Bringing The Heat
Updated October, 2024
Market/Symbol
LON:RHIM
Price
£33.398-0.9%
Market Cap
£1.6b
PE Ratio
10.4
Average Volume
29k
Pricing delayed 2 hours. Oct 16, 2024 8:00 AM
Investment Thesis
A Global Leader In Critical Refractory Products
RHI Magnesita is a leading global refractory producer. A refractory product is a heat shield used in many high-temperature industrial processes involving glass, aluminium, and copper. The company mines the raw materials (magnesite/dolomite), and processes, sells, and installs its refractory products at client sites. This vertical integration results in industry-high margins fuelling a winning business model by generating more capital for reinvestment in an industry that is ripe for consolidation.
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”They form a very minimal part of the total cost being around 0.5-2% but the dependency on this product is extremely high, and many industries cannot produce their product without refractories.”
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What the Pro's Are Asking
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The key operating risk is raw material supply. The company sources ~50% of its raw materials from owned assets but could still experience considerable volatility or scarcity for the remaining 50%. Fluctuations in raw material prices, supply shortages, or geopolitical issues in sourcing regions (such as China) can significantly affect operating costs and margins. The other key input is energy and rising energy costs could impact margins.
Over the past two decades, most of the incremental steel demand has come from China and India. China has had a tendency to over produce and there is a fear that if the economic growth in the region slows then excess inventory could weigh on prices. Only 6% of RHI Magnesita’s sales go directly to China but if domestic demand in China fell, it would hurt prices globally.
RHI aims to grow through M&A expanding its geographic footprint, particularly in emerging markets like China and India. They are also investing in their current plants and innovation to increase their capacity and broaden their offering.
Geopolitical tensions, particularly trade restrictions and tariffs, pose risks to raw material sourcing and global supply chains. To mitigate this, RHI Magnesita has diversified its supply chain, localized production in key regions, and built strategic raw material reserves to reduce dependency on certain regions.
The industry has adopted the practice of making refractories from recycled raw materials which has the added benefit of reducing dependency on imports and saving 30% on cost.
Investor Materials
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Team
Stegan Borgas
CEO
Stefan Borgas is the CEO of RHI Magnesita, a global leader in refractory products. With extensive experience in the chemical and materials industries, he previously served as CEO of Lonza Group and Israel Chemicals (ICL). Borgas is known for his strategic leadership and focus on innovation and global expansion.
Ian Botha
CFO
Ian Botha is the Chief Financial Officer (CFO) of RHI Magnesita, responsible for overseeing the company’s financial strategy and operations. With a strong background in finance, he previously held senior roles at Anglo American. Botha is known for driving financial efficiency and supporting strategic growth initiatives globally.
Rajah Jayendran
CTO
Rajah Jatendran is the Chief Operating Officer (COO) of RHI Magnesita, overseeing global operations and supply chain management. With a background in engineering and operations leadership, he has extensive experience in optimizing production processes and driving operational excellence. Jatendran is focused on enhancing efficiency and supporting the company’s strategic growth objectives.
Gustavo Franco
Chief Customer Officer
Gustavo Franco is the Chief Customer Officer (CSO) at RHI Magnesita, responsible for leading global sales and customer relations. With deep expertise in the refractory industry, he focuses on driving revenue growth and expanding the company’s market presence. Franco is known for his strategic approach to sales and customer-centric initiatives.
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Contact: Nirav Karia -
nirav.karia@curationcorp.com
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