Dangote Cement, Nigeria’s most prominent cement producer, has achieved a remarkable market valuation of N13 trillion, significantly outpacing its closest competitor, BUA Cement Plc, whose market value is less than half of Dangote’s.
BUA Cement has also experienced a surge in market valuation as investors continue to value the company at a significant high multiples to its earnings.
This substantial lead in market capitalization not only underscores Dangote Cement’s dominance over BUA Cement based on market cap but also highlights its considerable size advantage compared to the third-largest cement producer in the country, Lafarge Africa.
BUA Cement is also about 10 times the size of Lafarge Africa in terms of market capitalization.
The disparity in market size is striking, with Dangote Cement being 14 times larger than Lafarge Africa. This difference vividly illustrates the immense growth in market valuation that Dangote Cement, Nigeria’s leading cement maker, has experienced.
The catalysts
When examining the combined market capitalization of Dangote Cement, BUA Cement, and Lafarge Africa, it totals around N20 trillion. Of this, Dangote Cement contributes an impressive 65%, or approximately two-thirds.
- This dominance is further reflected in revenue figures, where the three companies collectively post an estimated N3 trillion in annualized revenues for 2023.
- Dangote Cement is responsible for a lion’s share of this, with N2.8 trillion or 67% of the total, mirroring its share in market capitalization.
- The recent surge in Dangote Cement’s share price has been a significant factor in the company’s valuation growth. Over the last two weeks, its share price has increased by 100% year to date.
- This surge has significantly influenced the overall market capitalization of the NGX, which stands at around N57.8 trillion.
The other catalyst behind this dramatic rise in share price was the news of Femi Otedola acquiring shares in the company, a story initially reported by Nairametrics and later confirmed by the billionaire himself.
- Otedola’s investment decision was based on Dangote Cement’s proven track record of delivering value to its shareholders.
- The billionaire did not state how many shares of the company he has acquired when interviewed by Bloomberg.
Surge in Cement Industry market cap
Reflecting on the company’s performance over the past year, Dangote Cement began 2023 with a market capitalization of N4.4 trillion and closed the year at N5.4 trillion.
- The rapid growth in its valuation, more than doubling in just a few weeks in December, is a testament to the company’s robust market presence and investor confidence.
- In contrast, BUA Cement, despite experiencing an 80% surge in its share price year to date, had a relatively flat performance in 2023 and has traditionally lagged behind the broader market.
- Starting 2023 with a market cap of N3.3 trillion, it closed the year slightly lower at N3.2 trillion. However, the company has witnessed a significant rebound, with its market valuation currently at N6.2 trillion.
SWOOT Dominance: Both Dangote Cement and BUA Cement are part of the exclusive group of Stocks Worth Over One Trillion Naira (SWOOTs).
- Within this group, Dangote Cement stands out as the only stock in Nigeria valued at over N10 trillion, further solidifying its position as the leading force in the Nigerian cement industry.
- At N20 trillion the market cap of Nigeria’s cement giants makes up over 35% of the total market capitalization of the NGX.
It just ovevalued it will come down after d first quarter watch and see
Huh?! If anything, most Nigerian listed stocks are actually UNDERVALUED (especially the banks)!