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Ever since BUA Cement was listed as a public firm with a market capitalization of $3.30 billion on January 9, 2020 as it completed a merger of two strategic subsidiaries, the producer of the building material has been firing on all cylinders.
BUA Cement has a market capitalization of $4.07 billion as of 2:00 pm on August 24 in Lagos.
That compares with Lafarge Holcim Marocsa, Morocco, ($4.01 billion); Ciments du maroc, Morocco, ($2.22 billion); Lafarge Africa Plc, Nigeria: ($905 million); PPC Ltd, South Africa: ($261 million); Tanzania Portland Cement CO, Tanzania, ($295 million); Carthage Cement, Tunisia: ($180 million); Bamburi Cement Ltd, Kenya, ($116 million); Arabian Cement co, Egypt, ($87 million), and Misr Beni Suef Cement co, Egypt, ($105 million), according to data gathered by Chapel Hill Denham.
Only the largest producer of the building material Dangote Cement has a larger market cap than BUA Cement in a competitive environment.
BUA Cement strong market capitalization amid a tough and unpredictable macroeconomic environment is due to its consistent earnings growth as investors are sanguine that the company is well positioned to take advantage of the infrastructure deficit to grow earnings.
The company delivered impressive volume growth of 22.20 percent year on year (yoy) in the second quarter (H1-22).
That, together with up to 24.2% yoy average ex-factory price increase, drove 45.2% yoy revenue growth in Q2-22 (H1-22: +51.7% yoy).
Overall, BUACEMENT volume is now expected to come in at 7.4mmt, translating to a capacity utilisation of 52.0% based on an installed capacity of 14.0mmt per annum.
Analysts at Chapel Hill Denham have raised their 12-month target price for BUA to N56.01 from N43.13 previously and upgraded our recommendation on the stock to a HOLD, from a SELL.
“This implies a 12.3% upside when a dividend yield of 3.4% is included. Our new TP implies an FY-22E exit PE and EBITDA multiple of 17.0x and 12.0x,” said the analysts.