Wednesday, February 27, 2019 03:40PM / NSE With Additional Comments from FBNQuest Research
Although DangCem’s 2018 PBT of N300.8bn came in behind consensus 2018 PBT forecast of N313.2bn, its PAT of N388.4bn surprised positively relative to consensus PAT forecast of N228.0bn. Consequently, we expect to see a positive reaction from the market over the next few days.
Q4 sales grew 7% y/y to N215.9bn, driven by unit volume growth of c.11% y/y to 3.4 million metric tonnes (mmt) in Nigeria. On a full year basis, sales for the Nigerian business also grew by 11% y/y to 14.2mmt and was the major driver behind the 7% y/y growth in unit volumes delivered by the group. Further down the P&L, Q4 2018 PAT grew strongly by 810% y/y to N208.4bn, thanks to the pioneer tax relief for Ibese lines 3&4 and Obajana line 4 that was approved by the federal government in Q4 2018. Relative to our forecast, PAT beat by c.144% because of the positive surprise on the tax line. Although we expected to see a tax credit in Q4 following the approval of the pioneer tax relief, our tax credit forecast of N18.3bn was more conservative than the N178.6bn reported by the company.
Q3 PBT declined by -23% y/y due to a 30%% y/y rise in opex and a 4.9x increase in net interest expense to –N19.0bn.
The company has proposed a final dividend of N16.0 per share which translates to a yield of 8.3%. The proposed dividend per share is around 36%% higher than our N11.78 forecast (N11.30 for consensus).
Year-to-date, DangCem shares have underperformed the index. The shares have gained +1.5% ytd compared with the +2.6% ytd return delivered by the ASI.
We rate DangCem shares Outperform. Our estimates are under review.
Dangote Cement Q4 2018 results vs. FBNQuest Capital estimates
Source: Company data, FBNQuest Capital Research estimates