Nigerian stock report - Nigerian Breweries

NIGEA

Nigerian Breweries in 3rd consecutive fall, nears four-month low October 20, 2017 13:00 WAT

NEWS BITES - AFRICA

Nigerian Breweries PLC (LG:NB), Nigeria's largest Food/beverage/tobacco company by market cap, slipped further on Friday, sliding an additional NGN1.98 (1.2%) to trade at NGN160.01. The stock decreased 1.6% on Wednesday and 0.3% on Thursday. This brought its 3-day fall to 3.1%, compared with the All Shares Index which fell 82.3 points (0.2%) in the three days for a relative price change of -2.8%. The cumulative volume in the 3 days was at about its average 3-day volume of 1 million shares. The stock is now testing its 87-day low of NGN160.01.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Low Performance Indicators

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

Technicals, Moving Annual Return, Beta

SECTION 4 RANKING

SECTION 5 FINANCIALS

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

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

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 4% of stocks by value of Q Ratio.

1.2 Overvaluation [compared with sector average]:

+ Price/Sales of 4 [2.2].

1.3 Technicals:

+ Falls to Rises: in the past month the number of falls outnumbered rises 9:3 or 3:1.

+ The stock's relative price strength percentile is slipping at 59 for 6 months, 54 for 3 months and 13 for 1 month.

1.4 Low Performance Indicators:

DescriptionValueRank In Market
Price to Sales4In Bottom Quartile
Price Change %-1.2In Bottom Quartile

SECTION 2 NIGERIAN BREWERIES BULLISH SIGNALS

2.1 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.

2.2 Undervaluation [compared with sector average]:

+ Return on Equity 17.1% [11.5%].

+ Return on Assets 7.7% [3.4%].

2.3 Technicals:

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

+ The present value of NGN1,000 (PV1000) invested one year ago in Nigerian Breweries is NGN1,104, for a capital gain of NGN104.

PV10001-week1-month1-year
NB.LG9521,104
All Shares Index9931,0321,326

+ The present value of NGN1,000 (PV1000) invested five years ago in Nigerian Breweries is NGN1,321, including a capital gain of NGN187 and dividend reinvested of NGN134.

+ 5 years Multiplier in NGN = 1.321x

+ Compound Annual Growth Rate (CAGR) in NGN = 5.7%

Present Value of USD1,000 invested 5 years ago:

+ The present value of USD1,000 (PV1000) invested five years ago in Nigerian Breweries is $US578, including a capital loss of $US481 and dividend reinvested of $US59.

+ 5 years ago USD 1 equalled NGN 156.25

+ 5 years Multiplier in USD = 0.578x

+ Compound Annual Growth Rate (CAGR) in USD = -10.4%

Oct 20, 2017: USD 1 equals NGN 357.14

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverNGN431 million (US$1.2 million)In Top 3%
Total Debt to Equity0.01In Top 7%
Price/Earnings/Growth0.1In Top Quartile
Return on Capital Employed [ROCE] %29.9In Top Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 2,693,323 shares worth NGN431 million (US$1.2 million) traded today. The fall was exacerbated by strong volume of 2.7 times the average daily volume of 1 million shares.

+ Nigerian Breweries is at a discount of 17.1% to its 12-month high of NGN193.0 on August 14. It is also at a premium of 41.8% to the 12-month low of NGN112.82 on February 14.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in NB would have produced a return of 10.4%.

NBClose (NGN)Dividends (NGN)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 20160.01-10.4-10.4
1 Yr ago1453.610.82.813.5
2 Yrs ago130.884.75(18.4)3(15.4)
3 Yrs ago160.44.5(2.2)2.70.6
4 Yrs ago164321.72.223.9

Close 5 years ago NGN134.81

3.3 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 47,821 stocks] and Rank in the Middle East & Africa Region [out of 2,304 stocks]

DescriptionValueGlobal RankIn MEA Region
MCap (US$)3.6B3,46987
Total Assets (US$)1B9,620407
Revenue (US$)878.5M7,069198
Net Profit (US$)79.6M5,790224
Return on Equity %17.15,863359
Net Profit Margin %9.112,180828
Price to Book19.431,9591,556
PV$1000 (1Year) US$*96625,7511,117
US$* Change (1Year) %-2.225,0331,059

* 1 year ago USD 1 = NGN 312.5

Oct 20, 2017: USD 1 equals NGN 357.14

SECTION 5 NIGERIAN BREWERIES FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD M)878.5822.9750.7
Pretax (USD M)111.1152.6172.1
Net (USD M)79.6106.6119.1
EPS (NGN)358482562

Net profit was down 25.3% from US$106.6 million in 2015 to US$79.6 million in 2016. Earnings Per Share (EPS) was down 25.7% from NGN482.0 to NGN358.0.

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
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 NGN1,268.7 billion (US$3.6 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