Five of Nigeria’s most valuable companies ended the month of October with a market valuation of N14.8 trillion ($36.1 billion) up from N14.4 trillion recorded in September 2021.
These companies are all quoted with their share price (Stocks) Worth Over One Trillion (SWOOT) naira in market value. The SWOOT as we call them at Nairametrics include the five most valuable companies in Nigeria, Nestle, BUA, MTN, Airtel and Dangote Cement.
These companies are so large that they also make up about 67.5% of the entire market capitalization of the stock exchange valued at N21.9 trillion. The Nigerian stock exchange has about 160 actively quoted stocks.
How did the SWOOT fare in October?
Nestle, Nigeria’s leading consumer goods company is the least capitalized of the SWOOTs with a valuation of N1.17 trillion at the end of October. The company’s share price fell from N1,480 per share in September to N1,400 by the end of October. A major reason for the drop was its 2021 Q3 results which saw the company report pre-tax profits of N18.2 billion compared to N15.4 billion same period in 2020.
Investors expected a much improved 2021 considering the fact that the prior year was a pandemic year. Nevertheless, Nestle remains one of the most profitable companies in the country and despite the result, still delivered a return on average equity of over 100%.
Nestle has a price to earnings ratio of 27.1x.
BUA Cement, one of the largest cement conglomerates in the country increased its market cap by a whopping 9% in October, taking its valuation to N2.43 trillion. The bullish sentiments recorded during the month is due to the impressive results declared in the 3 months ending September 2021.
Pre-tax profits for the period was N24.9 billion, up from N20.3 billion in the same period the year before, riding on the back of robust cement sales. Revenue grew to N62.6 billion during the quarter; up from N55.2 billion a year earlier. BUA is also one of the most expensive stocks on the exchange due to its high price to earnings ratio of 35.7x.
Airtel Africa is one of the two telecommunication firms included in the quintet of the largest companies in Nigeria by market capitalization. The telco gained 9% at the end of October with a market valuation of N2.9 trillion. However, this is not the company’s highest market valuation this year. Airtel was worth as high as N3.4 trillion between February and June 2021. However, profit-taking by investors has lowered the interest in the stock forcing the share price to drop.
Airtel also released its second-quarter results from Nigeria for the period ending September 2021 showing a 27.1% increase in revenues to N450 million.
Investors seem to have appreciated the revenue and profit growth. Airtel is also an expensive stock as it trades at a price to earnings multiple of 11.07x. However, Airtel is growing at a faster rate than its earnings multiple with a PEG ratio of 0.3x. Investors consider companies with a PEG ratio of less than one as extremely cheap.
MTN Nigeria is the most profitable company in Nigeria (based on public records) and also the second most capitalized company on the Exchange. At a market value of N3.6 trillion or $8.7 billion, MTN is just shy of its all-time high of N3.67 trillion. The company reported blistering third-quarter results reporting revenue of N415 billion; up 23% and pre-tax profits of N106 billion, up 47.5% year on year. The company remains one of the best when it comes to returns matching the likes of Nestle with a return on average equity of over 100%.
Some could argue that MTN is worth more considering that it currently trades at a price to earnings multiple of just 12.66x. MTN could easily be worth over N5 trillion in a very bullish market.
Dangote Cement is Africa’s largest cement company with a combined market valuation of about N4.7 trillion or $11.6 billion. The cement behemoth did not record any changes in its market valuation month on month but continued to deliver impressive numbers. During the quarter, its revenue rose 16.5% to N331.6 billion while pretax profits also rose but by 13.9% to N124.2 billion.
Dangote Cement also reports a very high return on equity averaging 31.2% this year. The company share price also contains a price to earnings multiple of 13.92x. Dangote Cement could be worth N5 trillion by early next year if it is able to sustain its performance and reward investors with a much higher dividend payout.
Where are the banks?
Finally, no Nigerian bank makes the cut since none of them is worth up to N1 trillion in market cap. The bank with the highest market cap is GTB with about N824 billion. The company was a member of SWOOT earlier in January when it was priced appropriately.
Tech Unicorns like Flutterwave, Paystack and Interswitch are probably knocking on the SWOOT doors and could be worth as much in the next few years. The likes of NNPC, which is currently not quoted could be worth more than Dangote Cement if it finally gets listed. Dangote Refinery could also be in the mix when you consider the valuation used by NNPC when they invested.