Analysis of Dangote Sugar Refiney’s Stock
Dangote Sugar Refinery Share Price – My Analysis of Stock Performance on the Nigerian Stock Exchange and Why Should Buy Now for Short-Term Gain.
As of this writing, Dangote Sugar year to date return is -21.5%, a not-so-impressive performance that is not unconnected to the company’s revenue shortfall.
It paid a dividend of ₦1.25 to shareholders on June 20, 2018. Dividend yield on the payment date was 6.58%.
Its current share price is ₦15.7
Results for the half year ended June 2018 show that revenue declined from ₦118.6 billion in 2017 to ₦84 billion in 2018 while the cost of sales improved to ₦60.7billion (from ₦91billion).
Profit before tax fell from ₦25.2 billion in 2017 to ₦19.9 billion in 2018. Profit after tax followed suit; from ₦17.1 billion in 2017 to ₦12.7 billion in 2018.
From the result, Sales fell significantly by 41% as the company is faced with increased competition from sugar importers and lower sugar prices per kg. On each Naira sales, cost ratio declined from 76.7% to 71%.
Gross profit margin improved from 22% in 2017 to 27.6% in 2018.
The payment of ₦18 billion to trade partners as part of the company’s strategy to reduce debt contributed to the improved Debt to Equity ratio, from 1.10 in 2017 to 0.87 in 2018.
Technically, Dangote stock is trading at the lower price compared to its 20-day and 50-day moving average after which portends a bearish sentiment on a short term. The long-term sentiment is clearly bullish as the price is well above the 200-day moving average of ₦9.68
Dangote Sugar reported a 2018 half year EPS of 1.07, compared to 1.43 in 2017, a 25% decline. Using a discount rate of 14%, an assumed zero growth and a TTM EPS of 2.8, we assign a fair value of ₦20 which is 27.3% above the current share price.
No recent update on Dangote Sugar Refinery Plc.
We assign a BUY rating on Dangote stock at the current price with a target price of ₦18-₦20.
About Dangote Sugar Refinery PLC
Dangote Sugar Refinery PLC produces, refines, packages, and sells granulated raw white sugar domestically and regionally in Africa. The Company also plans to increase international focus.