Nigerian stock report - Nigerian Breweries

NIGEA

Nigerian Breweries in its biggest weekly loss in 5 months June 22, 2017 13:00 WAT

NEWS BITES - AFRICA

Nigerian Breweries PLC (LG:NB), Nigeria's largest Food/beverage/tobacco company by market cap, has sunk NGN7.97 (4.8%) from its last trading session of June 21 to close at NGN158.03. Compared with the All Shares Index which fell 549.5 points (1.6%) in the day, the relative price change was -3.2%. The fall was exacerbated by robust volume of 1.4 times the average daily volume of 868,681 shares. In the past week the shares have dropped 3.6%, the biggest weekly fall since February 01.

SECTION 1

NIGERIAN BREWERIES BEARISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 3.5. Compared with the rest of the market the stock is overvalued and ranks in the bottom quartile of stocks by value of Q Ratio.

1.2 Technicals:

+ The price dropped 3.6% in the last week.

+ Compared with the All Shares Index which fell 2.6% for the week, this represented a relative price decrease for Nigerian Breweries stock of 1.1% for the week.

1.3 Low Performance Indicators:

DescriptionValueRank In Market
% Prem to Vol Wtd Price1.6In Bottom Quartile
Price Change %-4.8In Bottom Quartile
Price to Sales4.3In Bottom Quartile

SECTION 2

NIGERIAN BREWERIES BULLISH SIGNALS

2.1 Fundamentals:

+ Net profit margin has averaged 15% in the last 3 years. This is better than the sector average of 14.8% and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity is high at 22.1%. This is computed as net profit margin of 12.9% times asset turnover [sales/assets] of 0.83 times leverage factor [total assets/shareholders' equity] of 2.1.

5-years average annualized earnings growth rate of 160.6%

+ Revenue growth rate has shown signs of recovery in recent years. [Year ended, all figures in %]

YearRevenue GrowthEPS Growth
Dec 159.8-14.2
Dec 14-1.29,759.6

2.2 Undervaluation [compared with sector average]:

+ Return on Equity 22.1% [20.0%].

+ Return on Assets 10.7% [9.7%].

+ Return on Capital Employed 25.2% [22.8%].

2.3 Technicals:

+ The 4.8% discount to 12-month high of NGN166.0 against the 40.1% premium to 12-month low of NGN112.82 suggests the stock continues to push for new highs.

+ The present value of NGN1,000 (PV1000) invested five years ago in Nigerian Breweries is NGN1,814, including a capital gain of NGN630 and dividend reinvested of NGN184.

+ 5 years Multiplier in NGN = 1.814x

+ Compound Annual Growth Rate (CAGR) in NGN = 12.7%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in Nigerian Breweries is $US878, including a capital loss of $US211 and dividend reinvested of $US89.

+ 5 years ago USD 1 equalled NGN 161.2903

+ 5 years Multiplier in USD = 0.878x

+ Compound Annual Growth Rate (CAGR) in USD = -2.6%

Jun 22, 2017: USD 1 equals NGN 333.33

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverNGN197.6 million (US$592,810)In Top 3%
Return on Capital Employed [ROCE] %25.2In Top Quartile

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 1,250,416 shares worth NGN197.6 million (US$592,810) traded today. In the past week, volume was 1.3 times average and the shares were down 3.6%. The fall was exacerbated by robust volume of 1.4 times the average daily volume of 868,681 shares.

+ The present value of NGN1,000 (PV1000) invested one year ago in Nigerian Breweries is NGN1,057, for a capital gain of NGN57.

PV10001-week1-month1-year
NB.LG9641,1221,057
All Shares Index9741,1161,093

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 47,401 stocks] and Rank in the Middle East & Africa Region [out of 2,287 stocks]

DescriptionValueGlobal RankIn MEA Region
MCap (US$)3.8B3,01484
Total Assets (US$)1.1B9,150399
Revenue (US$)883.2M6,861201
Net Profit (US$)114.2M4,475196
Return on Equity %22.13,362201
Net Profit Margin %12.98,732673
Price to Book18.432,4121,581
PV$1000 (1Year) US$*88134,7991,575
US$* Change (1Year) %-7.527,9051,091

* 1 year ago USD 1 = NGN 285.71

Jun 22, 2017: USD 1 equals NGN 333.33

SECTION 5

NIGERIAN BREWERIES FINANCIALS

5.1 Financials Summary

Year endedDec 2015Dec 2014Dec 2013
Sales (USD M)883.2804.3813.7
Pretax (USD M)163.5184.4186.7
Net (USD M)114.2127.6129.2
EPS (NGN)4825625.7

5.2 Annual Report for the year ended December 31, 2015 (year-on-year comparisons with previous corresponding period)-

Nigerian Breweries Net Profit down 10.5%

Favourable Changes:

+ Total revenue up 9.8% from NGN268.1b ($US1.5b) to NGN294.4b ($US1.5b).

+ Total Liabilities to Operating Cash Flow of 2.5 compares favourably with the Joseph Piotroski benchmark of <4. This ratio has improved by 13.1% from the previous year's ratio of 2.9.

Unfavourable Changes:

+ Net profit down 10.5% from NGN42.5b ($US231.7m) to NGN38.1b ($US190.3m)

+ EPS down 14.2% from NGN562.0 ($US3.06) to NGN482.0 ($US2.41).

+ Cost of Goods Sold to Sales up from 48.8% to 51.4%.

+ Sales and marketing expenses to Sales up from 26.3% to 27.4%.

+ Profit before tax to Sales down from 22.9% to 18.5%.

+ Current ratio down 17.4% from 0.5 to 0.4.

Note:

+ Total revenue to total assets steady at 0.8.

+ Tax expenses to Sales down from 7.1% to 5.6%.

+ Total liabilities to Total assets steady at 0.5.

+ Total non-current assets to Total Assets up from 84.9% to 85%.

+ Fixed Assets to Total Assets down from 55.5% to 55.4%.

+ Intangibles to Total Assets up from 28.1% to 28.2%.

+ Total current assets to Total Assets down from 15.1% to 15%.

+ Current Inventory to Total Assets down from 8.2% to 8%.

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
Business SectorFood & Beverages
Economic SectorConsumer Non-Cyclicals

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 NGN1,253 billion (US$3.8 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