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.
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