 0.2 times average and the shares were down 3.2%. Wednesday's close price is at a 1.4% discount to its 5-day Volume Weighted Average Price (VWAP) of EUR61.57.

Past Month:

+ The present value of EUR1,000 (PV1000) invested one month ago in HeidelbergCement is EUR908, for a capital loss of EUR92.

Slipping Relative Strength (1mo, 3 mo):

+ In the German market of 641 stocks traded today, the stock has a 6-month relative strength of 35 which means it has underperformed 65.0% of the market.

+ Also, the relative strength percentile is slipping at 29 for 3 months and 15 for 1 month.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF EUR60.70):

SECTION 4 THE PAST WEEK

4.1 Snapshot: HeidelbergCement stock was down EUR2.02 or 3.2% in the past week. Volume in the week was 0.2 times average trading of 20.2 million shares. It underperformed the DAX index in 4 out of 5 days.

DayHeidelbergCementClose price [EUR]Price change %Relative change %Comment
TuesdayIn bottom 1% performers of DAX Index in past week60.36-3.0-2.2Price fall on falling relative strength
MondayRises 2.1% from 14-day low62.20.6-0.1Top Rise
FridayKeeps sliding, down 6.8% in 3 days61.84-1.4-2.1Price/MAP50 below 1 and falling
WednesdayIn bottom 1% performers of DAX Index62.72-4.9-2.1Steepest Fall
TuesdayIn top 1% performers of DAX Index in past week65.92-0.60.7Price rise on rising relative strength

4.2 Volatility:

+ HeidelbergCement is at a discount of 16.9% to its 12-month high of EUR73.02 on July 01. It is also at a premium of 20.7% to the 12-month low of EUR50.28 on December 27, 2018.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:

+ Net profit margin has averaged 6.7% in the last 3 years. This is better than the sector average of 4.2% and suggests a high margin of safety.

5.2 Low Debt Indicators:

+ Interest cover defined by EBIT/I is 6.6 times. This indicates it is less leveraged.

5.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 8.2%. The Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in HEI would have produced a return of 0.7%.

HEIClose (EUR)Dividends (EUR)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 0960.72.1(2.7)3.40.7
1 Yr ago62.361.9(23.1)2.3(20.8)
2 Yrs ago81.11.61.823.8
3 Yrs ago79.651.328.82.130.9
4 Yrs ago61.830.75251.526.5

Close 5 years ago EUR49.48

5.4 Increased ADVT past five years

Avg. Daily Volume Traded 12 months ended Oct 09, million shares

YearADVT
20195.1
201812.7
20174.6
20160.59
20150.66

In the past five years, Average Daily Volume of Trading (ADVT) has increased 671.4% to 5.1 million shares.

5.5 Increased Average Daily Turnover

Past five years, 12 months ended Oct 09 (EUR million)

YearAverage Daily Turnover
2019286.6
2018981.2
2017369.3
201640.2
201541.1

In the past five years, average daily share turnover has increased 597.4% to EUR286.6 million (US$314.2 million). This suggests increased liquidity.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Performance:

+ Return on Equity 7.7% [11.1%].

+ Return on Assets 3.6% [6.7%].

+ Return on Capital Employed 7.2% [11.1%].

6.2 High Debt Indicators:

+ Total Liabilities/EBITDA of 19.1 compares unfavourably with the Joseph Piotroski benchmark of 5.

6.3 Declining VWAP

Past five years, 12 months ended Oct 09 (EUR)

YearHigh PriceVWAPLow Price
201973.0256.7850.28
201891.1576.5461.59
201789.6681.1672.93
201680.9669.0656.6
201573.1662.7345.8

In the past five years Volume Weighted Average Price (VWAP) has decreased by 9.5% to EUR56.78.

SECTION 7 HEIDELBERGCEMENT SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended October 09 has improved from 75.0c in 2015 to EUR2.10 in 2019; there were no declines in the past 5 years. Dividends were up 10.5% for the 12 months ended October 09 from EUR1.90 in 2018 to EUR2.10 in 2019.

7.2 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)3.43.619
Pretax (USD B)1.91.91.9
Net (USD B)1.311
EPS (EUR)5.764.624.62

+ Net profit was up 24.6% from US$1 billion in 2017 to US$1.3 billion in 2018.

+ Earnings Per Share (EPS) was up 24.7% from EUR4.62 to EUR5.76.

7.3 Half-Yearly Report: Key Parameters

Interim Report (Half Year) Analysis H2 2019: HeidelbergCement half year profits hit by 43.4% fall

HeidelbergCement (ETR:HEI), announced net profit of EUR212m ($US241m) for the half year-ended 30 June 2019, down 43.4% from the previous corresponding period.

Compared with the previous corresponding period [PCP; H/30 Jun 2018], year-over-year [y.o.y.] Revenue was up 21% and Net Profit was down 43.4%.

Half year-ended30 Jun 201930 Jun 2018
EPS, EUR1.071.89
PCP growth in EPS %-43.3930.34
RevenueEUR1.4b ($US1.6b)EUR1.2b ($US1.4b)
PCP growth in Revenue %20.98-11.29
Net ProfitEUR212m ($US241m)EUR375m ($US427m)
PCP growth in Net Profit %-43.4430.46

Major changes compared with previous corresponding period [Year-on-Year]:

Favourable Changes:

- Total revenue up 21% from EUR1.2b ($US1.4b) to EUR1.4b ($US1.6b)

- Interest expenses to Sales down from 1.9% to 1.8%

Unfavourable Changes:

- Net profit slumped 43.4% from EUR375.2m ($US439.1m) to EUR212.2m ($US241.3m)

- EBIT to Sales down from 9.3% to 6.9%

- Profit before tax to Sales down from 7.5% to 4.9%

- Profit after tax to Sales down from 4.5% to 2.3%

Currency Conversion (June 30, 2019): $US1 = EUR0.88

Currency Conversion (June 30, 2018): $US1 = EUR0.85

7.4 Annual Report: Key Parameters

FY2018 Annual Report: HeidelbergCement Net Profit up 24.6%

HeidelbergCement (ETR:HEI) reported net profit for the year-ended 31 December 2018 of EUR1.1b ($US1.3b), up 24.6% from EUR918m ($US1.1b) in the previous year.

Major changes compared with previous year:

Favourable Changes:

- Net profit up 24.6% from EUR917.7m ($US1.1b) to EUR1.1b ($US1.3b)

- EPS up 24.7% from EUR4.62 ($US5.54) to EUR5.76 ($US6.58)

- Interest cover up 14.1% from 5.8 to 6.6

- Interest expenses to Sales down from 2.1% to 1.8%

- Current ratio up 13.3% from 1.1 to 1.2

- Retained earnings to total assets up from 27.5% to 28.7%

- Total current assets to Total Assets up from 19.1% to 20.7%

- Current Debtors to Total Assets up from 7.1% to 7.5%

- Net tangible assets per share up 10.8% from EUR22.76 ($US27.3) to EUR25.21 ($US28.8)

Unfavourable Changes:

- Total revenue down 6.8% from EUR3.3b ($US4.0b) to EUR3.1b ($US3.5b)

- EBIT Margin down from 12.2% to 11.7%

- EBIT to total assets down from 6.1% to 6.0%

- Fixed Assets to Total Assets down from 37.1% to 36.2%

- Total Liabilities to EBITDA of 19.1 compares unfavourably with the Joseph Piotroski benchmark of <5. However, it has improved by 3.4% from the previous year's ratio of 19.7.

- Total Liabilities to Operating Cash Flow of 9.6 compares unfavourably with the Joseph Piotroski benchmark of <4. This ratio has deteriorated by 5.7% from the previous year's ratio of 9.1.

Note:

- Sales to total assets steady at 0.5

- Profit before tax to Sales down from 9.8% to 9.7%

- Debt to Equity steady at 0.6

- Total liabilities to Total assets steady at 0.5

- Total non-current assets to Total Assets down from 80.6% to 79.1%

- Intangibles to Total Assets down from 33.2% to 33%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : HeidelbergCement AG (HEI)
December 312018201720182017Change
DescriptionEUR mEUR m$US m$US m(%)
Sales Revenue18,15217,314.120,74620,774.4Up 4.8
Total Revenue3,074.13,297.33,513.43,956.3Down 6.8
EBITDA994.8941.41,1371,129.5Up 5.7
Depreciation(1,090.5)(1,109)(1,246.3)(1,330.6)Improved 1.7
EBIT2,131.22,106.72,435.82,527.7Up 1.2
Interest320.8362366.6434.3Down 11.4
Pre-Tax Profit/(Loss)1,764.51,688.42,016.72,025.8Up 4.5
Profit/(Loss) after Tax1,143917.71,306.31,101.1Up 24.6
Current Assets7,412.36,5938,471.57,910.6Up 12.4
Current Liabilities6,253.76,282.97,147.47,538.6Down 0.5
Shareholders' Funds16,821.715,987.419,225.619,182.5Up 5.2
Total Liabilities18,961.618,570.721,671.322,282.1Up 2.1
Total Assets35,783.334,55840,896.941,464.5Up 3.5
Current Debt115.1116131.5139.2Down 0.8
Non-Current Debt9,436.48,805.310,784.910,565.1Up 7.2
Total Debt9,551.58,921.310,916.410,704.3Up 7.1
Operating Cash Flow1,968.32,037.92,249.62,445.2Down 3.4
Net Assets16,821.715,987.419,225.619,182.5Up 5.2
Net Tangible Assets5,001.24,516.35,715.95,418.9Up 10.7
AuditorERNST & YOUNG 

Year-on-year comparison of Per Share figures

December 312018201720182017Change (%)
DescriptionEUR EUR $US $US
Sales91.587.3104.6104.7Up 4.8
EBIT10.710.612.312.7Up 1.2
EBITDA54.75.75.7Up 5.7
Cash13.210.715.112.9Up 22.8
Shareholders' Funds84.880.696.996.7Up 5.2
Total Liabilities95.693.6109.2112.3Up 2.1
Total Assets180.3174.2206.1209Up 3.5
Current Debt58c58.5 cUS66.3cUS70.1cDown 0.8
Non-Current Debt47.644.454.453.2Up 7.2
Total Debt48.1455553.9Up 7.1
Net Tangible Assets25.222.828.827.3Up 10.8
EPS Final5.84.66.65.5Up 24.7
    EPS Growth Factor*1.01    

* EPS Growth Factor = EPS growth / Net Profit growth

Year-on-year comparison of Performance Ratios

December 3120182017Change (%)
Return on Equity (%)7.76.9Up 11.6
Return on Assets (%)3.63.2Up 12.5
Total debt to net tangible assets (%)191197.5Down 3.3
Total Liabilities to EBITDA19.119.7Down 3.4
Total Liabilities to Operating Cash Flow9.69.1Up 5.7
Debt/Equity (Up 1.8% from 0.56 to 0.57)0.60.6Up 1.8
Total Liabilities/Total Assets (Down 1.9% from 0.54 to 0.53)0.50.5Down 1.9
Interest Cover6.65.8Up 14.1
Current Ratio1.21.1Up 13.3
Common Size Ratios by Assets %
Total non-current assets to Total Assets 79.1 80.6 Down 1.9
Fixed Assets to Total Assets 36.2 37.1 Down 2.4
Intangibles to Total Assets 33.0 33.2 Down 0.6
Total current assets to Total Assets 20.7 19.1 Up 8.5
Current Debtors to Total Assets 7.5 7.1 Up 5.1
Common Size Ratios by Sales %
Profit before tax to Sales 9.7 9.8 Down 0.5
Interest expenses to Sales 1.8 2.1 Down 13.9
Interest revenue to Sales 0.3 0.3 Down 8.2
Tax expenses to Sales (2.6) (3.3) Up 22.3
Depreciation to Sales (6.0) (6.4) Up 6.3

Currency Conversion (December 31, 2018): $US1 = EUR0.87

Currency Conversion (December 31, 2017): $US1 = EUR0.83

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged EUR10.1B ($US11.6B), EBITDA averaged EUR1.7B ($US2B) and Net Profit averaged EUR1.1B ($US1.2B). Compound Annual Growth Rate (CAGR) averaged 6.8% for Total Revenue, 9.2% for Net Profit and -15.3% for EBITDA.

DescriptionAnnual (EUR M)Annual ($US B)5-year Avg (EUR B)5-year Avg ($US B)5-year CAGR %
Total Revenue3,074.13.510.111.66.8
EBITDA994.81.11.72(15.3)
Operating Profit2,131.22.41.92.26.2
Net Profit1,1431.31.11.29.2

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 7.2% was above its 5-year Avg of 6.8% (All Figures in %)

Description20185-year Avg
EBITDA Margin5.512.1
Operating Profit Margin11.712.3
Net Profit Margin7.26.8
Return on Equity7.76.4
Return on Assets3.63.3
Return on Capital Employed7.27.3

SECTION 8 CORPORATE PROFILE

8.1 Activities

HeidelbergCement AG produces and markets aggregates. The Company also manufactures building materials including cement and concrete in Europe, North America, Asia, Australia and Africa.

8.2 Top Management

The chairman is Bernd Scheifele.

8.3 Issued Capital and MCap

Based on 198,416,000 issued shares the market capitalisation is EUR12 billion (US$13.2 billion).

8.4 Vanguard Total World Stock ETF 7636:

The stock was one of 7636 global stocks selected by Vanguard Total World Stock ETF (VT). As at Jul 31, 2019, the Vanguard Total World Stock ETF held 48,984 shares worth $US3,732,133 or 0.02% by value of the ETF's portfolio [Ranked 818 out of 7636 by value and 29 out of 153 for Germany].

COMPANY IDENTIFIERS

Contact: 49-6221-481-227

Physical Address: Berliner Strasse 6 Heidelberg, 69120 Germany

State/Province/Country: Germany

Country of Incorporation: Germany

Exchange: Xetra Stock Exchange

Business Sector: Cyclical Consumer Products

Industry Group: Homebuilding & Construction Supplies

Industry: Construction Materials

Economic Sector: Consumer Cyclicals

ISIN: DE0006047004

DE:HEI; ETR:HEI; GR:HEI; HEIG.DE

PermID: 4295868961

RIC: HEIG.DE

Heidelbergcement Ag

Source: www.BuySellSignals.com