UACN PLC Q1'17 - Earnings miss on elevated interest charge
​Earnings miss on elevated interest charge
UACN recorded an impressive 41% y/y revenue growth in the first quarter of 2017, outperforming Vetiva estimate by 17%. This growth was majorly driven by price increases implemented in the later parts of 2016 and better volume performances across some operating divisions. Cost pressures in Q1’17 remained a challenge for the Conglomerate as price increases were unable to save Q1’17 gross margin from a 598bps y/y contraction to 17% (Vetiva estimate: 21%). With this, gross profit came in at a mild 4% y/y growth at ₦4.1 billion. Earnings took further beating from a significant 125% y/y rise in interest charge to ₦1.8 billion.
Coupled with a lower contribution from UPDC’s Real Estate Investment Trust, Q1’17 PAT came in 58% below our estimate, down 54% y/y to ₦606 million. We revise our FY’17 net interest expense estimate to ₦4.6 billion (Previous: ₦1.8 billion; Q1’17: ₦1.2 billion). However, given that we remain optimistic on slightly better input costs this year and following an upward revision to our revenue growth estimate (from 10.0% to 11.4%), our FY’17 EPS estimate comes to ₦1.74 (Previous: ₦2.17). Our Target Price is also revised lower to ₦28.54 (Previous: ₦30.91).
Vetiva provides clients with independent and unbiased access to analysis and opinion. We keep our clients on the cutting edge of market information and provide up to date market intelligence on quoted companies. Our services allow brokers, investment firms, and asset managers focus their energies on developing investment strategies and client relationships.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.