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Investors Stake N598.12bn on Dangote Cement in 9 Months, Stock Hits 52-week High



Dangote Cement - Investors King

Domestic and foreign investors have invested N598.12 billion in the stock of Dangote Cement Plc on the Nigerian Exchange Limited (NGX) in the first 9 months of 2021.

With impressive earnings in half year ended June 30, 2021, the cement manufacturing company stock price on the NGX hits 52-week high yesterday.

This means the stock of the cement manufacturing company has appreciated by 14.3 per cent to N280 (N4.77trillion) as at September 30, 2021 from N244.90 (N4.17trillion) it opened for trading this year.

Appreciation in Dangote Cement share price impacted positively on NGX Industrial index that gained nearly two per cent 2,089.38 basis points as at September 30, 2021 from 2,052.33 basis points it closed in 2020.

With a dividend of N272.65billion in 2020 financial year, Dangote Cement made the highest returns to investors on the NGX.

The company’s unaudited result and accounts for half year ended June 30, 2021 (H1) showed impressive performance in revenue and modest performance in net finance that impacted positively on profit before tax and profit after tax.

The company’s double-digit increase in revenue was largely driven by higher sales volumes, as well as improved cost management during the period, which drove margin expansion.

The cement manufacturing recorded increase in volume of both cement and clinker volumes to 14,550,000 tonnes in H1 2021 from 11,674,000 tonnes to drive revenue from sales of cement & clinker to N690.55billion in H1 2021 from N476.84billion reported in H1 2020.

During the H1 2021 period, Dangote Cement revenue increased by 44.8 per cent to N690.5billionn from N476.85billion recorded in H1 2020, supported by a 26.1per cent surge in volumes sold to 15,277 metric tonnes in H1 2021 from 12,114 metric tonnes and 14.5 per cent increase in revenue-per-tonne to N45,133.66 which was attributed to lower rebates and price increment during the period.

The impressive growth was reflected in both the Nigerian and Pan-African market segments, as sales volumes were up by 33.2per cent and 15.5 per cent, respectively.

With decline in finances, Profit Before Tax rose by 72.7 per cent to N281.3billion in H1 2021 from N162.85 billion in H1 2020.

Notably, a 141.2 per cent increase in tax income to N89.6biillion in H1 2021 from N36.71billion in H1 2020, dragged profit to N181.6billion in H1 2021 from N126.14billion reported in H1 2020.

Earnings per share (EPS) increased to N11.21 kobo in H1 2021 from N7.45 kobo in H1 2020.

According to analysts at United Capital, “Going into H2 2021, we remain optimistic on Dangote Cement and expect the company to sustain double-digit growth, albeit at a slower pace relative to H2 2020, given the relatively high base from the period.

“On a macro-scale, we are optimistic about economic recovery in Nigeria and Sub-Saharan Africa, as well as sustained cement demand, which has driven capacity expansion plans. Additionally, price increases in the first half of the year will help sustain top line growth and margins, as costs remain pressured.

“Furthermore, we see further room for price increments during H2-2021 as demand remains strong and inflationary pressures persist. However, risks to a more robust H2 2021 performance include disruptive rains in Q3-2021, an intensified third wave of Covid-19 in SSA and attendant lockdowns, persistent disruptions in global supply chains, higher freight prices, further naira devaluation and elevated inflationary pressures.However, we observe that Dangote cement has done particularly well in the face of rising expenses and this bolsters our optimistic outlook.Specifically, we project FY 2021 Revenue growth of 28.7per cent to N1,330.9billion (prev. N1,168.3billion) and expect EPS to grow by 31.9 per cent to N21.4/s in FY 2021.

They, however, recommended that investors should HOLD the stocks of Dangote Cement with upgraded target price.

“We updated our forecasts for Dangote cement in light of the H1 2021 numbers which exceeded our expectations, as well as our optimistic prognosis for cement demand in H2-2021.Accordingly, we raise our target price on Dangote cement to N270.28 (previous: N253.70). This revision reflects our expectation of upbeat sales volumes, further price increases and sustained cost management, as well as favourable adjustments in computing the cost of equity. Our target price implies a HOLD rating and an upside potential of 11.9 per cent, ”they said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Company News

Cadbury Nigeria Recognised For Human Resource Management



Cadbury Nigeria

Cadbury Nigeria Plc announced that it had been recognised as a top employer by the Netherlands-based Top Employers Institute, even as it stressed the importance of employee well-being.

Cadbury Nigeria, a subsidiary of Mondelēz International, made the announcement in a statement released on Wednesday as part of the celebration of its third annual purpose day.

The consumer goods manufacturer said it held a webinar for its employees anchored by experts in healthcare management.

The Managing Director, Cadbury Nigeria, Mrs. Oyeyimika Adeboye, said the company takes the well-being of its employees seriously, adding that they would give their best if they had the right mental attitude.

“That is the reason we organised the webinar by bringing in experts from Helen Keller International to speak to us on well-being, as part of our Purpose Day,” she said.

Adeboye added that the growing importance of holistic well-being made the company focus its annual Purpose Day activities this year exclusively on well-being in the areas of mind, body and connection.

The Country Director, Helen Keller International, Ms. Philomena Orji, was quoted as saying during her presentation, “Helen Keller is dedicated to scaling up evidence-based, cost-effective solutions to improve care practices and ensure that basic health interventions reach vulnerable people, with a focus on women, youth, and children.”

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Company News

BOC Gases Nigeria Plc Rebrands to Industrial and Medical Gases Nigeria Plc Following Acquisition



BOC Gases Nigeria Plc - Investors King

BOC Gases Nigeria Plc, Nigeria’s leading manufacturer of industrial and medical gases, has changed its name to Industrial and Medical Gases Nigeria Plc following an additional 60 percent acquisition by TY Holdings Limited in August.

TY Holdings Limited acquired a 60 percent stake owned by BOC Holdings UK to take its total stake in the company to 72 percent.

The company disclosed in a statement signed by Ayodeji Oseni, the Company’s Managing Director.

The statement reads, “The change of name is sequel to the purchase of 60% of BOC Gases Nigeria Plc, which was formerly controlled by BOC Holdings UK (a member of the Linde Group) by TY Holdings Limited. This has also resulted in the change of the Company’s logo and trademark.

“The Company has obtained a new certificate of incorporation from the Corporate Affairs Commission.”

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Merger and Acquisition

MFS Africa Acquires Baxi, Expand Operations Into Africa’s Largest Economy



Baxi Nigeria-Investors King

MFS Africa, the largest pan-African digital payments hub, announced it had signed an agreement to acquire Baxi, one of Nigeria’s largest independent SME-focused electronic payment networks. The deal, which is subject to approval from the Central Bank of Nigeria, will be the second-highest fintech acquisition in Nigeria to date.

Nigeria, Africa’s largest economy is the largest remittance market in Africa with one-third of intra-Africa remittance flows. MFS Africa’s presence in Nigeria to date has been limited given the country’s small number of mobile wallets. With the acquisition of Baxi, MFS Africa will expand its pan-African network into Nigeria, connecting Nigerian businesses to the continent and the rest of the world.

According to MFS Africa Founder and CEO Dare Okoudjou, he said, “this deal is a pivotal step in our journey. By combining Baxi’s network of SMEs operating as agents with our pan-African network, we aim to take Nigeria’s SMEs to the rest of Africa and the world. Our expansion into Nigeria brings us one step closer in our mission of making borders matter less,”

Baxi was founded in 2014 by Degbola Abudu and Folu Majekodunmi, the electronic payment network provides a cash-in/cash-out offering as well as value-added services — account opening, money transfer, bill payment and more — to the last mile. Through its network of more than 90,000 agents, Baxi has already processed over USD 1 Billion in transactions this year.

Following the acquisition’s close, MFS Africa will build Baxi into a key node on its digital payment network, allowing customers to make regional and global payments to and from Nigeria. MFS Africa will also expand Baxi’s proposition for offline SMEs to select markets within MFS Africa’s footprint of 320 million mobile wallets across more than 35 African countries.

Previous restrictions to mobile network operators’ participation in mobile money services have restrained the sector’s growth in Nigeria. To serve the more than 55% of Nigerian consumers currently excluded from formal financial services, Nigerian fintechs that have built strong agent networks are the crucial interface to reach Nigeria’s ~31m financially underserved and ~67m financially unserved populations. Supporting and nurturing SMEs is crucial to Nigeria’s economy, as they contribute 50% of Gross Domestic Product and provide 76% of jobs. With its presence in 36 Nigerian states, Baxi fills a critical gap by providing unbanked Nigerians and informal SMEs access to financial services.

The focus areas of both companies are complementary. Baxi simplifies and integrates online and offline payments for SMEs and merchants in Nigeria through its omnichannel distribution network. MFS Africa simplifies cross-border payments, integrating payments via one hub.

“We’re thrilled to partner with the MFS Africa team to expand our service offering for individuals and SMEs. We believe that we’ve barely scratched the market’s potential. Only 3% of Nigerian SMEs have access to credit products. By teaming up with MFS Africa, and with the strong support of our local commercial banking partners, we can offer more value-added products and services, such as cross-border payments, to support Nigerian SMEs in their growth,” said Degbola Abudu, Baxi CEO.

Baxi acquisition is MFS Africa’s third acquisition in five years, seeing the pan-African payments giant expand into Africa’s largest economy, where its presence to date has been limited given the country’s small number of mobile wallets. Capricorn will be called MFS Africa but its core product, Baxi, retains its name.

Both parties declined to disclose the value of the deal, however, Capricorn Founder and CEO, Degbola Abudu, in a call with TechCabal said the deal is the second-largest of its kind in Nigeria’s fintech space, behind the $200 million Stripe paid for Paystack last year.

MFS Africa was founded in 2009 by Dare Okoudjou, a Beninese national, while Nigeria-born Abudu started Capricorn in 2014, with Folu Majekodunmi. The acquisition creates a larger, more versatile company that fuses interoperability between money operators and a super-agent network reaching the mass market.

MFS Africa’s big vision is to have a presence in all 54 African countries, serving 500 million people and millions of small businesses, according to Okoudjou. He said, “if you have a phone or POS, it should be enough to transact with the rest of Africa and the world, we’re building the foremost, currency-agnostic, real-time hub for payments on the continent, to enable people to transfer money the way they can call each other.” 

Often, MFS Africa’s continental expansion plan has involved partnering with money operators and making minority investments in other fintech companies across Africa, as in the case of Julaya, Maviance, and Numida.

However, Okoudjou explains that the company opts for full acquisition when both parties consider that a more effective way to achieve their shared long-term ambitions.

“The more we spoke with Dee, the more we realised what we could achieve with a full acquisition instead of being only investors in which case there could be misaligned incentives.”

Okoudjou further explains that the need to “bolster our presence in Nigeria” given its unique market features—the prevalence of offline payment touchpoints over mobile-first transactions—drove MFS Africa’s interest in Capricorn.

“In other markets, one or two partnerships with mobile money operators could see us reach 60% of digital payment users in the country. However, mobile money isn’t that widely adopted in Nigeria. Instead, agent networks such as Capricorn’s have grown rapidly.” He says. 

For Abudu, the future of the mobile payments landscape in Africa is a game of few, where consolidation is the way forward, and attempting to scale alone would require more capital expenditure and a longer time to execute.

“It’s a good time to partner with a company that brings a real pan-African presence and we see synergies across our operations. They offer a wide range of value-added products and services like cross-border payments while we have access to SMEs in Nigeria, one of the biggest markets in Africa. We believe that we’ve barely scratched the market’s potential. The deal brings many things that allow us to grow very quickly.

“We’ve been able to build a large business with relatively small capital but now we want to be able to compete, not just in Nigeria but also across Africa, the deal with MFS Africa gives us leverage to take Baxi and the model that’s been so successful in Nigeria to other African countries.” Says Abudu

MFS Africa plans to engage with Nigeria’s central bank and other regulators to seek any other additional licenses needed to operate its full-service offerings—such as remittance, micro-lending, insurance—while also exploring commercial partnerships in the country.

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