Is Something Interesting Cooking in Telecom? - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  
The Equitymaster Research Digest

Is Something Interesting Cooking in Telecom?
Jul 1, 2016

Let's face it: The cement industry isn't exciting. There's no real product differentiation, the business is capital intensive, and volume growth moves more or less in line with the broader economy.

The temptation is to rate the industry poorly for long-term shareholder wealth creation.

But if you think this is true in all parts of the world, you are in for a big surprise.

Take the case of Cemex. The company is among the largest cement producers in the world. However, the returns it earns from its Mexico operations are much higher than what it earns in the US.

Why? Is there something in the water at its Mexican plants? Of course not. The product it sells in both countries is identical. The difference is industry structure.

Cement buyers in the US tend to be big, powerful construction companies. These companies account for a large percentage of the US cement industry's sales. And by virtue of their power, they get favourable terms from the producers, which stifles the profitability of the US cement industry.

To Read the Full Story, Subscribe or Sign In

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms