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.
In my view, shares of this company are currently overpriced. I think the price should be around NGN50 per share.