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While the overall NSE index is down by 15% or more, CCNN stock has already doubled shareholders’ wealth this year. As of this writing, CCNN’s stock year to date and one-year returns are 137.89% and 170.7% respectively. The stock is currently the best performer so far and as the government plans to rebuild northeast and finance more infrastructural deficits in that region, CCNN is better positioned to deliver impressive results this year.
Month to Date, the stock is down 26.86% as it looks overvalued. The current share price is N22, down from N31.35, its 52-weeks high.
See – How I analysed and bought this stock at N16
Recent Result
Results for the half year ended June 2018 show that revenue grew from ₦8.5 billion in 2017 to ₦12 billion in 2018 while the cost of sales increased to ₦6.6billion (from ₦5.4billion). From the result, Sales increased by 41%. On each Naira sales, the company spent less as cost ratio declined from 63% to 55%.
Profit before tax jumped from ₦1.3billion in 2017 to ₦3.6 billion in 2018. Profit after tax followed suit; from ₦1billion in 2017 to ₦2.6 billion in 2018.
Gross profit margin improved from 35% in 2017 to 45% in 2018.
Debt to Equity, a measure of financial leverage, increased from 70.8% in 2017 to 77.6% in 2018 but the increase in interest coverage shows that the company is able to finance its interest expenses with profit from operations.
Technical Analysis
Technically, CCNN stock’s price is below its 20-day price of ₦30 and 50-day moving average price of ₦27 which suggest that investors are taking profit right now. A break below the 50-day average price may set the stock up for further fall which is a great opportunity for long term investors to key into the company as fundamentals remain intact.
The long term sentiment is clearly bullish as the price is well above the 200-day moving average of ₦20.56
Valuation
CCNN reported a 2018 half year EPS of ₦2.07, which is 152% more than the EPS of 82k in the comparable period (2017). Using a discount rate of 14%, an assumed zero growth and a TTM EPS of ₦3.82, we assign a fair value of ₦27 to the stock, which is 22% above the current share price.
Market update
No recent news.
Recommendation
We assign a BUY rating on CCNN stock.
About Cement Company of Northern Nigeria
Cement Co Northern Nigeria PLC is a cement manufacturing and marketing company.
