Stock & Analyst Updates | |
Stock & Analyst Updates | |
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Thursday, August 17, 2017 6:28PM / FBNQuest Research
7% cut to our EPS estimates over
the 2017-18E period
UACN’s other businesses also contend
with similar headwinds. Following discussions with management, we expect modest
price increases across various products in the food & beverage category. Relatively
softer input costs due to improved fx supply for imports and the harvest season
in H2 are also supportive. As such, we see overall business costs easing in H2.
However, we have cut our EPS
estimates over the 2017-18E period by 6.6% given that Q2 earnings missed our
forecast by c.21%. Our price target of N26.0 holds because we have rolled
forward our valuation to 2018. Year-to-date, UACN shares are flattish compared
with a broad market gain of around +37% and has remained on the sidelines of the
market’s recent rally.
Given capital raising efforts across
various UACN subsidiaries it appears that dilution fears continue to weigh on
investors’ minds. Nonetheless, we retain our Outperform rating on the stock due
to the valuation gap to our fair value estimate. At current levels, UACN shares
are trading on a 2017E P/E multiple of 18.7x for an average EPS growth of 52%
over the 2018-19E period.
Q2 2017 PBT down -63% y/y to N805m
Sequentially, sales declined by -6%
q/q while PBT was
down -2.9% q/q on the back of strong other income
growth (up +724% q/q). Compared with our estimates, while UACN’s sales were in line with our forecast, PBT came in behind our N1.2bn
estimate by around 35%. Negative surprises on
both net finance charges and opex offset positives coming through from the
other income line.
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UAC of Nigeria Reports Q2 2017 Results - Sales Grew by
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