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444
SALES
Julcit Hwande sales@morgancapitalgroup.com
+234-8107596134 +234-1-2714713-4
REGULATORY COMPLIANCE
MD/CEO
Stock Rating
SELL
Industry View
In-Line
NIGERIAN BREWERIES
EQUITY NIGERIA BREWERIES
N170.30
Fair Value:
N105.60
Outlook:
NEGATIVE
Market Capitalization:
$8.05B
Year End:
December
Price-to-Earnings (PE)
2012Trailing:
33.85X
2013 Forecast:
32.25X
2014 Forecast:
30.52X
Earnings-per-Share (EPS)
Current: (FY 2012):
N5.03
2013 Forecast:
N5.28
2014 Forecast:
N5.58
Dividend-per-Share:
N3.50
Return-on-Equity:
22.80 %
Return-on-Asset:
15.00 %
7,562
2,400(31.74%)
Year-to-Date:
19.25%
Latest Result
H1 2013
Dollar ($)
N160
H1 -2012
Gross Earnings
133,815
124,621
7.38
PBT
29,607
28,525
3.79
PAT
20,663
19,376
6.64
EPS
2.73
2.56
6.64
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
39%
20%
14%
13%
8%
-1%
2010
2011
2012
Sales
13%
39%
20%
PBT
8%
14%
-1%
400%
350%
300%
250%
200%
150%
100%
50%
0%
-50%
Sales
PBT
Earnings Projection
10.7%
10.0%
7.3%
CAGR
5.0%
0.0%
Sales
Operating Exps
PBT
and despite our expectation that the Company will continue to see
60.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
14% over the last three fiscal years, ahead of the revenue growth
0.0%
26.3%
22.8%
26.5%
2011
16.1% 15.0%
ROE
ROA
average growth rate of 7.3%, well under the growth rate of the
2010
2012
3
Valuation Analysis
Our fair value for Nigerian Breweries shares was calculated using
PROFITABILITY MARGINS
60%
50%
sector.
47%
52%50%
40%
2010
24%27% 25%
30%
premium of 7% and the yield for the most recently issued 20-Year
20%
10%
2011
2012
0%
GPM
OPM
PBTM
FY 2013.
Investment Conclusion
An overvalued stock based on our research, with focus on our FY
30.0
25.0
20.0
15.0
29.2 28.2
21.9
19.5
NB
GUINNESS
10.0
4.4 3.3
5.0
0.0
P/E
P/S
P/CF
revenue.
MorganCapital Research
www.morgancapitalgroup.com
Slower/Higher than expected growth in revenue: This is a major factor that can impair our earnings estimates.
Although we have adjusted our earnings expectation based on our analysis, there is always an outside chance that
the Company either out performs or under performs our revenue estimates.
Better Management of the controllable cost lines: It is our expectation that the Companys weakening profit margin
will persist as the year progresses and this was taken into account in arriving at our profit expectations. If however,
this is not the case and there is an improvement in margins, this may impair our earnings expectation.
NIGERIAN BREWERIES
MARKET CAPITALIZATION (N'm) ($)
GROSS REVENUE (N'm)
PROFIT B/F TAX
TAX
PROFIT AFTER TAX
EARNINGS PER SHARE (EPS)
PRICE-EARNINGS RATIO
SHARE CAPITAL
OUSTANDING SHARES (M'n)
OWNERS' EQUITY
CASH DIVIDEND
SCRIP DIVIDEND
RELEASE DATE
AGM DATE
CLOSURE DATE
PAYMENT DATE
2010
2011
2012
3,887
185,862
44,880
14,548
30,332
4.01
19.22
3,781
7,562
50,172
250K
Nil
21/03/11
15/04/11
05/04/11
15/04/11
4,606
211,071
56,397
18,347
38,050
5.03
18.76
3,781
7,562
144,828
125K
NIL
09/03/12
03/04/12
23/03/12
05/04/12
6,948
252,674
55,624
17,581
38,043
5.03
29.22
3,781
7,562
166,799
300K
NIL
41,611
24/04/13
15/04/13
24/04/13
2013(F)
4,991
279,609
58,717
18,789
39,928
5.28
20.00
3,781
7,562
191,819
350K
NIL
MorganCapital Research
www.morgancapitalgroup.com
2014(F)
5,254
310,366
62,073
19,863
42,210
5.58
19.91
3,781
7,562
220,592
334K
NIL
DISCLOSURE
Analyst Certification
Where applicable, the views expressed in this report accurately reflect the analysts' views about any and all of the investments or issuers to which the
report relates, and no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific recommendations, views or
corporate finance transactions expressed in the report.
Conflict of Interest
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this document and may also perform or seek to perform investment banking services for those companies mentioned herein. Trading desks may trade, or
have traded, as principal on the basis of the research analyst(s) views and report(s).
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