Nigeria ∣ Equities ∣ Consumer Goods ∣ July 12, 2017 Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. E-mail: [email protected]Tel +234(1)4622371-5, Page 1 Unilever Nigeria Plc Passionately Eager to weather the storm Investment Summary Unilever Nigeria Plc, a consumer goods company last reported a significant increase in both top and bottom line in its Q1’17 earnings release showing signs of a better return on investments for investors. However, the company is still highly geared at a debt to equity ratio of 1.79x though down from a high of about 2.24x in FY’14. This high debt burden is expected to continue to impact the company’s operations as it is expected to continue to service its loan obligations amidst the harsh economic conditions which the consumer goods company has continued to suffer from in recent time. Unilever Nigeria Plc has continued to leverage on its years of experience as well as its array of products which have remained market leaders in their various segments to keep its revenue base at decent levels over the years. Its top brands include the likes of Blue Band, Knorr, Lifebuoy, Omo, Vaseline, Sunlight e.t.c. Unilever Overseas Holding B.V owned about 50.04% of the company till 2016 when it increased its stake by another 10.02%; now approximately 60.06% while Stanbic Nominees Nigeria limited has a total holding of about 10.43%. Despite the stiff competition to grow market share from rival companies with substitute products coupled with the harsh economic conditions over the last three years, it is believed that the parent company still believe strongly in the potential of its Nigerian business to post significant profit in the long term thereby indicating its interest to increase its shareholding via a tender offer up to 75% in 2015 despite the company’s profit plummeting to a new low during the period. Going forward, we anticipate that the company will strategize ways of actualising its initial target equity stake of 75% through its proposed rights issue which was approved at its last Annual General Meeting (AGM) except priorities have changed for the parent company. After proper analysis and valuation of the company’s shares, we place a short term SELL rating on the shares given its future outlook and historical dividend payments to shareholders. We are of the opinion that improved returns to shareholders may only be possible in the long-term but at current market price the company shares may drift either way though profitability is expected to improve even as the economy continues on its path to recovery. 2015 2016 %∆ 2017F %∆F Revenue (NGN’m) 59,222 69,777 17.82 87,919 26.00 Operating Profit (NGN’m) 4,640 5,805 25.11 11,342 95.38 Profit after tax (NGN’m) 1,192 3,072 157.72 6,734 119.21 Source company report, CBP Research Price: . - Current price ₦34.00 - Recommended entry price ₦20.00 - Target price ₦23.43 Recommendation(Short term) SELL As at Monday July 10, 2017 STOCK DATA Year End 31 st Dec YTD high 43.00 YTD low 27.81 YTD change -2.86% 52 weeks high 50.01 52 weeks low 27.81 3 months Average volume 620,235 Market cap (NGN’mn) 128,632.06 Trailing EPS (NGN’mn) 0.81 Shares Outstanding (‘mn) 3,783 Source company report, CBP Research Profitability ratios FY’16 FY’17F Gross profit margin 29.09% 27.00% Net Profit Margin 4.40% 7.66% Fixed Asset Turnover 0.42x 0.35x Valuations FY’14 FY’15 FY’16 FY’17F P/S ratio 2.31x 2.17x 1.84x 1.46x P/E 53.32x 107.87x 41.87x 19.10x Sales per share(₦) 14.74 15.65 18.44 23.24 NAPS(₦) 1.98 2.12 3.09 4.46 P/B 17.20x 16.07x 11.00x 7.62x ROE(%) 32.26 14.90 26.28 39.89 ROA(%) 5.27 2.38 4.24 7.43 Div. Yld% 0.29 0.15 0.29 0.88 Source company report, CBP Research -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 3-Jan-17 20-Jan-17 6-Feb-17 23-Feb-17 12-Mar-17 29-Mar-17 15-Apr-17 2-May-17 19-May-17 5-Jun-17 22-Jun-17 9-Jul-17 NSE ASI vs. Unilever 52-weeks movement Rebased NSE Unilever Capital Bancorp Plc (Member of the Nigerian Stock Exchange) 114135
11
Embed
Unilever Nigeria Plc - Capital Bancorp Plcadmin.capitalbancorpng.com/portal_reports/Unilever Nigeria Plc... · Unilever Nigeria Plc ... still highly geared at a debt to equity ratio
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Nigeria ∣ Equities ∣ Consumer Goods ∣ July 12, 2017
Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. E-mail: [email protected] Tel +234(1)4622371-5, Page 1
Unilever Nigeria Plc
Passionately Eager to weather the storm Investment Summary
Unilever Nigeria Plc, a consumer goods company last reported a significant
increase in both top and bottom line in its Q1’17 earnings release showing
signs of a better return on investments for investors. However, the company is
still highly geared at a debt to equity ratio of 1.79x though down from a high
of about 2.24x in FY’14. This high debt burden is expected to continue to
impact the company’s operations as it is expected to continue to service its
loan obligations amidst the harsh economic conditions which the consumer
goods company has continued to suffer from in recent time. Unilever Nigeria
Plc has continued to leverage on its years of experience as well as its array of
products which have remained market leaders in their various segments to
keep its revenue base at decent levels over the years. Its top brands include the
likes of Blue Band, Knorr, Lifebuoy, Omo, Vaseline, Sunlight e.t.c. Unilever
Overseas Holding B.V owned about 50.04% of the company till 2016 when it
increased its stake by another 10.02%; now approximately 60.06% while
Stanbic Nominees Nigeria limited has a total holding of about 10.43%.
Despite the stiff competition to grow market share from rival companies with
substitute products coupled with the harsh economic conditions over the last
three years, it is believed that the parent company still believe strongly in the
potential of its Nigerian business to post significant profit in the long term
thereby indicating its interest to increase its shareholding via a tender offer up
to 75% in 2015 despite the company’s profit plummeting to a new low during
the period. Going forward, we anticipate that the company will strategize ways
of actualising its initial target equity stake of 75% through its proposed rights
issue which was approved at its last Annual General Meeting (AGM) except
priorities have changed for the parent company. After proper analysis and
valuation of the company’s shares, we place a short term SELL rating on the
shares given its future outlook and historical dividend payments to
shareholders. We are of the opinion that improved returns to shareholders
may only be possible in the long-term but at current market price the
company shares may drift either way though profitability is expected to
improve even as the economy continues on its path to recovery.
From our analysis, fair value is our opinion of the actual fundamental worth of a stock, irrespective of what the market thinks of the stock or what investors are willing to pay for it. A BUY recommendation directly means investors should accumulate the stock according to their risk appetite. A SELL recommendation prompts investors to exit their positions in the stock, as the analyst believes the stock will lose value. A HOLD recommendation tells investors to do nothing; if you have not bought the stock, do not buy it and if you have bought it, do not sell it.
Disclaimer & Disclosure
The value of any investment is subject to fluctuations, i.e. may arise and fall. Past performance is no guide to the future. The rate of exchange
between currencies may cause the value of investment to increase or decrease. Hence investors may not get back the full value of their original
investment.
This document is not an offer to buy or sell any security. This document does not provide individually tailored investment advice. It has been
prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular
investment will depend on an investor’s individual circumstances and objectives. The investments and shares referred to in this document may
not be suitable for all investors.
This document is based on information Capital Bancorp Plc received from publicly available reports and industry sources. Capital Bancorp Plc may
not have verified all of this information with third parties. Neither Capital Bancorp Plc nor its advisors, shareholders, directors or employees can
guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither
Capital Bancorp Plc nor its advisors, shareholders, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any
loss howsoever arising from any use of this document. This document is not to be relied upon and should not be a substitute for the exercise of
independent judgment.
This document includes certain statements, estimates and projections with respect to the anticipated future performance of securities listed on the
Nigerian Stock Exchange and as to the market for these shares. Such statements, estimates and projections are based on information that we
consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently
verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates and
projections or as to their appropriateness for the purpose intended and it should not be relied upon such. Opinions expressed are current opinions
as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are
inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions,
views and analytical methods of the analysis who prepared them.