Economy
FY17: Unilever Nigeria EPS to Grow 94.7% to N1.58k—Analyst
By Dipo Olowookere
A research analyst at Renaissance Capital, Mr Adedayo Ayeni, has predicted that Earnings Per Share (diluted for the additional 1.9 billion shares issued in recent capital call) of Unilever Nigeria Plc is expected to grow by 94.7 percent year-on-year to N1.58k in the 2017 financial year.
Traders in the stock market are expected the company to release its 2017 financial statements soon and Mr Ayeni anticipates the company to record sales growth of 35.7 percent y-o-y and net profit growth of 112.6 percent y-o-y.
Recall that Unilever Nigeria carried out rights issue and Mr Ayeni believes that the excess cash obtained from the exercise will lead to the firm ending the fiscal year with a net cash balance of N29.8 billion and N31.2 billion next year.
He said with management not disclosing any major expansion capex plans for FY18 and the Blue Band plant in Agbara completed and commissioned in December 2017, capex should moderate to depreciation from FY18.
“We therefore cut our modelled capex to match depreciation in FY18-22. This therefore supports the strong cash-build which we see for Unilever in FY18-22 with FCF forecast to post 25.7 percent CAGR.
“Unilever’s management is now faced with the decision of what to do with the excess cash from the rights issue and the expected build-up from FCF.
“We have modelled that it continues to earn interest income which is the main driver of our earnings revision estimates in FY18 and FY19.
“There is the risk that it could pay extraordinary dividends in FY18 as we now estimate it will end FY17 and FY18 with net cash/equity of 38.9 percent and 40.6 percent, respectively,” the analyst said.
Furthermore, RenCap said given the slowdown in sales growth observed for Nestle Nigeria in the food segment in 4Q17 and that it was yet to see material increases in the price of Knorr in the current quarter, it revises its estimates for Unilever.
“We cut our sales forecasts by an average of 1.7 percent in FY17-18 and by 6.2 percent in FY19. We raise our EBITDA forecast by 2.3 percent in FY18 and 10.6 percent in FY19 as we view management’s drive to contain costs and move the production of Blue Band margarine to Nigeria as pleasing and supportive of medium- to long-term margin capture,” it said.
RenCap said it was mindful of tailwind FX risks associated with Unilever’s FX exposure.
In a meeting with management in 2017, it admitted that its FX effective rate was closer to N285/$ when most of the consumer companies under our coverage were sourcing FX at rates above N300/$.
“With FX rates now above ~NGN335/$ for most consumer companies and price increases in FY18-20 expected to be sub-inflationary, we expect EBITDA margin to decline to 14.7% in FY18.
However, we raise our net profit forecast by 20.4 percent and 33.5 percent in FY18 and FY19 with expectations of healthy interest income on significant cash balance driving the material revisions,” RenCap stated.
In addition, the investment firm said it has revised its estimates for Unilever with key changes driven by the expected impact of a stronger cash-build on interest income, capex cuts to match depreciation in forecast years and medium-term margin expansion.
“As a result, we up our TP by 3.0% to NGN40.5/share. The increase is further driven by a lower risk-free rate of 13.7% and upward revision to FY18E EPS.
“We maintain our SELL rating as we believe its valuation is still stretched given the recent re-rating. On our estimates, Unilever trades on FY18 P/E and EV/EBITDA multiples of 29.0x and 18.0x, respectively.
“While still trading below its five-year average forward P/E of 39.2x, we are still unable to justify the stock’s valuation at his level vs Nestle Nigeria (SELL; TP: NGN1,262.9; CP: NGN1,380.0), which we estimate trades on FY18 P/E of 26.6x,” it said.
By Dipo Olowookere
Sustained bargain-hunting in local stocks further lifted the Nigerian Exchange (NGX) Limited by 1.12 per cent on Monday.
The buying pressure was across the major sectors of Customs Street, though the consumer goods space came under profit-taking, closing flat.
But the banking counter expanded by 3.14 per cent, the industrial goods index gained 2.82 per cent, the insurance sector increased by 0.25 per cent, and the energy segment soared by 0.08 per cent.
Consequently, the All-Share Index (ASI) surged by 2,721.83 points to 246,183.96 points from 243,462.13 points, and the market capitalisation went up by N1.755 trillion to N158.812 trillion from N157.057 trillion.
Custodian Investment and NEM Insurance chalked up 10.00 per cent each to sell for N75.90 and N30.80, respectively, BUA Cement rose by 9.98 per cent to N303.10, First Holdco improved by 9.95 per cent to N105.50, and FTN Cocoa advanced by 9.94 per cent to N9.29.
On the flip side, SUNU Assurances shrank by 10.00 per cent to N3.60, Tripple Gee slipped by 9.77 per cent to N3.51, ABC Transport tumbled by 9.62 per cent to N7.05 per cent, Abbey Bank crashed by 9.00 per cent to N9.10, and Coronation Insurance dipped by 7.69 per cent to N2.40.
The market breadth index was flat yesterday, as there were 31 price gainers and 31 price losers.
First Holdco led the activity chart during the session, with a turnover of 203.9 million shares valued at N21.5 billion. Access Holdings sold 190.7 million equities worth N4.8 billion, UBA traded 29.2 million stocks for N1.4 billion, Zenith Bank transacted 24.7 million shares valued at N2.9 billion, and Sterling Holdings exchanged 23.6 million equities worth N187.4 million.
When trading activities ended at 4 pm, investors traded 851.6 million stocks for N49.6 billion in 56,873 deals compared with the 685.9 million stocks valued at N42.7 billion transacted in 44,134 deals last Friday, representing a rise in the trading volume, value, and number of deals by 24.16 per cent, 16.16 per cent, and 28.86 per cent, respectively.
By Adedapo Adesanya
Oil prices settled over 1 per cent higher on Monday as the market weighed the prospect of renewed US-Iran negotiations against escalating supply risks following escalations in the Middle East.
Brent crude futures gained $1.12 or 1.3 per cent to trade at $89.22 per barrel, while the US West Texas Intermediate (WTI) crude soared by 74 cents or 0.9 per cent to $83.23 a barrel.
The Middle East conflict escalated over the weekend, with the US conducting a ninth straight night of attacks against Iran, while American allies Kuwait and Bahrain reported more Iranian strikes.
Traders weighed hopes of renewed US-Iran negotiations against Yemen’s Houthis’ imposition of a naval blockade against Saudi Arabia. The group said the “maritime embargo” was retaliation for what it described as a Saudi siege of Yemen.
This development brings the US-Iran war officially to the southern entrance of the Red Sea and threatens an export route used by Saudi Arabia to bypass disruptions in the Strait of Hormuz. About 20 per cent of global oil supplies flowed through the waterway.
Iran had previously instructed the Houthis to prepare to close the Bab el-Mandeb Strait if the US continued attacking Iranian power infrastructure. A full closure could disrupt oil shipments equivalent to about 7 per cent of global supply.
Meanwhile, Iran has received a proposal for a 10-day ceasefire, and both Iran and the US have left open the possibility of renewed negotiations.
Market analysts noted that if a ceasefire does not materialise and the Strait of Hormuz remains largely closed while the Houthi threat to Red Sea shipping intensifies, the risk of a significant rebound in oil prices would be substantial.
Kpler analysts said in a note that there is also the possibility that a record amount of crude oil on water, estimated at around 1.35 billion barrels, could limit the next leg of oil price increases.
A drone struck a tanker loading crude oil at the Caspian Pipeline Consortium’s (CPC) Black Sea export terminal on Monday, forcing the suspension of exports for the second time in less than 24 hours.
The CPC system accounts for roughly 1 per cent of global oil supply, carrying crude primarily from Kazakhstan’s giant Tengiz, Kashagan and Karachaganak fields, with additional volumes from Russian producers in the Caspian region.
By Adedapo Adesanya
The Central Securities Clearing System (CSCS) Plc has declared the first interim dividend in its history after posting its financial results for the first half of 2026, reflecting robust earnings growth, improved operating efficiency and stronger capital market activity.
The board approved an interim dividend of N1.00 per ordinary share for the six months ended June 30, 2026, citing the company’s strong cash generation, resilient balance sheet and confidence in the sustainability of its earnings.
The interim payout represents about 56 per cent of the total dividend of N1.78 per share paid for the 2025 financial year, underscoring its strong earnings momentum while preserving financial flexibility to invest in technology, innovation and future growth.
CSCS recorded one of the strongest financial performances in its history during the review period, with total operating income rising by 92 per cent to N18.51 billion from the corresponding period of 2025.
The growth was driven by higher transaction fee income as capital market activity strengthened, continued expansion in depository services, increased collateral management revenues and stronger contributions from data and technology-enabled services. Investment income also improved as the company optimised its investment portfolio.
Despite the sharp rise in revenue, operating expenses increased by only 38 per cent, reflecting disciplined cost management and the scalability of the company’s business model.
As a result, operating profit surged by 186 per cent to N10.11 billion, while profit before tax climbed by 115 per cent to N13.21 billion. Earnings per share also rose significantly to 190.1 kobo from 109.1 kobo in the corresponding period of 2025.
The organisation also recorded improvements in operating efficiency. Its cost-to-income ratio declined to 45.4 per cent from 63.2 per cent a year earlier, while operating profit margin improved to 54.6 per cent from 36.8 per cent.
According to the company, the results demonstrate not only the benefits of stronger market activity but also the resilience of its operating model and its ability to convert revenue growth into higher profitability, improved shareholder returns and sustainable long-term value creation.
Commenting on the interim dividend, the Chairman of CSCS Plc, Mr Temi Popoola, said the board’s decision reflected confidence in the firm’s financial strength, earnings quality and long-term strategic direction.
He said the strong performance was driven not only by increased market activity but also by sustained improvements in operational efficiency, disciplined cost management and the continued diversification of revenue streams.
Mr Popoola noted that the Board remained committed to balancing shareholder returns with investments in technology, innovation, resilience and new growth opportunities that would strengthen CSCS’ position as Nigeria’s leading financial market infrastructure and one of Africa’s foremost post-trade institutions.
The chief executive of CSCS Plc, Mr Shehu Yahaya Shantali, attributed the strong performance to the resilience of the entity’s business model, the dedication of its workforce and the confidence of market participants.
He said the first-ever interim dividend demonstrated the company’s ability to translate strong earnings growth and improved operating efficiency into enhanced shareholder value.
Mr Shantali added that CSCS would continue to strengthen its core market infrastructure, invest in technology and innovation, diversify its revenue base and enhance value creation for stakeholders while supporting the development of Nigeria’s capital market.
