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NBC - A buy?


July 08, 2007/




Thank you for choosing Afrinvest (West Africa) Ltd as your investment broker.
In our constant quest to ensure the growth of your portfolio and the actualization of your investment objectives, we would like to sensitize you on the latest information about NBC:  

NBC announced Q1 (up to March 2007) results with turnover and PAT figures up by 17% and 22% to N17.6 bn and N1.042 bn respectively. 



2006 financials also show that cash generated from operations improved for the first time in five years to N13.4 bn (N5.3 bn in 2005).  


NBC has made significant investments (over N16 bn since 2004), including a mega plant located in Abuja. Additionally, the Company also reduced its headcount by 1,442 (or 19%) from 7,596 to 6,154.  
These investments and restructuring are expected to impact positively on the company’s revenue and profit going forward. 


Based on this result, we have reviewed our YE PAT forecast to N3.6 bn, and as such the valuation turn out as follows:
 Current Price (N):                         34.01
12-month high (N):                        55.00
12-month low (N):                         31.00
Forecast EPS (N):                          2.75
Forecast P/E:                               12.37x
Forecast DPS (N):                         1.00
Dividend yield (%):                        2.9%
12 month price target (N):              50.00 
It is important to note that NBC’s rival 7up Bottling Company, trades comfortably at a YE forecast P/E of 20x. Therefore NBC is relatively cheap.
In addition, we note that a bonus issue seems likely given the company’s history. 
Based on our analysis of the relative value of NBC, we recommend the shares a strong BUY. 
To take advantage of this, you are advised to contact your account officer, who is most willing to assist you with the planning and execution of your trades.
Thank you.  

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