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

Quoted companies pass cost to customers, report N5.2 trillion revenues in first half of 2022

MTN Nigeria boosts SWOOTs capitalization by N6.11 billion

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.

News continues after this ad


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.

News continues after this ad


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 *

inq
avatrade
Stanbic bank
Mega Millions
UBN
Hot forex
Access Bank
Bankers Committee
First bank






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

    Recent News

    • Lagos State government to test run Blue Line train in December 2022
    • Ghana’s central bank hikes interest rate to 22% to combat inflation, forex crises
    • Top 10 forex trading apps in Nigeria by number of downloads as of August 2022

    Follow us on social media:

    Recent News

    Lagos orders removal of all unapproved street gates in the state to ease traffic, Sanwo-Olu to stop pension for former governors, deputies, #EndSARS: Judicial Panel of Inquiry and Restitution to include Lekki toll gate incident – Sanwo-Olu, Lagos approves resumption of all classes in public, private schools, Lagos takes major step towards delivery of Fourth Mainland Bridge, Lagos to construct rail line to airport terminal for international passengers, COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office, Lekki regional road: Sanwo-Olu revokes land titles of Elegushi Royal family, Lagos pays N1.3 billion into the RSA of 246 retirees, Lagos State to empower 2.5 million youths in Arts and Crafts

    Lagos State government to test run Blue Line train in December 2022

    August 18, 2022
    Global tension, inflation pushes Ghana’s central bank to massively hike interest rate

    Ghana’s central bank hikes interest rate to 22% to combat inflation, forex crises

    August 18, 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