International Cement Group (ICG) listed on SGX in March 2019, through a transfer of the listing status of another SGX-listed company. ICG is one of the earliest foreign-owned operators in Kazakhstan and Tajikistan in Central Asia – with its core business in producing and distributing cement and gypsum plasterboards.
Since its listing on SGX, ICG’s revenue and pre-tax profit has grown at a CAGR of 15% and 7% respectively, attributed to increased sales volume. Its gross profit margin came in between 35% and 38% during this period.
As Central Asia develops, more international operators are investing in the region, including other cement operators. While competition has increased today, both Kazakhstan and Tajikistan is expected to increase its economic activities – which will support demand for cement and new growth opportunities.
Over the years, ICG has invested towards capturing these growth opportunities, increasing production capacity to meet strong demand from regional infrastructure projects, building its new Korcem cement plant to further grow its operations and capacity, as well as acquiring suitable target companies in the region.
To learn more about International Cement Group’s operations, here are 5 things you will want to know.
#1 Central Asia Is A Less Familiar Region For Investors. What Are The Biggest Growth Drivers And Potential Challenges In The Region That Investors Need To Also Understand?
Given its early entry into Central Asia, ICG believes it has an early mover advantage in branding and market share.
Kazakhstan and Tajikistan are emerging markets with untapped potential. Both countries are experiencing economic growth, infrastructure development, and a demand for housing and construction.
Emerging markets like these often present higher returns on investment compared to more saturated markets. On 16 August 2024, Standard & Poor’s rated Tajikistan as “B” outlook stable. On 15 November 2024, Fitch affirmed Kazakhstan at “BBB” outlook stable. Both ratings signify a stable and investment-friendly environment.
The Group’s investments in both countries are supported by their respective governments, including granting preferential tax holidays and treatments. Our investments create employment opportunities and contribute to the government’s tax revenue.
Like all emerging markets, regulations are less clear and the Group addresses these concerns by collaborating with trusted local business partners, constantly engaging with government agencies and conducting regular risk assessments to anticipate and mitigate potential issues.
Another point to note is that ICG’s revenue is denominated in local currencies (Tenge and Somoni), however its liabilities and some operating costs are denominated in US$ and RMB. Inevitably, ICG will be exposed to foreign exchange fluctuations – which could potentially have a significant impact on profitability given the absence of a cost-effective avenue to mitigate these currency exposures.
#2 How Does International Cement Differentiate Itself From Other Competitors?
While competition is expected to heat up in Central Asia on the back of development initiatives, ICG can differentiate itself as a leading producer and distributor in the region.
1) Strategic location: The profitability of the Cement business is highly dependent on proximity to demand due to logistical costs. Compared to its main competitors, ICG’s plants are located closer to key demand centers, such as Almaty in Kazakhstan and Dushanbe in Tajikistan, which provides a significant cost advantage.
Its newly completed Korcem Plant is strategically located near the Alatau Special Economic Zone (SEZ) – a major emerging economic hub with a projected population of 2 million residents and 1.1 million new jobs – reinforcing the importance of ICG’s strategic locations as a competitive advantage.
As a result, ICG can reduce transportation costs and ensure timely deliveries – ensuring cost efficiencies for both its operations and customers.
2) Vertical Integration and Cost Efficiency: ICG owns key resources like limestone mines, which are located close to our plants. We also produce clinkers, the essential binding component in cement, created by heating limestone and other minerals at high temperatures, which reduces time-to-market. These advantages reduce our cost structure significantly and ensure constant supply and consistent quality of raw materials.
During the off-peak winter season, ICG focuses on optimising production and labour costs by controlling equipment usage and scheduling personnel effectively. We also plan equipment overhauls strategically during the off-season to ensure continuous operation and cement supply during peak sales season.
Furthermore, positive cashflow generated from operations can be used to reduce the Group’s gearing and borrowing cost – ensuring greater operational sustainability.
3) Scale: The completion of Korcem Plant has resulted in ICG becoming the largest dry-process cement producer in Kazakhstan. It will allow us to play an integral role in the economic development of the country and provide employment.
4) Early Mover Advantage: There are major entry barriers into the cement industry in Central Asia, including having an established distribution network, established branding and high capital investment in building cement plants.
#3 Does The Group See Any Opportunities For Inorganic Growth, And What Segments Or Geographies Would Be Of Interest?
ICG’s growth has been organic, expanding its production facilities/capacities, green field construction of the recent Korcem plant and gypsum plasterboard plant at Tajikistan, and acquiring related businesses (acquisition of Sharcem cement plant and facilities at Jarminsky district in the East Kazakhstan region).
To-date, ICG’s growth strategy has been disciplined and guided by not over-elevating its risk profile. Instead, the focus is on extending its core competencies (operating cement plant and related facilities) and focusing into businesses where it can further add value or expand its distribution network and customers base.
The current markets in which the Group operates offer significant growth opportunities, supported by strong economic potential and infrastructure development needs.
#4 With Greater Focus On Industrial Emissions Of Greenhouse Gases, How Is International Cement Managing Emissions From Production?
ICG prioritises sustainability by adopting energy-efficient technologies, including modern kilns at the Korcem Plant to reduce fuel consumption and emissions.
We also lower the clinker-to-cement ratio by using fly ash and slag, minimising environmental impact and constantly work towards optimizing our productions processes to manage emissions.
#5 Why Should Investors Take A Closer Look At International Cement?
Central Asia is made up of 5 countries – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, with a combined population of 83 million people. Our key markets of Kazakhstan and Tajikistan have a combined population of 31.1 million or 37.6% of Central Asia’s population.
Based on the World Bank Group’s estimates, both countries will enjoy growth in the coming years.
The Group’s core business – cement – will benefit from these positive factors. Investors in International Cement Group will gain exposure from these developments.
Currently, among companies listed on the SGX-ST based on revenue contribution, our Group is the only that can hold itself to be Central Asia centric.
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Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 28 January 2025 and republished with permission. You can read more International Cement Group (SGX: KUO) on the SGX website.
Read other featured companies from SGX’s 10 in 10 series on the DollarsAndSense website.
The post 5 Things To Know About International Cement Group (SGX: KUO), A Leading Cement Producer In Central Asia appeared first on DollarsAndSense.sg.
