Intrinsic Value Cementos Pacasmayo S.A.A. (CPAC)

• Previous Close: $6.85
• Intrinsic Value: $0.59
• Upside potential: -91%

Stock Valuation Context

Business Model And Market Position

Cementos Pacasmayo S.A.A. operates as a leading cement producer in Peru, specializing in the manufacturing and distribution of cement, concrete, and precast products. The company serves both the construction and infrastructure sectors, leveraging its vertically integrated operations to maintain cost efficiency and quality control. Its core revenue model is driven by domestic demand for construction materials, supported by Peru's growing urbanization and public infrastructure projects. Cementos Pacasmayo holds a strong regional presence in northern Peru, where it dominates the market due to logistical advantages and established customer relationships. The company also benefits from its diversified product portfolio, which includes specialty cements tailored for specific construction needs. Despite competition from larger multinational players, Cementos Pacasmayo maintains a defensible position through localized production and a focus on customer service. The firm’s strategic investments in sustainability and operational efficiency further enhance its competitive edge in a price-sensitive industry.

Revenue Profitability And Efficiency

In FY 2024, Cementos Pacasmayo reported revenue of PEN 1.98 billion, with net income reaching PEN 198.9 million, reflecting a net margin of approximately 10.1%. The company generated PEN 321.1 million in operating cash flow, demonstrating solid cash conversion efficiency. Capital expenditures totaled PEN 64.3 million, indicating disciplined reinvestment to sustain production capacity and operational improvements.

Earnings Power And Capital Efficiency

Diluted EPS stood at PEN 2.30, underscoring the company’s ability to deliver earnings growth despite macroeconomic volatility. The firm’s capital efficiency is supported by its vertically integrated model, which optimizes costs across the value chain. Operating cash flow coverage of capital expenditures remains robust, ensuring financial flexibility for future investments.

Balance Sheet And Financial Health

Cementos Pacasmayo’s balance sheet shows PEN 72.7 million in cash and equivalents against total debt of PEN 1.50 billion, reflecting a leveraged but manageable position. The debt load is primarily tied to long-term financing for operational expansion, with manageable near-term maturities. The company’s liquidity position appears adequate, supported by consistent cash flow generation.

Growth Trends And Dividend Policy

The company has demonstrated resilience in revenue growth, supported by Peru’s infrastructure development. A dividend of PEN 2.04 per share was distributed, signaling confidence in sustained profitability. Future growth may hinge on regional demand trends and the company’s ability to pass on cost inflation to customers.

Valuation And Market Expectations

With a market capitalization derived from its current share price and outstanding shares, Cementos Pacasmayo trades at a P/E multiple reflective of its stable earnings profile. Investors likely price in moderate growth expectations, balanced against sector cyclicality and input cost risks.

Strategic Advantages And Outlook

Cementos Pacasmayo’s regional dominance and cost-efficient operations provide a competitive moat. The outlook remains cautiously optimistic, contingent on Peru’s economic stability and infrastructure spending. Strategic initiatives in sustainability and product innovation could further solidify its market position over the long term.

Sources

Company filings, 10-K reports, investor presentations