Economy

Analysis of Dangote Sugar 2016 Performance

Published

9 years ago

11/04/2017

Modupe Gbadeyanka

**Posts Positive Performance Despite Input Costs Pressures

By Modupe Gbadeyanka

Dangote Sugar Refinery Plc delivered a remarkable financial performance in spite of elevated input cost within the financial year, as top line recorded a solid growth of 68 percent at N169.7 billion (FY 2015: N101.1 billion) and bottom line grew by 29 percent to N14.4 billion (FY 2015: N11.1 billion).

After a review of the company’s performance and based on our expectations, we project a fair value of N8.23 for Dangote Sugar and we assign a BUY rating on the stock.

The current market price of N6.00 implies a 27 percent discount to our fair value estimate of N8.23. DSR currently trades at a forward P/E and EV/EBITDA multiple of 4.82x and 4.97x, respectively.

FY’16 Performance Highlights:

Revenue grew markedly by 68% to N169.7bn (FY 2015: N101.1bn) on the back of major price increases within the year, while volume growth remained muted.

The average selling price in the year increased by 69% to N214.41/kg (N126.82/kg: FY’15), while sales volume was flat at 778,518mt (FY 2015: 778,000mt).

The major price hikes within the year were necessitated by the sharp rise in input costs as cost of sales increased by 82% to N146.7bn (FY 2015: N80.6bn), driven by a combination of increase in the international price of raw sugar, depreciation of the domestic currency, and higher energy costs.
The international price of raw sugar rose by 19% to an average of USD410.6 in 2016 (USD345.3 in FY 2015) while the domestic currency depreciated by 53% to further impact the cost of imported raw sugar. Also, gas supply interruptions led to the usage of more expensive low pour fuel oil (LPFO) and this aggravated energy costs.
DSR was, however, unable to fully pass the higher input costs to consumers through the several increases in selling price within the year as gross profit margin declined to 14% (FY 2015: 20%) and gross profit increased marginally by 12% to N23.0bn (FY 2015: N20.5bn).
Profit before tax grew by 21% to N19.6bn (FY 2015: N16.2bn) as fair value gains on biological assets of N2.5bn (FY 2015: N1.2bn) recorded in the year also supported bottom line. Profit after tax rose by 29% to N14.4bn (FY 2015: N11.1bn).

Our view

We expect revenue growth in FY 2017 to be driven primarily by volume. We believe the second phase of the crop season which kicked off in November ’16 from DSL’s backward integration drive will support more increases in production volume in H1 ’17. We expect volume sales to be driven by increase in market share as foreign exchange scarcity and higher imported sugar prices continue to subdue competition.

Ultimately, we believe lower international sugar prices, relative “stability” in the FX market and improved gas supply should ease input costs pressures and support profitability margins in FY 2017.

Valuation and rating

In estimating the fair value of DSR Plc, we adopted a combination of DCF and relative valuation methodologies. Our initial year cost of equity estimate of 19% was computed using a 10-yr risk-free rate of 15.80%, beta of 0.53 (relative to the NSE ASI) and an equity risk premium of 5.69%. We arrived at a fair value estimate of N8.23 per share.

Our fair value estimate implies a justified forward P/E multiple of 6.61x and EV/EBITDA multiple of 6.00x.
The current market price of N6.00 is at a 27% discount to our fair value estimate; hence, we rate the company’s stock a BUY.

Downside Risks to Valuation

The downside risks to our fair value estimate include:

Gas supply disruptions and increase in energy prices;
Further spike in international price of raw sugar;

• Devaluation of the domestic currency and the impact on the international price of raw sugar.

http://www.wstc.com.ng/uploads/reports/Earnings%20Update%20Dangote%20Sugar%20Refinery%20Plc.pdf

Economy

Seven Price Gainers Boost NASD OTC Bourse by 2.19%

Published

19 hours ago

21/02/2026

Adedapo Adesanya

By Adedapo Adesanya

Seven price gainers flipped recent declines at the NASD Over-the-Counter (OTC) Securities Exchange, raising the alternative stock market by 2.19 per cent on Friday.

According to data, the market capitalisation added N51.24 billion to end N2.389 trillion compared with the previous day’s N2.338 trillion, while the NASD Unlisted Security Index (NSI) climbed 85.65 points to close at 3,994.32 points, in contrast to the 3,908.67 points it ended a day earlier.

Business Post reports that the advancers were led by MRS Oil Plc, which improved its value by N13.00 to N200.00 per share from N187.00 per share, FrieslandCampina Wamco Nigeria Plc gained N7.40 to settle at N91.55 per unit versus the previous day’s N84.15 per unit, Central Securities Clearing System (CSCS) Plc appreciated by N6.08 to N71.00 per share from N64.92 per share, Afriland Properties Plc added 66 Kobo to finish at N17.17 per unit versus N16.51 per unit, IPWA Plc rose 37 Kobo to N4.15 per share from N3.78 per share, First Trust Mortgage Bank Plc grew by 11 Kobo to N1.20 per unit from N1.09 per unit, and Food Concepts Plc went up by 10obo to N3.70 per share from N3.60 per share.

On the flip side, there were two price losers led by Geo-Fluids Plc, which depreciated by 28 Kobo to N3.32 per unit from N3.60 per unit, and Industrial and General Insurance (IGI) Plc dropped 5 Kobo to sell at 45 Kobo per share from 50 Kobo per share.

Yesterday, the volume of trades went down by 92.0 per cent to 3.7 million units from 45.8 million units, the value of transactions fell by 59.4 per cent to N84.5 million from N208.2 million, while the number of deals went up by 7.7 per cent to 42 deals from 39 deals.

CSCS Plc remained the most traded stock by value (year-to-date) with 32.6 million units exchanged for N1.9 billion, trailed by Geo-Fluids Plc with 119.6 million units valued at N470.3 million, and Resourcery Plc with 1.05 billion units traded at N408.6 million.

Resourcery Plc closed the day as the most traded stock by volume (year-to-date) with 1.05 billion units sold for N408.7 million, followed by Geo-Fluids Plc with 119.6 million units worth N470.3 million, and CSCS Plc with 32.6 million units worth N1.9 billion.

Economy

FX Demand Worries Weaken Naira to N1,346/$1 at Official Market

Published

19 hours ago

21/02/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira weakened further against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, February 20, by N4.97 or 0.37 per cent to N1,346.32/$1 from the N1,341.35/$1 it was transacted on Thursday.

Heightened FX demand tilted the market toward the downside yesterday, exerting upward pressure on rates despite efforts by the Central Bank of Nigeria (CBN) to stabilise the foreign exchange market.

Also in the official market, the domestic currency depreciated against the Pound Sterling during the session by N9.39 to sell for N1,815.25/£1 versus the previous day’s N1,805.86/£1, and lost N7.33 against the Euro to close at N1,584.62/€1 compared with the preceding session’s N1,577.29/€1.

The story was not different for the Nigerian Naira at the GTBank FX desk, where it depleted against the Dollar by N7 on Friday to quote at N1,356/$1 versus the N1,349/$1 it was sold a day earlier, but remained unchanged in the black market at N1,370/$1.

It was observed that risky sentiment among Foreign Portfolio Investors (FPIs) contributed to the FX market, amid fears of hot money flight due to capital gains tax and other factors.

As for the cryptocurrency market, it was mostly green yesterday in reaction to a Supreme Court verdict dismissing a fresh 10 per cent global levy by President Donald Trump.

The apex court on Friday described Mr Trump’s global tariff rollout as illegal. The decision did not clarify what should happen to tariff revenue already collected, and it doesn’t necessarily spell the end of the trade agenda, with multiple legal and executive avenues still available.

Litecoin (LTC) grew 2.7 per cent to $55.00, Cardano (ADA) appreciated 2.6 per cent to trade at $0.2815, Binance Coin (BNB) expanded by 2.6 per cent to $627.19, Dogecoin (DOGE) recouped 1.3 per cent to quote at $0.1, Ripple (XRP) jumped 0.7 per cent to $1.43, Solana (SOL) improved by 0.5 per cent to $84.15, and Ethereum (ETH) soared 0.1 per cent to $1,962.78.

However, Bitcoin (BTC) lost 0.2 per cent to sell for $67,850.49, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.

Economy

Fidson, Jaiz Bank, Others Keep NGX in Green Territory

Published

1 day ago

21/02/2026

Dipo Olowookere

By Dipo Olowookere

A further 0.99 per cent was gained by the Nigerian Exchange (NGX) Limited on Friday after a positive market breadth index supported by 53 price gainers, which outweighed 23 price losers, representing bullish investor sentiment.

During the trading day, the trio of Jaiz Bank, Fidson, and NPF Microfinance Bank chalked up 10.00 per cent each to sell for N11.00, N86.90, and N6.27, respectively, while Deap Capital appreciated by 9.96 per cent to N7.62, and Mutual Benefits increased by 9.94 per cent to N5.42.

Conversely, Secure Electronic Technology shed 10.00 per cent to trade at N1.62, Sovereign Trust Insurance slipped by 9.73 per cent to N2.32, Ellah Lakes declined by 7.91 per cent to N12.80, International Energy Insurance retreated by 5.56 per cent to N3.40, and ABC Transport moderated by 5.26 per cent to N9.00.

Data from Customs Street revealed that the insurance counter was up by 2.52 per cent, the industrial goods sector grew by 2.28 per cent, the banking space expanded by 1.43 per cent, the consumer goods index gained 1.23 per cent, and the energy industry rose by 0.05 per cent.

As a result, the All-Share Index (ASI) went up by 1,916.20 points to 194,989.77 points from 193,073.57 points, and the market capitalisation moved up by N1.230 trillion to N125.164 trillion from Thursday’s N123.934 trillion.

Yesterday, investors traded 820.5 million stocks valued at N28.3 billion in 63,507 deals compared with the 898.5 million stocks worth N38.5 billion executed in 61,953 deals, showing a jump in the number of deals by 2.51 per cent, and a shortfall in the trading volume and value by 8.68 per cent and 26.49 per cent apiece.

Closing the session as the most active equity was Mutual Benefits with 79.0 million units worth N427.1 million, Zenith Bank traded 44.0 million units valued at N3.8 billion, Chams exchanged 43.9 million units for N182.0 million, AIICO Insurance transacted 42.4 million units valued at N179.8 million, and Veritas Kapital sold 36.0 million units worth N90.6 million.