Wednesday, October 31, 2018 04.55PM / NSE
Initial Reaction – FBNQuest
Implications: All key line items on the P&L declined y/y. Although we were expecting a tough quarter for the company the magnitude of the topline decline surprised negatively. Q3 sales were down -26% y/y to N32.7bn while PBT fell by around -55% y/y to N6.3bn. Additionally, gross margin contracted by -1211bp y/y to 20.8% indicative of subdued prices as DSR attempts to win back eroded market share. Compared with our estimates, Q3 sales and PBT both missed by -22% and -46% respectively. On an annualised basis, 9M PBT of N26.2bn is currently tracking well behind consensus’ full year PBT 2018E estimate of N40.1bn. Therefore, we expect downward adjustments to consensus forecasts on average and a negative reaction by the market to these numbers.
Positives: Operating expenses declined by around -6% y/y and -17% q/q to N1.9bn
Negatives: All key line items on the P&L declined both on a y/y and q/q basis. Gross margin also contracted by -1211bp y/y and -952bp q/q to 20.8%.
Year-to-date, DSR shares have shed -28.5% vs. the NSE ASI’s -13.8% performance.
Rating: We rate the stock Neutral. Our estimates are under review.
Dangote Sugar Refinery Q3 2018 results vs. FBNQuest Capital Research estimates (N millions)
Source: NSE, FBNQuest Capital Research estimates