Report
Victor Dima
EUR 14.84 For Business Accounts Only

Dangote Sugar (BUY, TP NGN 7.80/share) - Q4 16A: Sales double y/y but margins disappoint, fair value adjustment drive EPS beat


  • Q4 16A revenue almost doubled y/y to NGN 54.5bn; 29% above consensus and 40% above ACe. Revenue increase was driven by price increase as volumes remained flat
  • Gross margin expanded 30bps y/y to 7.3% but compressed 400 bps q/q, missing consensus est. by 990bps and ACe by 120bps as FX continues to impact raw material prices. EBIT margin disappointed at 3.8%, the lowest in last four quarters (consensus at 15.6% and ACe: 2.8%)
  • Q4 16A EPS at NGN 0.36/share was 8% above consensus (NGN 0.33/share) and c.338% above ACe (NGN -0.08/share) driven by fair value adjustment gain of NGN 1.8bn (Q4 15A: NGN 1.2bn)
  • DPS at NGN 0.6/share for FY 16A (FY 15A: NGN 0.5/share) imply a dividend yield of 9.2% at CMP of NGN 6.5/share, more than double of NSE average of c. 4% 


Underlying
Dangote Sugar

Provider
Arqaam Capital
Arqaam Capital

Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa. 

Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research. 

Analysts
Victor Dima

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