Economy
Why Lafarge Africa is Currently Undervalued—Analysts
By Modupe Gbadeyanka
Analysts at United Capital Research have said shares of Lafarge Africa Plc are currently being traded at the Nigerian Stock Exchange (NSE) at a price below its real value.
Business Post reports that as at the time of filing this article on Monday noon, Lafarge Africa was up by 10 kobo or 0.85 per cent, selling at N11.85 per share compared with N11.75 per share it closed last Friday at the market.
In their analysis of the half-year earnings of the cement manufacturer in Nigeria, United Capital Research analysts argued that shares of Lafarge Africa should be trading around N14 per unit.
“WAPCO (Lafarge Africa) currently trades at a forward EV/EBITDA of 4.3x, which is well below both the local and EM peers average of 5.13x and 10.9x, respectively implying that the ticker is currently undervalued.
“Putting the above together, we update our valuation assumption and revised our 12M-TP to N14.4/share (from prior N16.6/share) with a potential upside of 23.1 per cent when compared to the current price of N11.70/share,” a report from the firm said.
United Capital Research noted that it is positive about the short-term outlook for the cement maker, especially at a moment it was restructuring its balance sheet to improve performance.
It said the opening of the economy by the federal government will help the company because construction activities will resume, which will, in turn, boost its revenue.
“Accordingly, we have estimated a Revenue growth of 3.3 per cent y/y in FY-2020E. Also, we expect the cost of sales growth to come lower compare to revenue growth, hence, gross margin is expected to be strengthened.
“Our expectation for lower cost of sales rests on the back of the aggressive cost optimization strategy that the company has embarked on since the beginning of the year which has resulted into a 17.8 per cent reduction in production cost.
“However, our concern remains the continued increase in energy cost. Also, we have estimated an uptick in OPEX as the company resumes promotional activities in a bid to drive volumes and compensate for
Q2-2020 shortfalls.
“In all, we expect the surge in PAT to be sustained, fuelled by the lower base effect of the 2019 performance,” the analysts said in the report.
In the first six months of 2020, Lafarge Africa grew its revenue grew by 2.3 per cent despite apparent challenges that characterized Q2-2020 amid the COVID-19 induced lockdown.
According to the management, this growth was because of an increase in volume sold and better average prices in H1-2020 when compared to the corresponding period in 2019.
Also, a sharp decline in Operating Expenses (OPEX) by 27.9 per cent y/y to N9.4 billion supported the overall bottom-line performance in H1-2020.
This was as Administrative/Selling and Marketing expenses fell 30.6 per cent and 9.9 per cent y/y to N7.8 billion and N1.5 billion, respectively. Similarly, Net finance cost tumbled 67.3 per cent resulting in 86.1 per cent y/y surge in pre-tax profit to N28.8 billion.
However, a 1.5x jump in tax expense brought post-tax profit growth to 47.3 per cent y/y to settle at N23.3 billion. Notably, the jump in tax expense was a fallout of tax credit accessed by the company in 2019.
By Modupe Gbadeyanka
The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.
In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.
A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.
To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”
“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.
It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”
“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.
“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.
“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.
“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.
By Adedapo Adesanya
Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.
The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.
Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.
Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.
Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.
The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.
By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.
By Dipo Olowookere
It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.
The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.
Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.
Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.
At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.
This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.
VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.
In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism9 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn