CCNN Reports Modest Growth in Top Line; Cardinal Stone Recommends SELL


Thursday, October 24, 2013 9:10 AM / Cardinal Stone


Cement Company of Northern Nigeria Plc (CCNN), released its Q3’13 result to the Nigerian Stock Exchange (NSE) today. Kindly see our initial thoughts on the numbers and result highlights below;


1.      Modest growth in Turnover, up 6% YoY: CCNN reported a modest 6%yoy growth in revenue to N12.07 billion, which closely aligns with our N12.20 billion estimate. In line with seasonal patterns (given the heavy rains that usually characterise third quarters), revenue declined by 14% most likely as a result of lower volumes. Overall, CCNN’s annualised EPS came in higher, rising 25% to 88kobo from 50kobo in Q3’12.


2.   Impressive bottom line growth given muted increase in production costs: CCNN’s after-tax earnings came in at N1.10 billion in Q3’13, a 25% rise over Q3’12, which falls largely in line with our N1.16 billion estimate for the period, pacing behind by 5%. We note the steady improvement in operational efficiency as the company consolidated on its H1’13 performance with the slower 1% growth seen in cost of sales compared to the 6% rise in revenue. Thus, CCNN’s operating and PAT margins came in at 10% and 9% from 6% and 8% respectively in Q3’12.


3.    Revision to forecast and valuation: With CCNN’s Q3’13 results largely within our FY’13 projections for the company, we retain our forecasts for FY’13. Our revised valuation for CCNN is N9.82 which translates to a 3% downside on its last close price of N9.50. Hence, we maintain a SELL rating on the stock. CCNN is trading at a trailing P/E of 8.43x higher than our forward P/E of 7.79x.



Analyst Certification

As to each security or issuer mentioned in this report, the respective primary research analyst(s) covering that security or issuer hereby certify that their views about the issuers and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.


While the website is checked for accuracy, we are not liable for any incorrect information included. The details of this publication should not be construed as an investment advice by the author/analyst or the publishers/Proshare. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use of this information. All opinions on this page/site constitute the authors best estimate judgement as of this date and are subject to change without notice. Investors should see the content of this page as one of the factors to consider in making their investment decision. We recommend that you make enquiries based on your own circumstances and, if necessary, take professional advice before entering into transactions. This article is published with the consent of the author(s) for circulation to the online investment community in accordance with the terms of usage. Further enquiries should be directed to the author whose e-mail is CardinalStone Research []

Related News