The shares of Africa’s largest cement producer, Dangote Cement Plc have this year outperformed other premium stocks on the Nigerian Exchange Limited (NGX). Other outperformers in the premium stocks league are Seplat Energy Plc and Lafarge Africa Plc.
Dangote Cement Plc, with market capitalisation of about N11.190trillion has 17,040,507,405 shares outstanding, each valued at N656.70 as at Monday, May 20. Among other premium stocks, Dangote Cement has risen most this year by +105.3percent.
Also, it has far outperformed the NGX All Share Index (ASI) which according to trading data on Monday was up this year by 31.30percent.
Some key developments have shaped Nigeria’s macroeconomic environment year-to-date (YtD). These include among others earlier depreciation and now appreciation of the naira, constant rise in inflation rate, and proactive measures by the monetary and fiscal authorities to bolster the country’s growth prospect.
The eight-member companies that make up the NGX Premium Board were selected because of their market capitalisation and liquidity.
Read also: Foreign investors interest in Nigeria stocks seen rise in Q1
In addition to Dangote Cement, the basket of premium companies contains others like Access Holdings Plc, FBN Holdings Plc, MTN Nigeria Plc, Seplat Energy Plc, UBA Plc, Lafarge Africa Plc and Zenith Bank Plc. In terms of returns, the shares of Seplat Energy trails Dangote Cement in the premium companies’ basket.
The energy company with market capitalisation of N1.743trillion has risen this year by 28.2percent. Seplat Energy has 588,444,561 shares outstanding each valued a N2,962.20 as at Monday, May 20.
The share price of another major cement, Lafarge Africa Plc has risen this year by 6.3percent. Lafarge Africa, also a premium stock has 16,107,795,496 shares outstanding, each valued at N33.50 as at Monday, May 20. In terms of equities capitalisation, Lafarge Africa is valued at N539.611billion.
While Nigeria stock market continues to trade on both sides, though tilted towards the red zone, a cautious sentiment is anticipated among stock investors, with a preference for fundamentally sound stocks and a readiness to seize profit-taking opportunities as they arise.
Apart from the three companies above that recorded positive returns, other premium stocks have underperformed this year. For instance, Access Holdings Plc at N17 per share as at Monday May 20, has decreased this year by 26.6percent. Likewise, FBN Holdings Plc which traded at N22.90 per share on Monday has decreased this year by 2.8percent.
MTN Nigeria which traded at N230 per share has decreased this year by 12.9percent. Each share of UBA priced at N20.90 shows it has decreased this year by 18.5percent; while that of Zenith Bank priced at N31.80 per share has decreased this year by 17.7percent.
“Naira’s depreciation against the greenback, inflation, and elevated rates continued to impede profitability across sectors. Regardless, some companies posted strong results for the quarter.
“Investors were relatively muted to these releases given the broad-based subdued mood in the market coupled with the fact that expectations had been largely priced into their positions,” said Lagos-based Meristem research analysts in their April macro and market insight.
They noted that with first-quarter (Q1) 2024 earnings reports releases, “dividend investing presents a compelling strategy to capitalise on market opportunities”.
Read also: How BUA, Unilever, Dangote boosted earnings amid losses
Access Holdings and UBA are among the four stocks Meristem analysts in their insight recommended for buy because of “their attractive combination of strong dividend yields and potential for capital appreciation”.
Access Holdings has revealed a capital raise of N365billion via right issue and $1.5billion capital raise programme which is in line with the groups 5-year capital programme.
Also, FBN Holdings has announced its intention to seek shareholder approval for a capital raise of up to N300billion (approximately $241million) via public share offerings or private placements, which could be conducted domestically or internationally.
UBA has also noted its plans to raise fresh capital through sale of 10.8 billion ordinary shares. UBA will this Friday May 24 propose to shareholders the capital raise in the Nigerian or international capital markets by way of public offerings, private placements, rights issue or other transaction modes.
Zenith Bank Plc has also disclosed its plans to transition into a holding company. The restructuring involves transferring of outstanding shares (31.40billion units) from Zenith Bank Plc (the current listed entity) to Zenith Bank Holding Company Plc (the HoldCo entity), with shareholders receiving shares in the HoldCo proportionate to their existing holdings.
Additionally, existing Global Depository Receipts (GDRs) will be replaced with new HoldCo GDRs, and shares held in Zenpay Limited will be transferred to the HoldCo.
For the 2023 financial year, the directors of Dangote Cement recommended a dividend of N30 per ordinary 50 kobo share (2022: N20). They will at the company’s 15th annual general meeting (AGM) on Tuesday, May 28 seek shareholders’ approval for payment of the proposed dividend.
Read also: Cement price: Reps give BUA, Dangote, others 14 days to make submissions
In the financial year ended December 31, 2023, Dangote Cement Plc recorded group revenue increase by 36percent to N2.208trillion (2022: N1.618 trillion). Its group net profit increased by 19percent to N456 billion (2022: N382 billion). The group earnings per share increased in 2023 by 19percent to N26.47 (2022: N22.27).
The directors of Dangote Cement pursue a dividend policy that reflects the Company’s earnings and cash flow, while maintaining appropriate levels of dividend cover.
They consider the capital needed to fund the Company’s operations and expansion plans. The board considers that the proposed dividend is appropriate and is in line with the Company’s strategic growth objectives.
If the shareholders approve this dividend at the Annual General Meeting, dividends will be paid to the shareholders whose names are registered in the Company’s Register of Members at the close of business on the Qualification Date.
In the first-quarter (Q1) to March 31, 2024, Dangote Cement Plc group revenue went up 101percent to N817.4billion, while the group profit after tax (PAT) increased by 2.9percent to N112.7billion. Earnings per share in Q1’24 was up by 3.7percent at N6.68.
“For Nigerian equities, we expect cautious sentiments in May due to the following reasons; Monetary Policy Committee (MPC) decision on key rates, attractive valuation,” said CardinalStone research analysts who also noted that notable selloffs in equities observed in April may have created attractive re-entry opportunities, “especially in banking names, given their impressive Q1’24 numbers. Strategic investors would also take advantage of resilient non-banking names with low leverage, reduced FX exposure and robust cash position”.
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