Dangote Cement, the largest producer of the building material in Nigeria is not a local champion as it has delivered values for shareholders more than global and emerging market peers.
This means the largest firm by market capitalisation in Nigeria has generated more profit from investment as the cement maker continues to pursue an aggressive expansion plan across the continent.
Dangote Cement generated a return on equity of 31.20 percent in December 2021, according to Chapel Hill Denham Limited.
That compares with BUA Cement Nigeria’s (19.10 percent); LafargeHolcim MOROC SA of Morocco (14.60 percent); Ciment Du MOROC of Morocco, (16.10 percent0); Lafarge Africa of Nigeria, (8.8o percent); Tanzania Portland Cement, (26.20 percent); MISR Beni Sef Cement of Egypt, (3.90 percent).
Dangote Cement outperformed middle east peers like: Saudi Cement, 16.90 percent; Quassim/Cement of Saudi Arabia, 23.40 percent; Yamama Cement, 9.70 percent.
It beat global majors such as Heidelbergcement AG of Germany, (14.40 percent); Siam Cement PCL/THE of Thailand, 13.70 percent, Shree Cement of India, 16.0 percent; Taiwan Cement, 12.80 percent; China Resources Cement of Hong Kong, and Asia Cement Corp, (10 percent).
A higher ROE means the management and board of directors of Dangote Cement are efficient in the use of shareholders resources in generating higher profit.
The cement maker has been taking advantage of Nigeria’s huge infrastructure deficit underpin earnings while an efficient energy diversification strategy has helped bolster margins as the company is seeking possible opportunity in Brazil and South Africa
Its Obajana plant in Kogi State with 16.25 MTA, Ibese Cement Plant in South-West with 6.0 MTA, and Benue Cement Plant with 4 MTA have been contributing to Group revenue.
The company’s Pan African operations such as 1.5Mta cement grinding capacity in Douala, Cameroun; 1.5Mta importing and bagging terminal in Ghana; 2.8Mta integrated cement plant in South Africa, 1.5Mta integrated cement plant near Mfila, Congo; 1.5Mta integrated cement plant in Pout, Senegal, and 3Mta integrated plant in Mtwara, in Tanzania are also a cash cow.
With the continued improvement in the underlying profitability driver looking set to further bolster earnings, Dangote Cement shareholders are in for more capital gains as the stock has not run its course.
Between April 2020 and May 2021, the group has completed a total of N150bn bond, yet it remains relatively ungeared with a Net Debt to EBITDA of 1.16x vs. MENA average of 2.98x, providing an exceptional leverage opportunity for further expansion, and thus, capture market share across its regions of operation, according to analysts at Chapel Hill Denham Limited in a recent note to clients.
Dangote Cement has a market value of $11.46 billion with its shares up 32 percent in the past year.