Stock & Analyst Updates | |
Stock & Analyst Updates | |
6235 VIEWS | |
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Monday, April 16, 2018 /06:10PM / FBNQuest Research
Neutral rating maintained
Within the next five years, management expects to
locally produce 1 million tonnes of sugar annually from projects in Adamawa,
Taraba and Nassarawa States. According to management, project funding is now
expected to exclude any form of additional equity capital. We have raised our
EPS forecast over the 2018-19 period by 21% on average, largely on the back of
our expectations of stable pricing and an 18% y/y growth is sales volume to
773,170 tonnes. However, we anticipate a persistent rise in operating expenses
over the next three years as land cultivation progresses. Our new price target
of N24.0 is up 26% and implies an upside potential of 8% from current levels.
We retain our Neutral rating on the stock. At current levels, DSR shares are
trading on a 2018 P/E multiple of 5.2x for an EPS decline of -6% over the next
two years. Ytd, DSR shares are up +11.3% compared with the broad market’s gain
of +7.0%.
Marked improvement in profitability, driven by GM
expansion
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