Markets

Dangote Sugar, May & Baker, Fidson are top performing stocks

by Iheanyi Nwachukwu

December 21, 2017 | 12:48 am
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Dangote Sugar Refinery Plc, May & Baker Nigeria Plc, and Fidson Healthcare Plc are best performing stocks on the Nigerian Stock Exchange (NSE) this year.

These stocks have all outperformed the NSE broad index which recorded year-to-date (ytd) returns of approximately 40percent.

Few days to the end of 2017, Dangote Sugar Refinery Plc, May & Baker Nigeria Plc, and Fidson Healthcare Plc stocks have impressed many stock buyers with record minimum returns of 200percent year-to-date (Ytd). 

Dangote Sugar Refinery Plc

With price at N21.65 as at Monday, Dangote Sugar Refinery Plc achieved impressive return of 254.3percent year-to-date. Year-to-date, the shares have outperformed both the NSE broad index and sectoral index respectively. Dangote Sugar Refinery Plc is the strongest pick within many analysts fast moving consumer goods (FMCG) coverage universe.   

Positive market sentiments fuelled by impressive earnings

Dangote Sugar Refinery stock has benefited from recent bargain hunting that pushed the Nigerian stock market to record new highs. 

With the company’s impressive quarterly results signalling positive walk to the full year, many investors chose to raise wagers in the stock, preparatory to possible full year rewards.

For instance, in the nine months to September 30, 2017, Dangote Sugar Refinery Plc recorded group revenue of N163.03billion, reasonably higher than N115.25billion in the corresponding nine month period of 2016.

Selling and distribution expenses dropped to just N650.57million from a high of N1.18billion in the corresponding nine month period of 2016.

Operating profit at N36.36billion grew from N14.72billion in same period of 2016. The group after tax profit for the period grew to N26.5billion, up from N10.11billion in the corresponding period of 2016.

Analysts positive on Dangote Sugar outlook

According to Uwadiae Osadiaye team of research analysts at Lagos-based FBNQuest, the outlook for Dangote Sugar Refinery Plc remains favourable.

The analysts strongly believe Dangote Sugar Refinery’s (DSR) growth story over the medium term is compelling; and they forecast earnings per share (EPS) growth to average 45percent year-on-year (y/y) over the 2017-2019E period.

“We expect the company’s dominance of the sugar industry to persist well beyond the next few years given the firm’s aggressive backward integration project which is in line with the federal government’s sugar master plan. In comparison with peers which have struggled, DSR has successfully signed key land acquisition agreements”, FBNQuest analysts said.

The management of the Company expects to produce around one million tonnes per annum (1MTPA) of finished sugar domestically, equivalent to two-thirds and 50percent of current and projected national sugar demand by 2022. 

“We expect the company’s dominance of the sugar industry to persist well beyond the next few years given the firm’s aggressive backward integration project which is in line with the federal government’s sugar master plan. In comparison with peers which have struggled, DSR has successfully signed key land acquisition agreements. The most recent is a 60,000 hectare Tunga Project in Nasarawa which accounts for circa 55percent of DSR’s near term production ambition”, the analysts noted. 

May & Baker Nigeria Plc

Another stock that has impressed the market is May & Baker Nigeria Plc. At N2.88 which its price stood early this week, it implies Ytd return of 206.4percent. This stock outperformed the NSE broader index.

Investors became more interested in May & Baker shortly after the Federal Executive Council ratified the 12 year old agreement between it and May & Baker Nigeria Plc for local vaccine production.

Shareholders expect the investment in local vaccine production to certainly multiply the turnover and profitability of May & Baker Nigeria Plc.

May & Baker Nigeria Plc unaudited consolidated financial statements for the period ended September 30, 2017 show group revenue grew to N6.92billion from N5.94billion in corresponding period of 2016.

Gross profit also increased to N2.155billion from N1.704billion in 9M’2016; while the group reported profit before tax (PBT) of N322.393million in 9M’17 against N66.23million in 9M’16. Profit for the 9M’17 period stood higher at N218.506million, up from N44.397million in 9M’16 period. 

Fidson Healthcare Plc

Another top performing stock is Fidson Healthcare Plc. The stock has remained on demand this year.

Its share price stood at N3.78 at the beginning of this week, which implies Ytd return of 195.3percent. The unaudited financial statements for the period ended September 30, 2017 shows the company recorded nine months revenue of N10.302billion, a remarkable increase from N4.527billion in the corresponding period of 2016.

Last year, Fidson Healthcare Plc commenced operations in its brand new WHO-complaint ultra-modern facility which the company believes will help it to significantly meet orders of the major consumers- the Teaching and General Hospitals, Federal Medical Centres, Big Private Hospitals, Corporate Clinics, among others as far as infusion products are concerned.

The expected financial contribution from this facility according to the management will help grow the Company’s turnover by additional N1.9 billion at 75percent activity level by the 3rd year of production, N2.9 billion at 90percent activity level by 6th year and N3.6 billion by the 10th year at same 90percent activity level.

Investors started taking position in Fidson Healthcare amid their belief that the project in addition to increased capacities (almost two-fold) for the existing 5 product lines and other strategic initiatives will contribute handsomely to the overhead recovery of the  Company  thereby  growing  shareholder  value  significantly.

Results of the company at the Nigerian Stock Exchange (NSE) show gross profit at N5.223billion rose from N2.385billion in 9M’16. Profit Before Tax (PBT) at N1.043billion in the nine months period signifies a remarkable growth from N120.698million in 9M’16; while profit for the period impressed at N730.453million from N82.075million in corresponding nine month period of 2016.

Iheanyi Nwachukwu


by Iheanyi Nwachukwu

December 21, 2017 | 12:48 am
  |     |     |   Start Conversation

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