Nigerian Breweries (NB:NGN34.05) price 15.6% below VWAP 03 July 2020

NEWS BITES - AFRICA

Dateline: Friday July 03, 2020

Nigerian Breweries PLC (LG:NB), Nigeria's 2nd largest Food/beverage/tobacco company by market cap, has sunk NGN1.45 (4.1%) from its previous trading session to close at NGN34.05. Compared with the All Shares Index which fell 38.3 points (0.2%) in the day, the relative price change was -3.9%. The volume was 0.3 times the average daily trading volume of 4 million shares. The price is at a discount of 15.6% to the 1-month volume weighted average price of NGN40.32, which may appeal as a value proposition. There were 1,229,846 shares worth NGN41.9 million (US$107,653) traded today.

Stock Summary

Currency1 USD = 388.8 NGNDividend Yield5.9%
Jul 03 closeNGN34.05SectorFood/Beverage/Tobacco
Ave Daily Volume3,976,093 sharesShares Outstanding7,996,902,051
52-Week Range22.00 - 63.00Market CapNGN272.3 billion [USD700.3 million]
P/E16.9EPS Growth % (y.o.y)-31.0

Financials Summary: EPS down 17.3% to NGN2.01 in FY2019

+ Net profit was down 17.1% from USD50.2 million in FY2018 to USD41.6 million in FY2019.

+ Earnings Per Share (EPS) was down 17.3% from NGN2.43 in FY2018 to NGN2.01 in FY2019.

Year ended DecFY2019FY2018FY2017
Sales (USD M)834837.6889.6
Pretax (USD M)60.376120.4
Net (USD M)41.650.285.3
EPS (NGN)2.012.434.13

Click on links to download NB data

Financials in xls

INDEX

SECTION 1 News In The Past Quarter

SECTION 2 Corporate Profile

SECTION 3 Today's Bullish Signals

SECTION 4 Ongoing Bullish Parameters

SECTION 5 Today's Bearish Signals

SECTION 6 Ongoing Bearish Parameters

Click here to view the following

SECTION 7 Dividend

SECTION 8 Financials Q1 2020, FY 2019

SECTION 9 Peer Group Analysis & Ranking

SECTION 10 News Archives (Oct 2018 - Feb 2020)

Glossary

SECTION 1 News In The Past Quarter

1.1 Financial News

Quarterly Report (Q1/2020):

May 11, 2020

Quarterly Report Analysis Q1 2020: Nigerian Breweries reports Net Profit of NGN5.5b ($US14.1m)

Nigerian Breweries (LG:NB) announced net profit for the quarter-ended 31 March 2020 [Q1/2020] of NGN5.5b ($US14.1m).

Quarterly Report

Read more in SECTION 8 on Financials

SECTION 2 Corporate Profile

2.1 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.

2.2 Contact Details

Websitehttp://www.nbplc.com
Physical AddressIganmu House Abebe Village Road Iganmu PO Box 545 Lagos Nigeria
Phone-5801116
Fax01-2617682

2.3 Industry & Sector

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

SECTION 3 Today's Bullish Signals

3.1 Momentum Up 4.4% Past Week

The stock is the fifth highest performer in the All Shares Index of 112 stocks in the past week.

Nigerian Breweries outperformed the All Shares index in 3 out of 5 days. The price ranged between a low of 34.1 on Friday, Jun 26 and a high of 36.1 on Tuesday, Jun 30.

DayNigerian BreweriesClose price [NGN]Price change %Relative change %Comment
ThursdayIn top 5% performers of Nigerian market in past week35.51.32.2Oversold: close to 14-day low
WednesdayUnderperforms 92% of the market35.05-2.9-3.4Steepest Fall
TuesdayKeeps rising, up 6.2% in 3 days36.13.14.7Week-high of 36.1 Top Rise; VI*=5.7
MondayAccelerates rise, up 2.9% in 2 days35.02.62.5Oversold: close to 14-day low
FridayIn bottom 4% performers of All Shares Index in past month34.10.3-0.5VI*=1.2

[Volume Index (VI); 1 is average]

3.2 Rank in the top 23% by Relative Valuation in the Nigerian market

DescriptionValueRank
EV/EBITDA9.1In Top 23%

3.3 Rank in the top 20% by Price Performance in the Nigerian market

DescriptionValueRank
1-week Price Change %0.1In Top 20%

3.4 Uptrend

Beta > 1 combined with price rise. The Beta of the stock is 2.1.

3.5 Undervaluation

Price/Earnings:

Nigerian Breweries stock is trading at the Twenty-sixth lowest P/E multiple in the All Shares Index.

Price/Earnings of 16.9 < sector avg of 19.9:

- Price/Earnings of 16.9 versus sector average of 19.9.

Dividend Yield:

Nigerian Breweries stock is the Twenty-fourth highest dividend yielding stock in the All Shares Index.

MCap/Total Assets:

- Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.7. Compared with the rest of the market the stock is undervalued.

3.6 Oversold/Bullish Signals:

- The stock is oversold according to the Williams % R indicator of -99.4, suggesting the price is close to its 14-day low of NGN34.0.

SECTION 4 Ongoing Bullish Parameters

4.1 Rank in the top 10% by Size in the Nigerian market

DescriptionValueRank
Ave daily TurnoverNGN41.9 million (US$107,653)In Top 7%
Annual RevenueNGN323 billion (US$830.8 million)In Top 7%
MCapUSD700.3 millionIn Top 10%

4.2 Present Value of NGN1000 Invested in the Past 3 Months; The Best Period with PVNGN1000 > 1,622

PVNGN1,0003 mo ago
NB.LGNGN1,623
Food/Beverage/Tobacco sectorNGN1,403
All Shares IndexNGN1,204

4.3 Past quarter: price rise of 54.8%

3-Month price change of 54.8% for Nigerian Breweries outperformed the change of 15.4% in the All Shares index for a relative price change of 39.4%.

Price Change %Quarter
Nigerian Breweries54.8
Food/Beverage/Tobacco sector40.3
All Shares index15.4

4.4 Low Debt to Equity (%)

The debt to equity ratio of 33.2% is under a safe benchmark figure of 50%. However, it has deteriorated in the past two years.

YearsDebt to Equity (%)
Dec 201933.22
Dec 201825.53
Dec 20174.75
Dec 201610.78
Dec 201512.9

4.5 Increased Volume, up 68% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has increased 68.3% to 4 million shares.

Avg. Daily Volume Traded 12 months ended Jul 03, million shares

YearADVT
20204.0
20192.4
20183.4
20171.5
20162.4

4.6 Increased share turnover, up 18% in 5 years

In the past five years, average daily share turnover has increased 18.4% to NGN164.8 million (US$423,925). This suggests increased liquidity.

Past five years, 12 months ended Jul 03 (NGN million)

YearAverage Daily Turnover
2020164.8
2019188.1
2018364.6
2017104.7
2016139.2

4.7 Revenue, EPS, and EBITDA:

- Revenue growth, Earnings per share growth and EBITDA growth are negative but improving in recent years. [compared with previous year, all figures in %]

FYRevenue GrowthEPS GrowthEBITDA Growth
2019-0-17-5
2018-6-41-35

4.8 Satisfies one criteria of Benjamin Graham

-"Total debt less than tangible book value"; total debt of NGN55.7 billion (US$153.7 million) is less than tangible book value of NGN60.2 billion (US$166.1 million).

SECTION 5 Today's Bearish Signals

5.1 Momentum Down 22.6% Past Month

The past month witnessed the worst 2 weeks in the past quarter. In the past quarter the steepest fall of 17.0% took place in the week beginning Monday March 30. The fall was exacerbated by volume of 1.2 times average.

The Worst 3 weeks in the past quarter:

Mon-FriChange %All Shares index Change %RPC %Vol Ind [1 is avg]
Mar 30-Apr 03-17-3.5-13.51.2
Jun 22-26-10.30-10.30.7
Jun 15-19-8.4-1.4-70.5

5.2 Rank in the bottom 22% by Relative Valuation in the Nigerian market

DescriptionValueRank
Price/Earnings16.9In Bottom 22%
P/E * P/NTA76.57In Bottom 4%
Price to Book Value4.5In Bottom 3%
Earnings Yield %5.9In Bottom 1%

5.3 Rank in the bottom 22% by Price Performance in the Nigerian market

DescriptionValueRank
Price/MAP2000.77In Bottom 22%
1-month Price Change %-22.6In Bottom 6%

5.4 Downtrend

Price/Moving Average Price of 0.77 and negative MACD:

- The Price/MAP 200 of 0.77 for Nigerian Breweries is lower than the Price/MAP 200 for the All Shares Index of 0.96.

- The price to 200-day MAP ratio is 0.77, a bearish indicator. In the past 200 days this ratio has been under 0.77, 68 times suggesting further downside. The 50-day MAP of NGN33.91 is lower than the 200-day MAP of NGN44.40, another bearish indicator.

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 35.97 minus the 26-day EMA of 36.87 is negative, suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.

Past Month:

- Falls to Rises: In the past month the number of falls outnumbered rises 10:6 or 1.7:1.

Past Quarter:

- In the last three months the stock has hit a new 52-week low once.

Trailing Relative Strength (6 months) at 5 percentile:

- The stock has a 6-month relative strength of 5 in the Nigerian market of 90 stocks indicating it is trailing 95% of the market.

5.5 Overvaluation

Dividend Yield of 5.9% < Index avg of 8.1%:

- The relative yield of the stock, defined by its yield of 5.9%, divided by average yield of dividend yielding stocks in the All Shares Index of 8.1% is 72.7%. This suggests the stock is overvalued in dividend yield terms.

5.6 Other Bearish Signals

- Return on Equity of 9.6% versus sector average of 11.9% and market average of 25.0%.

- Total Liabilities/EBITDA of 6.1 is more than or equal to 5, this compares unfavourably with the Joseph Piotroski benchmark of 5.

- Return on Capital Employed of 14.6% versus sector average of 17.2%.

- Net profit margin has averaged 6.7% in the last 3 years. This is lower than the sector average of 7.0% and suggests a low margin of safety.

- As per the Du Pont analysis, Return on Equity of 9.6% is lower than sector average of 11.9%. This is computed as net profit margin of 5.0% times asset turnover [sales/assets] of 0.84 times leverage factor [total assets/shareholders' equity] of 2.3.

SECTION 6 Ongoing Bearish Parameters

6.1 Past three-years

- The shares extended their fell from NGN48.45 (30.1%) 2 years ago to NGN49.70 (44.1%) a year ago.

- Nigerian Breweries fell for a third consecutive year. In the past three years it has fallen NGN127.0 (78.9%).

6.2 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Periods with TSR < 5%

TSR %1 yr3 yrs5 yrs10 yrs20 yrs
NB.LG-42.7-37.2-22.2-3.64.9

6.3 Present Value of NGN1000 Invested in the Past [1 Yr, 3 Yrs]; The Worst Periods with PVNGN1000 < 574

PVNGN1,0001 yr ago3 yrs ago
NB.LGNGN573NGN244
Food/Beverage/Tobacco sectorNGN738NGN616
All Shares IndexNGN828NGN743

6.4 The Worst Periods [1 Yr, 3 Yrs] with Price Change % < -45.8

3-Year price change of -78.5% for Nigerian Breweries underperformed the change of -26.5% in the All Shares index for a relative price change of -51.9%.

Price Change %Year3 Years
Nigerian Breweries-45.9-78.5
Food/Beverage/Tobacco sector-26.2-38.4
All Shares index-17.2-26.5

6.5 Moving Annual Return of -42.7% in the past year:

Moving Annual Return was -42.7% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged -18.7%. The Moving Annual Return has been negative in 4 out of 5 years.

NBClose (NGN)Dividends (NGN)Capital Gain / (Loss) %% YieldAnnual Return %
Jul 0334.052.01(45.9)3.2(42.7)
1 Yr ago62.92.43(44.4)2.1(42.2)
2 Yrs ago113.14.13(28.4)2.6(25.8)
3 Yrs ago158.033.5820.52.723.3
4 Yrs ago131.14.8(9.6)3.3(6.3)

Close 5 years ago NGN145.05

6.6 MCap: 5-Year Decrease of NGN878 billion [USD2 billion]

In the past 5 years Market Capitalization has decreased by NGN877.8 billion (76%) from NGN1,150.1 billion to NGN272.3 billion. Based on a dynamic start date of 5 years ago, there have been declines in MCap in 4 out of 5 years.

PriceMCap (NGN B)MCap (US$ M)
LastNGN34.05272.3700.3
1 Year agoNGN62.905031,395.3
2 Years agoNGN113.10904.42,499
3 Years agoNGN158.031,2533,759.1
4 Years agoNGN131.101,039.53,638.3
5 Years agoNGN145.051,150.15,750.6

6.7 Past 5 years Annual Net Profit growth:

Average Annual Compounded rate of growth in Net Profit for the 5 years was -17.7%. There has been one rise and four declines in the past 5 years.

FYNet Profit (B NGN)Growth %
201916.1-17.1
201819.43-41.2
201733.0516.3
201628.41-25.3
201538.06-10.5

6.8 Thin Interest Cover and Deteriorating

Interest cover of 2.9 is thin and under a safe benchmark figure of 3. Moreover, it has decreased in the past two years.

YearsInterest cover
20192.93
20184.73
20175.37
20163.91
20154.42

6.9 % Growth in EPS & RPS

EPS growth: PCP EPS growth (Q1 2020 vs Q1 2019) was down 31.0%. FY EPS growth (FY2019 vs FY2018) was down 17.3%.

RPS growth: PCP growth in Revenue per share (Q1 2020 vs Q1 2019) was down 0.1%. FY growth in Revenue per share (FY2019 vs FY2018) was down 0.4%.

(All figures in %)

PCP growth in EPS (Q1 2020 vs Q1 2019)-31.0
PCP growth in RPS (Q1 2020 vs Q1 2019)-0.1
FY growth in EPS (FY2019 vs FY2018)-17.3
FY growth in RPS (FY2019 vs FY2018)-0.4

6.10 Declining VWAP, down 63% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has decreased by 62.9% to NGN45.19. .

Past five years, 12 months ended Jul 03 (NGN)

YearHigh PriceVWAPLow Price
202063.045.1922.0
2019113.179.8156.7
2018193.0136.75102.6
2017166.0139.65112.82
2016149.49121.7592.33

6.11 Satisfies 4 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Positive net income.

- Positive operating cashflow.

- Good quality of earnings [operating cashflow exceeds net income].

- Improvement in gross margin [from 39.1% to 40.6%].

6.12 Year-over-year (%) Change in Dividend:

Final dividend for FY 2019 was NGN1.51. The year-on-year change was down 17.5% from NGN1.83 in the previous year FY 2018.

FinalFY 2018FY 2019
Dividend (NGN)1.831.51

Glossary

ADVT: Average Daily Volume of shares Traded

Annual Return: Dividends Paid In a 12-Month Period/Price at the Beginning of the Period + Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Current Ratio: Current Assets/Current Liabiliites (times)

Debt/Equity: Net Debt/Net Assets %

Dividend Yield: Dividend Per Share/Share Price (%)

EBIT Margin : Earnings Before Interest and Tax/Revenue (%)

Earnings Yield: Earnings Per Share/Share Price (%)

Income during the n years (3/2/1): Dividends received during the Period

Interest Cover: Earnings Before Interest and Tax/Interest (times)

Moving Average Price (n periods): Sum of Prices for each Period/Number of Periods

PCP: Previous Corresponding Period

PV1000: Present value of 1000 invested 1 year/'n' years ago

Price Close/Moving Avg Price: Latest Price/Moving Average Price

Price/Earnings: Share Price/Earnings Per Share (times)

Price/NTA: Closing Share Price/Net Tangible Assets Per Share (times)

Price/Sales: Share Price/Sales Per Share (times)

Relative Price Change [RPC]: Relative price change is price change of stock with respect to Benchmark Index

Relative Strength (6 Months): Price close today/Price close 6 months ago, then ranked by percentile within the entire market.

Return on Assets: Net Profit/Total Assets (%)

Return on Equity (Shareholders' Funds): Net Profit/Net Assets (%)

TSR: Total Shareholder Returns is expressed as an annualized rate of return for shareholders after allowing for capital appreciation and dividend

Total Liabilities/Total Assets: Total Liabilities/Total Assets

Turnover Rate: value of annual trading volume as a percentage of market capitalisation

Volume Index (VI): Number of shares traded in the period/Average number of shares traded for the period

Volume Weighted Average Price (VWAP): The Volume Weighted Average Price (VWAP) is the summation of turnover divided by total volume in the same period.

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