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Manufacturing

Nestlé’s capitalization on NSE sheds N103 billion in market value in Q1 2021

The shares of the leading FMCG company declined by 8.64% to close the first quarter lower at N1,375.

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Why Nestle Nigeria’s return remains strong - EFG Hermes, Nestle Nigeria Plc appoints new Director, Nestle Plc: FY 2019 Revenue beats estimate; but profit underperforms, GTB, Zenith Bank, & Nestle emerge as Renaissance Capital’s top stock picks, Nestlé’s parent company acquires additional shares worth ₦300 million

Nestlé Nigeria Plc lost a total of N103 billion in market capitalization in the first quarter of 2021, following the decline in the shares of the leading fast-moving consumer goods company.

The decline in the shares of the famed producer of the popular Milo beverage brand was driven by sustained sell-down by investors in the months of February and March, triggered by the need to cycle funds into fixed-income securities.

The move which dropped the shares of the company by 8.64% on the NSE, pressured the company’s market capitalization to about N1.090 trillion at the end of the first quarter of 2021.

READ: Nestle Nigeria’s parent company to earn N32 billion in dividend from subsidiary

Data tracked on the website of the Nigerian Stock Exchange revealed that Nestlé’s shares declined from N1,505 per share on the 31st of December 2020, to N1,375 per share on the 31st of March 2021. This translates to a N130 per share or 8.64% decline in the shares of Nestlé.

In line with this, the market capitalization of Nestlé Nigeria Plc declined from N1.193 trillion on the 31st of December 2020, to N1.090 trillion on the 31st of March.

READ: Consumer Goods index contracts by 1.46% to close at 531.97 index points

What you should know

  • Nestlé Nigeria was not the only FMCG company impacted by the sell-off which started in February. Other FMCG companies like Unilever, PZ and Cadbury saw their shares on the Exchange decline by 3.6%, 8.49% and 8.33% respectively during the quarter.
  • The NSE Consumer Goods Index, an investable benchmark designed to track the performance of consumer goods companies like Nestlé Nigeria Plc, depreciated by 5.30% in the first quarter of 2021.
  • The index lost a total of 30.41 index points between 31st of December 2020 and 31st of March 2021, following sustained sell down in the shares of listed consumer goods companies on the NSE.

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Omokolade Ajayi is a graduate of Economics, and a certificate holder of the CFA Institute’s Investment Foundation Program. He is a business analyst, and equity market researcher, with wealth of experience as a retail investor. He is a business owner and a stern advocate of Financial literacy, who believes in the huge economic prospect of the Nigerian Payment channels and Fintech space.

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Dividends

BUA Cement pays N129 billion in dividend in 2 years

BUA Cement has paid shareholders a dividend of N129 billion in 2 years.

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BUA Cement pays N129 billion in 3 years

BUA Cement Plc, one of Nigeria’s leading cement producers has recommended a total dividend payout of about N70 billion from the profits made in 2020.

The company will be paying shareholders a dividend of N2.067 per share for all the outstanding 33,864,354,060 ordinary shares of the company.

According to the figures contained in the company’s audited financial statement for the period ended December 31st 2020, the cement giant has now paid about a total of N129.26 billion to shareholders since 2019.

Africa’s 6th richest billionaire, Abdulsamad Rabiu is the majority shareholder of the company, with an ownership stake running in excess of 90% of the outstanding shares of the cement company.

The billionaire owns this stake directly, and indirectly through Damnaz Cement Company Limited, BUA International Limited and BUA Cement Company Limited.

In line with this, we estimate that over 90% of the dividends paid out over the last 2 years were paid to the billionaire industrialist.

The company’s dividend policy

BUA Cement Plc has maintained a dividend payout of more than N1.75 per share in the last two years, and a dividend payout ratio that averages 97.3% over the last two years, with 2019 being the highest with about 98% in the dividend paid out of profits.

  • However, the defunct Cement Company of Nigeria (CCNN) that was acquired by BUA Cement, paid shareholders a dividend of N5.3 billion in 2019, which translates to a dividend of 40 kobo per share.
  • The dividend payout ratio for 2020 was 96.76%, meaning it retained a meagre 3.24% from the profits it earned during the year.
  • Total profits earned since 2019 is about N132.96 billion. Thus, over the last 2 years, it has paid out 97.2% of all its profits as dividends.
  • BUA Cement Plc is currently valued at about N2.46 trillion, this valuation is 34x (thirty-four times) the company’s earnings of N72.344 billion in 2020.
  • Despite paying out almost all its profits in the last 2 years, the cement manufacturer boasts strong retained earnings of N159.92 billion.

What you should know

  • Focusing on price appreciation, the shares of BUA Cement from the price of N35.30 per share on April 1st 2020, are worth about 106% more in recent times, as the market value of the shares of the leading cement maker is currently put at N72.70 per share.
  • BUA Cement’s topline revenue rose from N175.52 billion in 2019 to N209.44 billion in 2020, the company’s profits also increased from N60.61 billion to N72.34 billion between 2019 and 2020.
  • BUA Cement’s total installed production infrastructure of 8 million MTPA, in line with the cement maker’s strategic midterm expansion program is expected to expand to 20 million MTPA by the end of 2022.

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Consumer Goods

Best performing mining, industrial and consumer goods stocks from last week

The shares of the following mining, industrial and consumer goods companies delivered gains in excess of 6.9% for investors last week.

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Best performing mining, industrial and consumer goods stocks from last week

Market data for the week ended 9th April 2021 revealed that the Nigerian Equity space closed on a negative note, as the All-Share Index and the market capitalization depreciated by -0.66%, to close the week lower at 38,866.39 and N20.335 trillion respectively.

This bearish move has been linked to the conclusion of an impressive annual reporting season, as this leaves few incentives to bet on slightly higher returns from equities, with the rising yields in the fixed-income market.

READ: Shares of these FMCG companies grew by more than 55% in 97 days of 2021

Some industrial, mining, and consumer goods stocks delivered decent returns during the week

Despite the prevailing bearishness in the market which impacted the performance of some key consumer and industrial good stocks on NSE last week, shares of the following industrial, mining, and consumer goods companies delivered decent returns for their holders during the week.

The gains were driven by buying activities on the exchange as some analysts and investors consider them to be trading at discounts, with tremendous value. This made bargain hunters scamper for the shares of these companies during the week ended 9th April 2021.

READ: Nestlé’s capitalization on NSE sheds N103 billion in market value in Q1 2021

Japaul Gold and Ventures Plc (JAPAULGOLD), W-o-W gains: 40%

The rebranded and restructured mining company with a key focus on gold exploration was the best-performing stocks on NSE last week. The company also maintained the status of the best performing mining stocks.

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The shares of the gold exploration company surged by an impressive 40% last week driven by buying pressures in the shares of the company.

The company’s relatively low price driven by the recent sell-down in its shares prompted bargain hunters to accumulate additional stakes in it, in a bid to capitalize on the upward swing in its share price.

This move saw the shares of the company increase from N0.41 to N0.63 per share, representing a whopping 40% gain in just a week.

READ: Nestlé’s capitalization on NSE sheds N103 billion in market value in Q1 2021

Meyer Plc (MEYER), W-o-W gains: 19.51%

The shares of the key player in the paint and decorative industry increased from N0.41 per share at the market open last week, to N0.49 per share, to print a gain of 19.51% at the close of trading activities for the week ended 9th April 2021.

Stanbic 728 x 90

Prior to this move, the shares of the company declined by 24.07%, from N0.54 at the open of trade this year, to N0.41 per share on the 9th of March 2021.

At this price, buying activities in the shares of the paint manufacturer and marketer surged owing to the actions of bargain hunters. This led to the move up to N0.49 during the week.

READ: NIPC grants tax holiday to Honeywell, Savannah Sugar, 4 others with N175.28 billion investments

Flour Mills Nigeria Plc (FLOURMILLS), W-o-W gains: 6.90%

Shares of Flour Mills Nigeria Plc, one of the biggest brands in the food and agro-allied industry in Africa, surged by 6.9% last week, as the shares of the consumer goods company increased from N29.00 per share to N31 per share during the week ended 9th April 2021.

The impressive N2 per share or 6.9% gain in the shares of Flour Mills last week was driven by the buying interest in the shares of the flour miller, as investors anticipate an impressive financial performance ahead of the company’s earnings season.

This bullish move in the shares of Flour Mills pushed the market capitalization of the miller up by more than N8.2 billion on the exchange from N118.9 billion at market open to N127.1 billion at the close of the market last week.

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What you should know

Ayodeji Ebo, head of retail investment at Chapel Hill Denham in Lagos, in a conversation with Bloomberg revealed that the market will be bearish in the first half of 2021.

He added that after the result season, the investing public should expect a further depression because there will be no further catalysts to drive the market.

Ayodeji suggested that the growing yield in the fixed income space will continue to be a major issue as investors will become more inclined to get a one-year Treasury bill at 7% now, than taking a risk of 8 or 9%.

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