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May 18 2020, 06:45 IST/BST
If you thought HeidelbergCement (HEI) was cheap before the downturn, take another look now. Down close to 40% year-to-date, the stock trades on just 8.2x our FY21 P/E forecast and at a c.50% discount to replacement cost. There is real value in the shares; realising that value remains the issue. There is hope on the horizon with the new CEO’s strategic update due later this year. That needs to focus on improving returns and major disposals to reduce persistently high debt levels. Hopefully, that ship hasn’t sailed in terms of potential buyers. Absent that, we see HEI facing capex and investment limitations that will curb its ability to grow and keep pace with peers in the years ahead.