There's no such thing as a free lunch...Or is there?

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It's official. The next president of Indonesia is former army general Prabowo Subianto. Quite how the next five years will pan out is anyone's guess but hopefully the foreign pundits who always bring up his dodgy human rights record will be proven wrong. Nonetheless, on policy making, Prabowo's popularist move to literally offer the poor 'a free lunch' every day of the week does not augur well for the future. Such a policy - if it ever came to fruition - would cost a phenomenal amount of money and likely lead to huge inefficiencies (food waste) and poor incentives (make people lazy). Another concern is Prabowo's strong nationalist bent. Thus, in the possible event that he finds himself with his back against the proverbial wall in the face of stern economic challenges, there is a big chance that he will simply scapegoat foreigners. But he will have to be careful. Construction of the new capital city, Nusantara, for example, is highly dependent on foreign in
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EV/tonne definition



EV/tonne is how cement companies are conventionally valued.

 It is simply the size of the firm – i.e. its NET DEBT and EQUITY VALUE (market cap) added together – divided by the cement firm’s ANNUAL CEMENT PRODUCTION.

 This figure essentially shows how much capital is used to produce one tonne of cement.

 The lower the figure the CHEAPER the cement company appears to be.

 The higher the figure the MORE EXPENSIVE the cement company appears to be.

 Hence cement company A which has an EV/tonne of US$80 is cheaper than cement company B which has an EV/tonne of US$120.

 Most large cement companies have an EV/tonne of between US$100-120. Small cement companies might have a 30 percent discount.

 Another way of looking at it is from the replacement cost perspective.

 Suppose a company has a EV/tonne of US$100 but the replacement cost – i.e. the cost of building a new cement plant – is U$150/tonne.

 This would suggest the company is cheap and a likely candidate for a takeover (rather than build a plant for US$150/tonne a competitor could acquire this company’s cement production capacity for just US$100/tonne – a 33 percent discount!)


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