The cement industry leader once again recorded an impressive performance in its just released FY2017 financial scorecard. The company recorded a 30.97% growth in revenue to NGN805.58bn in 2017. Cost of sales, which grew at a much slower rate of 8.48%, drove the cost-to sales down to 43.61% from 52.64% recorded in FY2016.
Similarly, DANGCEM’s earnings trailed the path of its revenue, as Profit-Before-Tax and Profit-After-Tax advanced by 60.26% and 42.97% to NGN289.95bn and NGN204.25bn respectively. In terms of its margins, the company improved significantly as the cost management measures supported earnings growth in the year. Consequently, gross margin and net margin both improved to 56.39% (vs.47.36% in 2016) and 25.35% (vs.23.23% in 2016) accordingly. As a result, we reviewed our EPS and PE forecast to NGN15.29 and 17x which gives a FY2018 target price of NGN258.57. This represents a discount of 2.39% from the closing price of NGN264.90 on the 22nd of March 2018. We therefore recommend a “HOLD”.