Nigerian stock report - Nigerian Breweries

NIGEA

Nigerian Breweries hits year-high 9th time in three months August 14, 2017 13:00 WAT

NEWS BITES - AFRICA

Nigerian Breweries PLC (LG:NB), Nigeria's largest Food/beverage/tobacco company by market cap, hit a 52-week high of NGN193.0 during the day. In the last three months the stock has hit a new 52-week high nine times, pointing to a significant uptrend. The stock price has increased NGN2.0 (1.0%) from its last trading session of August 11 to close at NGN193.0. Compared with the All Shares Index which fell 247.6 points (0.7%) in the day, the relative price increase was 1.7%. The rise has been propped up by firm volume of 1.4 times the average daily volume of 951,456 shares.

SECTION 1

NIGERIAN BREWERIES BULLISH SIGNALS

1.1 Fundamentals:

+ Total Liabilities/EBITDA of 3 is comfortably below the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 12.7% in the last 3 years. This is better than the sector average of 8.4% and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity of 17.1% is better than sector average of 11.5%. This is computed as net profit margin of 9.1% times asset turnover [sales/assets] of 0.85 times leverage factor [total assets/shareholders' equity] of 2.2.

1.2 Undervaluation [compared with sector average]:

+ Return on Equity 17.1% [11.5%].

+ Return on Assets 7.7% [3.4%].

1.3 Technicals:

+ Rises to Falls: in the past month the number of rises outnumbered falls 6:3 or 2:1.

+ In the last three months the stock has hit a new 52-week high nine times, pointing to a significant uptrend.

+ The present value of NGN1,000 (PV1000) invested five years ago in Nigerian Breweries is NGN1,862, including a capital gain of NGN673 and dividend reinvested of NGN189.

+ 5 years Multiplier in NGN = 1.862x

+ Compound Annual Growth Rate (CAGR) in NGN = 13.2%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in Nigerian Breweries is $US798, including a capital loss of $US283 and dividend reinvested of $US81.

+ 5 years ago USD 1 equalled NGN 158.7302

+ 5 years Multiplier in USD = 0.798x

+ Compound Annual Growth Rate (CAGR) in USD = -4.4%

Aug 14, 2017: USD 1 equals NGN 370.37

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverNGN249.8 million (US$674,353)In Top 4%
Total Debt to Equity0.01In Top 7%
Price Change %1.0In Top 9%
Return on Capital Employed [ROCE] %29.9In Top Quartile
Price/Earnings/Growth0.2In Top Quartile
% Prem to Vol Wtd Price9.6In Top Quartile

SECTION 2

NIGERIAN BREWERIES BEARISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 4.2. Compared with the rest of the market the stock is overvalued and ranks in the bottom 3% of stocks by value of Q Ratio.

2.2 Overvaluation [compared with sector average]:

+ Price/Sales of 4.9 [2.4].

2.3 Low Performance Indicator:

DescriptionValueRank In Market
Price to Sales4.9In Bottom 8%

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Momentum:

+ Volume: there were 1,294,096 shares worth NGN249.8 million (US$674,353) traded today.

3.2 Beta:

+ Beta: the Beta of Nigerian Breweries stock is 0.9. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

SECTION 4

RANKING

Global Rank [out of 47,599 stocks] and Rank in the Middle East & Africa Region [out of 2,283 stocks]

DescriptionValueGlobal RankIn MEA Region
MCap (US$)4.1B2,97782
Total Assets (US$)991.3M9,616418
Revenue (US$)847.1M7,111202
Net Profit (US$)76.7M5,744230
Return on Equity %17.15,767359
Net Profit Margin %9.111,932830
Price to Book22.830,6641,627
US$* Change (1Year) %26.111,899390

* 1 year ago USD 1 = NGN 312.5

Aug 14, 2017: USD 1 equals NGN 370.37

SECTION 5

NIGERIAN BREWERIES FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD M)847.1793.5723.8
Pretax (USD M)107.1147.2165.9
Net (USD M)76.7102.7114.8
EPS (NGN)358482562

5.2 Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Total revenue to total assets up from 0.8 to 0.9.

+ Administration expenses to Sales down from 8.2% to 7%.

+ Current ratio up 26.8% from 0.4 to 0.5.

+ Total current assets to Total Assets up from 16.1% to 20.3%.

+ Current Debtors to Total Assets up from 4.6% to 5.4%.

+ Total Liabilities to EBITDA of 3.0 compares favourably with the Joseph Piotroski benchmark of <5. However, it has deteriorated by 15.7% from the previous year's ratio of 2.6.

+ Total Liabilities to Operating Cash Flow of 2.9 compares favourably with the Joseph Piotroski benchmark of <4. However, it has deteriorated by 13.4% from the previous year's ratio of 2.5.

Unfavourable Changes:

+ Net profit slumps 25.3% from NGN38.1b ($US190.3m) to NGN28.4b ($US93.4m)

+ EPS slumps 25.7% from NGN482.0 ($US2.41) to NGN358.0 ($US1.18).

+ EBIT Margin down from 24.0% to 21.2%.

+ Interest cover down 43.9% from 4.4 to 2.5.

+ EBIT to total assets down from 19.8% to 18.1%.

+ Cost of Goods Sold to Sales up from 50.9% to 56.8%.

+ Profit before tax to Sales down from 18.5% to 12.6%.

+ Interest expenses to Sales up from 5.4% to 8.6%.

+ Total liabilities to Total assets up 5.8% from 0.5 to 0.6.

+ Retained earnings to total assets down from 28.9% to 26.2%.

+ Total non-current assets to Total Assets down from 83.9% to 79.7%.

+ Fixed Assets to Total Assets down from 55.4% to 52.1%.

Note:

+ Sales and marketing expenses to Sales down from 19.9% to 19.5%.

+ Intangibles to Total Assets down from 28.2% to 27.1%.

SECTION 6

NIGERIAN BREWERIES PROFILE

6.1 Activities

Nigerian Breweries is a Nigeria-based company. It is a subsidiary of Heineken N.V. The Company is engaged in the brewing, marketing and selling of lager, stout, non-alcoholic malt drinks and soft drinks. Its brands include Star, Gulder, Legend, Heineken, Maltina, Amstel Malta and Fayrouz.

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorConsumer Non-Cyclicals
Business SectorFood & Beverages

6.3 Top Management

The chief executive officer is Nicolaas Vervelde.

6.4 Issued Capital

Based on 7,929,100,000 issued shares the market capitalisation is NGN1,530.3 billion (US$4.1 billion).

Contact: -5801116

Physical Address: Iganmu House Abebe Village Road Iganmu PO Box 545 Lagos Nigeria

State/Province/Country: Nigeria

Exchange: Nigerian Stock Exchange

ISIN: NGNB00000005

LG:NB; NL:NB; NB.LG

PermID: 4295885255

Source: www.BuySellSignals.com