Summary Dangote Cement Plc - Company Profile and SWOT Analysis, is a source of comprehensive company data and information. The report covers the company's structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 360˚ view of the company. Key Highlights Dangote Cement Plc (DCP), a subsidiary of Dangote Industries Ltd, is a manufacturer and distributor of cement. The company’s cement products include Dangote 3X 42.5R, Dangote BlocMaster, Dangote 3X 4...
Q3'19 Earnings Preview Coming off a strong 2018, the Nigerian cement market has continued to expand in the first half of 2019, largely supported by private sector demand. However, when compared to the c.11% growth in cement sales in 2018, 2019 kicked off at a slower pace. Cement sales in H1’19 were estimated to be 11.5 million MT, up a mild 3% y/y amidst a dearth of public sector expenditure. We expect weak cement consumpt...
Nigeria H2'19 Outlook - Feeble feet on thorny grounds Narrow opportunity window amid easing global monetary conditions: A sense of urgency is required for Nigeria to derive optimal benefits from the sudden increase in global liquidity conditions occasioned by the switch to accommodative monetary policy by central banks in developed markets. IMF projections indicate, that global GDP growth could ease to 3.3% for FY’19 due to weaker growth in the...
Higher earnings potential upon merger completion CCNN recently released its FY’18 results, reporting a record profit of ₦5.7 billion, 77% higher than 2017 figures and ahead of our estimate (₦5.5 billion). Notably, this is the first earnings release since the completion of the merger with Kalambaina Cement Company. While the merger was completed in Q4’18, management elected to report the performance of the merged entities ...
A brief look at the year ahead Nigeria faces a challenging economic environment in 2019 against the backdrop of weaker commodity prices, prolonged capital reversals, tepid investor sentiment, and geopolitical uncertainty. Despite these, we expect the Nigerian economy to accelerate in 2019 and project GDP growth of 2.7% y/y in our base scenario. This is driven by continued recovery in the manufacturing and services sectors as well as higher expe...
CCNN reported revenue growth of 44% yoy in Q3, which implies 120% capacity utilisation of its pre-merger 0.5mtpa plant. CCNN had sourced clinker from the Kalambaina plant, according to management, which explains the volumes and the improvement in production efficiency.
We see lower volume growth, price competition and margin decline in the medium term. We expect Nigeria’s GDP per capita to increase by 9.5% in 2019f after likely meagre 2.8% growth in 2018 and, prior to that, three consecutive years of decline (cumulatively, 40%) in 2014-16. Rising disposable income is positive for cement sales, which hit their five-year low in 2017. However, the Nigeria cement sector currently trades at a 2019f EV/EBITDA multiples of 7.2x (a 40% discount to the five-year aver...
CCNN’s management held a shareholders’ meeting on 14 November to discuss its proposed merger with Kalambaina cement (another BUA-owned cement plant). The merger, if it goes ahead, will be conducted at an exchange ratio of 1 CCNN share for every 198 Kalambaina shares (which total 60mn). If the merger is approved, an additional 11.9bn new CCNN shares will be issued, representing a significant dilution of its current 1.25bn shares outstanding. Management will seek shareholder approval of the me...
In line with the capacity expansion in Nigeria, the stage for competition has become far wider with price likely to be the new play. In this report, we update our views on the Nigerian cement sector with a more sanguine outlook on consumption following the industry wide volume growth over H1 18 and the more convincing growth in government capital expenditure (capex) – with a multiplier impact on private consumption. Thus, we forecast volume growth of 16% to 21.6 million tons (Previous: +14.7% ...
Coca-Cola planning to increase stake in Chi Ltd According to Peter Njonjo, President of Coca-Cola’s West African business, the soda giant plans to increase its stake in Chi Limited, makers of Chivita and Hollandia, by Q1’19. We recall that the company acquired a 40% stake in Chi Ltd a couple of years ago, with the intent to increase its holding further down the line. The move is in line with the Group’s strategic plan to expand its portfolio beyon...
CCNN recently released its Q1’18 results, reporting a jump in earnings largely buoyed by decent topline performance - up 24% y/y to ₦5.4 billion, slightly higher than our ₦5.2 billion estimate. Taking a cue from results from other cement producers, we believe the topline line performance was a mix of both higher cement pricing and volume, with the price support particularly higher than we had expected. Consequently, Gross Profit (₦2.3 billion) rose 39% y/y and outpaced our ₦1.8 billion e...
Cement Company of Northern Nigeria (CCNN) recorded FY17 EPS of NGN2.57, +157% yoy (in line with our forecast of NGN2.51). This implies EPS of NGN0.95 in Q4 17, +123% yoy and +18% qoq. FY17 EBITDA rose 119% yoy to NGN4.9bn. DPS of NGN1.25 was also proposed (vs nil in FY16), ahead of our expectations, implying a 49% payout and 6.7% yield. Outlook is weak. We reiterate SELL with a TP of NGN7.30. Our medium-term earnings outlook for the company is weak (EPS -14% pa in FY17-20), in the absence of cl...
CCNN released its 9M’17 result, with PAT coming in at ₦2 billion, up 182% y/y (already better than the ₦1.3 billion reported in FY’16) and 66% ahead of our estimate. Whilst the low base from prior year flattered the y/y performance, earnings were supported by a positive Q3 performance with PAT for the quarter (₦1.0 billion) nearly doubling the reported bottom line in Q2’17. Given the series of price increases taken earlier in the year, we had expected revenue to come in strong (particularl...
Earnings recover on strong cement pricesCCNN released its Q1’17 earnings last week, showing sizable y/y growth across all profit lines. In line with trend observed across other industry players, strong cement prices (up c.70% y/y) weighed on CCNN’s cement volume but still provided greater positive impact on topline as revenue rose 22% y/y to ₦4.4 billion (Vetiva: ₦4.2 billion). More importantly, energy supply, particularly LPFO, remained stable over the quarter (allowing for stabl...
CCNN reported a FY’16 PAT of ₦1.3 billion, up 4% y/y and 65% better than Consensus estimate of ₦758 million. The modest bottom line performance was still impressive considering that the profit line was already down 56% y/y as at 9M’16. The recovery was driven by a strong q/q growth in Q4 across most major line items, particularly topline - up 77% q/q to ₦4.9 billion (the highest Q4 revenue on record). Although OPEX (as a percentage of sales) rose 220bps q/q to 19.2% amidst height...
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CCNN’s 9M’16 PAT was down 56% y/y to ₦0.7 billion (Vetiva estimate: ₦1.0 billion) following a disappointing Q3. Despite q/q increase in cement prices (46% price hike only took effect from September), revenue over the 3-month period declined 5% q/q to N2.7 billion and suggests volume must have been down over the period. Asides the impact of the price hike on volume, we believe the challenges around LPFO (CCNN’s main kiln fuel) supply could have also weighed more on production. Amidst th...
CCNN reported a 72% q/q increase in Q2 PAT to N416 million amidst significant improvement in cost of production for the period. As a percentage of sales, production costs came in at 63% over the 3-month period compared to 77% in Q1. This suggests improvement in energy cost over the period. We recall the commencement of operations at the Kaduna refinery (CCNN’s main LPFO supplier) since the start of Q2, having being shut down over February and March. We gather that capacity utilization at the r...
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