BUA Foods vs Dangote Sugar: Which is a Better Investment?

BUA Foods Plc and Dangote Sugar Plc are two of the largest consumer goods firms in Nigeria known for their innovative products and customer focus ideologies. But who leads the pack?

Investors truly want to know where these two giants stand in the market, given the tough and unpredictable macroeconomic environment.

Here’s how BUA Foods and Dangote Sugar stack up in 2023.

Financials

BUA Foods and Dangote Sugar have both recorded strong growth at the top line, but the latter have fared better due to its ability to hedge against foreign exchange revaluation losses.

In 2023, BUA Foods brought in N728.47 billion in 2023, an increase from N418.34 billion in 2022. On the other hand, Dangote Sugar was up a mere 9.41 percent to N441.51 billion in 2023, from N403.24 billion in 2022.

BUA Foods posted net income of N1115.13 billion in 2023, which represents a 22.10 percent increase from 2022’s N91.34 billion.

In 2023, Dangote Sugar posted a loss after tax of N73.76 billion, from a profit position of 54.74 billion the previous year. The huge net loss was caused by foreign exchange revaluation loss of N115.08 billion, which raises questions about the company’s ability to hedge against such risk in the future.

The current BUA Foods stock price is N379, while Dangote Sugar stock is N61.25

Investors have been swooping on BUA Foods’ shares since last year and the interest has spilled into 2024. For instance, its shares have year-to-date (YTD) gains of 96.43 percent, and that compares with Dangote Sugar’s 7.46 percent.

Additionally, BUA Foods has market capitalisation of N6.84 trillion as of March 14, 2023, while Dangote Sugar market value stood at N744 billion.

BUA Foods has more innovative products and diversified revenue base than peer rival

BUA Foods has a more innovative products and diversified revenue base than peer rival that adds impetus to its revenue.

In 2021, BUA Group, one of Nigeria’s leading manufacturing conglomerates, had restructured its business and consolidated its food operations under a single entity known as BUA Foods.

The food businesses merged into the newly formed arm include BUA Sugar Refinery Limited, BUA Oil Mills Limited, IRS Flour, IRS Pasta and BUA Rice Limited.

Dangote Sugar will definitely catch up with its rival in terms of market capitalisation and earnings size as parent company Dangote Group has proposed a merger of three of its companies into Dangote Foods. The companies are Dangote Sugar Refinery Plc (DSR), NASCON Allied Industries Plc, and Dangote Rice Limited The development will expectedly lead to more profit and diversified mega-corporation for the Group.

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