Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Opinions Blurb

2015 Result: Why You Should Be Concerned If You Are Long On Dangote Cement

Nairametrics by Nairametrics
March 2, 2016
in Blurb
2015 Result: Why You Should Be Concerned If You Are Long On Dangote Cement
Share on FacebookShare on TwitterShare on Linkedin

Dangote Cement, Nigeria’s largest company by market value just reported sterling results for year-end 2015, but look underneath the numbers and there are some troubling signs, investors should be aware of.

Fig 1: Segment revenues and results

Dangote Segment

RelatedPosts

Dissecting Atiku’s economic plan

By the numbers: Comparing NNPC with Saudi Aramco

Source: Company Financials

Looking at the segment revenues and results across DANGCEMs regions of operation across Africa, one can see that Nigerian operations have abnormally high margins.

For example the Nigerian operations made N389.2 billion in revenue and N193.6 billion in operating profit, equivalent to a margin of 49.7 percent.

In West and Central Africa, DANGCEMs operations generated revenues of N42.26 billion and operating profits of N4.72 billion, equivalent to margins of 11.18 percent.

Meanwhile in the South & East Africa regions, DANGCEMs operations yielded N61.2 billion in revenue, and N8.6 billion in operating profits, equivalent to 14 percent margins.

Our major concern

Dangote Cement is projecting an increase in annual capacity to about 77.3 million tons of cement by the end of 2019.

Most of this expected increase in capacity will come from outside Nigeria and certainly will continue to drag down margins as volumes grow.

Dangote Cement with capacity of 43.6 million tons last year is already richly valued at 5.5 x sales (price to sales ratio) and market capitalisation of $13.6 billion (N2.72 trillion).

In comparison, LafargeHolcim with 386 million tons of capacity is valued at 0.78 x sales and has a market capitalisation of $24.7 billion.

The largest Cement maker in China Anhui Conch Cement Co Ltd, with 285 million tons capacity is valued at 1.46 x sales, and has a market capitalisation of $12.8 billion or 99.58 billion Hong Kong Dollars.

While some of Dangote’s premium valuation can be justified by high growth in its markets of operation and low debt levels, as margins fall with expansion, then also will valuation fall.

If DANGCEMs were to be valued at a more appropriate 2.5 x sales then it would be a N1.22 trillion or $6.1 billion company.

The bottom-line is DANGCEM is a fine cash generating firm, but valuations are steep for a company about to be hit with falling margins going forward.

 

Related

Tags: Dangote Cement PlcManufacturing

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Mega Millions
Hot forex
Cornerstone
Polaris Bank
Access Bank
Bankers Committee
First bank


FCMB




    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • KongaPay at House of Lords, London, signs historic partnership with Bibimoney
    • US Equities: Weekly Round up
    • Top Crypto: UST Classic leads weekly gainers of top 100

    Follow us on social media:

    Recent News

    KongaPay at House of Lords, London, signs historic partnership with Bibimoney

    KongaPay at House of Lords, London, signs historic partnership with Bibimoney

    July 3, 2022
    U.S Stocks set to surge higher, on hopes of a stimulus package deal, What Does The Circuit Breaker Tell Us

    US Equities: Weekly Round up

    July 3, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Financial Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Metrics
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • Business News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com