CEMENT COMPANY OF NORTHERN NIGERIA PLC H1'18 - Another Record Year In Sight?
Another Record Year in Sight?
CCNN released its H1’18 results earlier, with bottom line growing 153% y/y - 29% ahead of our estimate. Notably, the bottom line outperformance was supported by a strong topline growth as well as improved operating margins. Particularly, revenue for the second quarter came in much stronger, up 61% q/q, resulting in a 42% y/y growth for the H1’18 period to ₦12.1 billion – ahead of our ₦10.9 billion expectation. We note that the topline boost was much in line with the impressive performance observed within the cement industry, with H1’18 topline growing an average of c.13% y/y across the other listed producers.
Following the impressive H1’18 result and in line with our positive expectations for the cement sector, we have revised our estimates across most line items. We raise our FY’18 topline estimate to ₦22.9 billion (Previous: ₦21.4 billion), reflecting the H1’18 run rate albeit adjusting for seasonally weaker demand in H2. At a revised effective tax rate of 29%, we estimate a PAT of ₦4.8 billion (Previous: ₦3.8 billion) and a target price of ₦14.31 (Previous: ₦11.12). Despite the stock trading at a premium to our target price, we place a HOLD on CCNN in view of a potential upside from the upcoming merger.
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