Proshare Logo
   Market Date: 29-01-2015   
Agriculture ARTS FINANCE All One Min News Archives Bonds Cap Mkt Sentiments Capital Market CASHLESS NIGERIA Commodities Corporate Earnings Daily & Weekly Market Updates Elections Enterpreneurship ETFs Forex Frauds & Scandals General Global Market Insurance Investors NewsBeat Islamic Finance Mergers & Aquisitions Money Market Mortgage Mutual Funds Nigeria Economy Oil Sector Opinions and Analysis Pensions People Personal Finance Politics Power Products & Services Professionals Property Public Offers Private Placements Regulators REITs Stock PICKS Taxation Telcos Travel & Tours Unlisted OTC MARKET World of Business

Equity Research Report - Cadbury Nigeria Plc - 240311

Category: Investors NewsBeat

  Read (5255)
Equity Research Report - Cadbury Nigeria Plc - 240311



March 25, 2011
Cadbury Nigeria Plc (Cadbury) is engaged in the manufacture and sale of branded fast moving consumer goods and processing of cocoa to butter, powder, liquor and cake. It sells its products in the Nigerian market, West Africa and South Africa. Cadbury Nigeria Plc is a subsidiary of Cadbury Plc, incorporated in the United Kingdom.
Cadbury Plc, through Cadbury Schweppes Overseas Limited (CSOL), held 75% of the issue and fully paid share capital of the company as at December 2009. The remaining 25% is held by Nigerian individual and institutional shareholders. The increase in the shareholding of CSOL occurred following the 2009 Rights Issue in which CSOL took up its rights in full and applied for additional shares, demonstrating its commitment to the Company’s future.
In February 2010, Kraft Foods Incorporated, a firm founded in Illinois, United States in 1903, completed the takeover of Cadbury Plc when the shareholders approved to purchase 71.7% of the firm at a value of US$18.9bn. The acquisition of the parent company of Cadbury Nigeria Plc may mean a change of name for Cadbury Nigeria Plc and introduction of new products into the Nigerian market, to meet the growing needs of customers.
It is unclear if Kraft Foods will opt for delisting of Cadbury Nigeria from the NSE, following the acquisition. Cadbury has a majority shareholding of 93.25% in Stanmark Cocoa Processing Company Plc (SCPCL) located in Ondo State. SCPCL produces a range of intermediate products such as cocoa butter, liquor and powder. The cocoa butter and liquor are exported to a wide range of international customers, while the cocoa powder is consumed locally. Cadbury Nigeria Plc’s entire cocoa powder requirement is sourced from SCPCL. It also exports to Cadbury Ghana Ltd and Cadbury South Africa.
Applying two valuation methods to value the shares of Cadbury; we arrived at a fair value of N32.16 per share. We estimate a dividend per share of N0.52 for FY 2010 based on dividend payout of 75%. Buying the stock at the current market price of N25 and the price appreciates to our fair value of N32.16 and adding the present value of the 5-year forecast dividend, investors will record a total gain of 42.05%. Relating this gain to the cost of equity, estimated by CAPM, of 16.71%, investment in Cadbury shares at the current market price will record an alpha return of 25.34%. The 2010 estimated earnings yield based on our fair value generates 2.17%, while the 2010 estimated Dividend Yield based on N0.52. Dividend Per Share at our fair value generates 1.63%.
Although the estimated earnings and dividend yield for 2010 are low, we believe that the future of Cadbury in the Nigerian market is bright and the company is well positioned to take advantage of the ensuing opportunities in the market.
Cadbury Investor Page on Proshare:
Disclaimer: As per our Terms of Use, is a financial information service, investor relations and issues articulation and information aggregator. We do not publicly offer/provide investment advice on the stock market or individual companies. This author may own shares in companies discussed, all opinions are his/her own & are for information purposes only. You should seek independent professional advice before making any investment decisions. Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. For further information on the comments here, kindly mail us at

Tags: , 

Comment With Your Facebook or Yahoo! ID

Latest news

News on Investors NewsBeat

About Us

Who We Are
Our Team & Partners
Corporate Governance
Advertise with Us
Subscribe / Unsubscribe
Site Map
News Feed - RSS
Contact Us
Volunteer Program
Message from CEO

News & Features
The Analyst / Market Data
Investor Relations Portal
The Regulator
Economy & Politics
Training Portal
Events Calendar
NewsStands - Online Reputation

Products and Services

Research & Market Intelligence
Analyst Services
Offers & Rights Support Service
Investor Relations Services
Alert & Subscription Services
Share Support Services
Proshare Consult
Event & Seminar Coverage
Market Directory
File a Complaint
News & Analysis

News from TheANALYST
Video News from WebTV
Money Market Updates
Opinions & Analysis
Nigerian Economy
Market Data
The Regulator
Discussion Forum

Subscriber Agreement
Privacy Policy
Data Policy
Copyright Policy
Comments in Site
Advertising Code
Conflict of Interest
Content Partnership
3rd Parties

Online Trading and Execution
Legal Support Services
Web/Technology Services
File a Complaint

CBN Governor 2014