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Practically doubling since Could, the spectacular Steppe Cement (LSE:STCM) share worth efficiency isn’t that unusual with penny shares. Certainly, with comparatively few shares being actively traded, optimistic information tales can have a big effect. Nevertheless, the other’s additionally true.
However short-term worth actions could be a distraction. For skilled traders, it’s the long run that basically issues. With this in thoughts, what do the group’s prospects appear to be?
A bit totally different
Admittedly, a Malaysian-incorporated, London-listed, Kazakhstan-based cement producer feels like a distinct segment funding. But when it makes cash and may ship spectacular shareholder returns, who cares, proper?
Certainly, through the six months ended 30 June, it reported a revenue of $8.99m in comparison with $476,000 a yr earlier. Earnings per share was 4.1 cents (3.04p). The corporate additionally declared an interim dividend of two cents (1.48p), its first since 2021
If its first-half efficiency was repeated through the second six months, it means the inventory’s presently (7 November) buying and selling on an earnings a number of of solely 6.6.
Encouragingly, this robust efficiency continued into the third quarter. Income was 19% larger than for a similar interval in 2025. However we should be cautious. A few of the enchancment was because of the appreciation of the Kazakhstani tenge in opposition to the greenback. And a 28% enhance within the promoting worth of cement additionally helped. The truth is, manufacturing volumes had been down 6.5%.
The basic situation
For me, the important thing query is: how’s the group going to proceed to enhance its earnings sufficently to drive its share worth larger?
In keeping with the Eurasian Fund for Stabilization and Improvement, the Kazakhstan economic system will develop by 5% in 2026, 5% in 2027, 4.2% in 2028, and 4.1% in 2029. This sounds optimistic because the demand for constructing merchandise is intently tied to the state of the broader economic system. Nevertheless, with the nation experiencing double-digit inflation in the mean time, the image’s much less clear lower.
Extra considerably, the group not too long ago reported {that a} $30m building undertaking to develop capability to 2.5m tonnes has began. For context, present full manufacturing is round 2m tonnes of cement.
Completion is predicted in the summertime of 2027. In the mean time, prices are being funded from money circulate — at 30 June, it had web money on its steadiness sheet of $16.7bn – and the group “intends to think about the issuance of debt solely in situations whereby it expands the present undertaking”.
My view
I believe it’s honest to say that as a small firm – it has a market-cap of £85m – Steppe Cement’s on the riskier finish of the funding spectrum.
And since 75.3% of the corporate’s shares will not be in public arms, its share worth is prone to stay lumpy.
Investing in penny shares isn’t usually my factor. However on this case, I believe a small place in Steppe Cement might be thought of. It’s due to this fact happening my watchlist for after I subsequent have some spare money.
There’s all the time going to be a necessity for cement and, logically, elevated manufacturing ought to result in larger earnings. All different issues being equal, this could assist increase the group’s share worth.
Nevertheless, I acknowledge that not everybody will agree with me. For the extra sceptical, there’s one other progress inventory that’s not too long ago caught my consideration…
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James Beard doesn’t maintain any positions within the firms talked about.
