Monday, February 08, 2016 5:48 PM / Cordros Capital
Cordros had a call last week (Friday) with the management of Flour Mills of Nigeria Plc (FLOURMILL) to discuss the recently released results for the period ended 31 December 2015 i.e. Q3-15/16 and 9M-15/16.
Following the result/call, we have revised estimate for 2016 PAT down to N19.68 billion (previously N26.56 billion), which is reflective of the impact of other losses reported in the third quarter.
In addition, 2017 PAT was reduced to N2.07 billion (from N2.62 billion), being the net outcome of scaling down estimates for other income (to accommodate potential currency headwinds), investment income (in view of a more accommodative monetary policy), and operating expenses (taking into consideration savings from the ongoing reorganization of RTM and merger of subsidiaries).
Our 12-month TP for the stock is however unchanged at N40.55, as we have rolled forward valuation to 2017e and slightly reduced capex estimates to below N20 billion over the medium term (as guided by management).
NB: Proshare wrote formally to Flour Mills Plc on the subject of their financial charges specifically last week but up till the time of this report, have not received any response from the company.