• Tuesday, March 05, 2024
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Dangote Cement, CCNN have attractive valuations compared to African peers

Dangote Cement

Dangote Cement Nigeria Plc and Cement Company of Northern Nigeria (CCNN) have attractive valuations compared to their African peers as they continue to take advantage of the country’s infrastructure deficit to increase their market share.

For instance, Dangote Cement and CCCN are both trading at 7.3x and 7.0x 2019E EV/EBITDA respectively, a discount to 11.2x for the Middle East and Africa (MEA) peers. This means they are strong gains for investors that invest in these stocks.

EV/EBITDA stands for Enterprise Value to Earnings before Interest, Taxes, Depreciation and Amortisation (and Exceptionals). It is similar to and often used in conjunction with – the PE Ratio but it is capital structure-neutral by including debt and taking earnings before the payment of interest.


As a general guideline, an EV/EBITDA value below 10 is commonly interpreted as healthy and above average by analysts and investors.
Investors have been dumping the shares of Dangote and other NSE 30 firms as they fret about the lack of policy direction of President Muhammdu Buhari’s administration.

Dangote Cement’s share price closed at N173 2:00 pm on Friday (July 12 ), this compares to N234 the corresponding period of 2018, N235.35 in 2017, N180 in 2016, N171 in 2015, and N232 in 2014.

CCCN’s share price closed at N14.50 2:00 pm on Friday (July 12), this compares to N31.50 the corresponding period of 2018, N9.22 in 2017, N7 in 2016, and N9.50 in 2015, and N14.17 billion in 2014.

The dominant players in the building material industry are poised to take advantage of the country’s infrastrucute deficit and housing deficit as they have embarked on organic and inorganic strategies.

For instance, CCNN’s new cement plant in Sokoto is, the best cement plant in Nigeria, due to the high level of technological configurations which makes end products cure and dry faster.

The company has a unique geographical positioning that gives its seamless access to the market in the North West region of the country and strong exports potential to neighbouring countries, especially Niger, according to analysts at Cordros Capital Securities Limited.


Analysts at Cordros Capital said CCNN’s is a top pick in their coverage universe and they set a target price of N28.71 and an expected total upside of 105 percent on current market price.

“Against production ramp up in its new line, we expect the company will deliver solid earnings in 2019E with both EBITDA and PBT growth of 95.1 percent and 131.6 respectively,” said analysts at Cordros Capital.
Dangote Cement maintains its position as a market leader because it controls 60 percent of the market. It continues to enjoy superior margin on account of strong energy efficiency and lower maintenance costs.

Dangote Cement recorded gross profit margin of 59.12 percent as at March 2019, this compares with CCNN, (46.45 percent), and Lafarge Africa, (22.12 percent).