₦airaland Forum

pluto09:
The job you are doing here now reminds me of those good old days of the defunct stock market Nigeria (SMN) . You can't analyze too much, the deeper you dig the better you understand.
I personally appreciate those who take their time to analyze and scrutinize company financial reports.

Exactly bro.
The deeper you dig, the better you become.
There are stocks i bought early last year have sold off now as i get better, when i started seeing the flaws in them.
I am gradually rebalancing my portfolio

ositadima1:
I remember when you started, and I admire your dedication—it truly gives you strength. I tried doing all of this myself and failed. It’s not hard, but it’s tedious and requires a lot of commitment. I think some people actually make a living from this. With enough capital, you can even play the markets full-time.

As for me, I’m too lazy and busy at the same time. So, I take shortcuts: I try to gauge market sentiment, watch what the big players are doing, and ride along with them. I’m sure they’re doing all the hard work—running laborious calculations and acting on them. My strategy is to watch the charts and volumes, get a sense of the market, and do the bare minimum, lol.

We all take shortcuts, don’t we? When you bought your car, TV, or computer, I bet you didn’t download the datasheets or analyze the intricate details of each component’s performance. You likely just asked around or checked online, trusting that others had already done the heavy lifting—or simply because they were using those products themselves.

Of course, this method has its flaws. The people you’re polling might be relying on polls themselves, and the whole cycle could be based on a baseless rumor or even manipulation, lol. This is a major problem with technical analysis.

Sorry for the long epistle!

Thanks bro for the compliment. It was not easy at all for me but i know i had no choice nor option than to know it and keep going forward. No other option.
When i joined the group early last year, i tried contacting some good monikers here privately to guide and mentor me but they declined and told me to say whatever i want to say here publicly. I wasn't too comfortable exposing myself too much and i understand their fears too, we have to be very careful with kidnappers and scammers in today's nigeria.
So i took the expensive route of self-education and self-reliance. It has always helped me. I worked in an industry full of expats and God bless you, you are not on your A-game, they will mock you and write you off to company that you know nothing. So it is in your best effort to read, read and read manuals, books, online to operate most equipment because the whites especially Ukrainians and Russians won't show you ( especially a black boy they are eager to sack before).
Spent close to $1,000 on courses, videos, tutorials, assignments, YouTube videos too etc and have seen so much improvement in my stock analyzing.

NettyNelly:
Well done
I believe it's a #80 - #90 stock as well.
I started looking at the stock at #49, but I didn't buy cause it's not the type of business I would like to hold for a long time.

They are really struggling with energy cost and I couldn't see a favourable runway ahead of the business, like most of my portfolio businesses.
If I was a trader I would have loaded up and hold it for a year for capital appreciation.

You are right with the valuation of 80-90 though i don't see them struggling with energy cost because operating expenses only rose by 3.8% between 9M/2024 and 9M/2023 while revenue grew by 76% during those periods.

my concern is their account receivable rising alot which means buyers are owing them more and inventory rising alot too - Both of these means product is struggling to move in the market thereby having more in store and buyers struggling to sell the ones they have so as to pay back their debts.
We can confirm this looking at their - Cash Conversion Cycle (CCC) which is the number o days it takes the company to convert inventory to cashflow.
CCC = DIO (time to sell your products) + DSO ( time to collect money from customers) - DPO (time to pay your bills)
CCC = 91 +124 - 67 = 148 days ( we want less than 30 days, though we will compare with their peers in the same sector)
It takes 91 days for betaglass to sell their products, 124 days to collect the money and 67 days to pay contractors/suppliers of of raw materials.
With this, we can see betaglass is under pressure to pay their own bills (67 days) compared to the days it takes them to produce and get back their money (215 days)
Let's look back at betaglass CCC 5 years history to see if they are improving or not -

DIO ( 2020 - 2024 LTM) = 130 - 109 - 78 - 96 -91 -So as we can see, this number is improving. Taking betaglass 3 months to sell their products compared to previous 4 months plus. We want less than 30 days though.
DSO (2020 - 2024 LTM) = 85 - 68 - 75 - 74 - 124 - It takes 4 months to get back their money from buyers compare to 3 months previous. This number is getting bad. We want less than 30 days
DPO (2020 - 2024 LTM) - 98 - 83 - 67 - 74 - 67 - This number is reducing from 3 months to 2 months for betaglass to pay back contractors. It is not good. We want 90+

ositadima1:
Let me start by saying that I haven’t looked deeply into the details beyond glancing at the audited 2023 earnings and the unaudited third-quarter 2024 earnings. The rest of my analysis is based on basic technical analysis and statistics.

My estimated final EPS for 2024 is similar to yours at 16.9. If the dividend follows the very low payout from 2023, it should be around ₦1.8 per share. It looks like a solid company focused on growth, which explains why only 11% of earnings are being paid as dividends. This low dividend payout pattern may continue, as the chart doesn’t show any anomalies in volume—unless, of course, they’re exceptionally good at hiding information.

With the kind of EPS they’re generating, the stock should be trading between ₦92 and ₦177, but the low dividend payout is holding back share price growth. This is the type of company that could issue a bonus in the future, perhaps something like a 3-for-2 stock split.

I’ll be keeping an eye out for anomalies in trading volume. While I believe the stock price will rise, I also expect it to dip below the current price at some point during the year due to the low dividend payout, only to recover later.

You are right with the #177 upper band valuation using valuation by EPS method

emmanuelewumi:
Well done


It is a capital intensive business, capex margin of 68% is on the highside coupled with low dividend payout.

I prefer businesses with capex margin of 20% and below although 10% and below is preferable.


What percentage of the net operating cash flow did they use for capex. 30% and below of net operating cash flow is better.

Capex is 5.7b while OFC is negative 7.7b, so total FCF is -#13.4b. To answer your question, 74% of OFC was used for capex in 9M
Account receivables of 58b is roughly 75% of 9M revenue which is we need to keep an eye on
Inventory of 25b is 3x of profit 8b which is worrisome

bastardson:
No one is saying anything about Ellah Lakes.. All so quiet about it.

.

eziokwunwoko:
Pa Emma, current price, Suprisepebble and emmaodet: Please what are your spreadsheet saying about a Beta Glass Plc.
Abeg I need your wonderful analysis.
I am loyal as you boy

Beta Glass -
The company is into the production of glass bottles for companies like Smirnoff Ice, Mcdowells, Squadron, Best Whisky, Chelsea, Lord's Gin, Royal Eagle, Schnapps, Orijin Bitters, Veleta wine, Amstel Malt, Guinnenss, Heineken, Guilder, 33, Harp, Trophy Goldberg and many more.
They also pproduce glass bottles crow cover ( bottle covers we use openers for
hey also produce drinks crates e.g crates for cokes etc

Revenue (2020 - 2024E) = 25.6b - 37b - 54.3b - 62.9b - 105b (E)
Revenue YOY (2020 to 2024E) = 44.5% - 46.8% - 15.8% - 67% (E)
Net Profit (2020 - 2024E) = 3.5b - 5.5b - 4.7b - 6.4b - 10.5b (E)
Net Margin (2020 - 2024E) = 13.7% - 14.9% - 8.7% -10.2% - 10% (E)
EPS (2020 - 2024E) = 6.93 - 10.92 -7.81 - 10.74 - 17.5 (E)
Equity ( 2020 - 2024E) = 37.2b - 42.1 - 46.3b - 52b - 60b(E)

She is spending less to make more sales/revenue which reduced from 2.5% in 2023 to 1.4% in 2024
Balance sheet is deteriorating due to Debt rising very much of 31.4b than cash of 12b compared to previous year of cash 26.8b and debt 24.6b
Account receivable increased by 800% from 3b to 27b
Inventory increased by 100% to7.3b
FCF reduced 121% from 9.6b to -2b. Negative FCF of -2b

Dep. Margin improved to 21% from 31.5% but we want 10%
Capex margin improved to 68.6% from 85% but we still prefer 25%

5% of revenue came from exported products while 95% sales is from local base.

Current P/E = 4.1, Forward P/E = 3.7, 5yrs P/E (mean) = 5.4, Current price = #64.9
Calculating for the implied earnings:

TTM earnings per share = Current price ÷ TTM P/E
#64.9 ÷ 4.1 = #15.83 (TTM EPS)
Forward earnings per share = Current price ÷ Forward P/E
#64.9 ÷ 3.7 = #17.54 (Forward EPS)

Using the TTM EPS = #15.83, Forward EPS = #17.54, historical 5-year average P/E of 5.4:
TTM-based price:
Implied Price = TTM EPS × Historical P/E
#15.83 × 5.4 = #85.48

Forward-based price:
Implied Price = Forward EPS × Historical P/E
#17.54 × 5.4 = #94.72

Therefore, based on the company's own historical valuation:

Using TTM earnings, the implied price is #85.48
Using forward earnings, the implied price is #94.72

Since the current price is $64.90, this suggests the stock might be undervalued by:

#20.58 (31.7%) based on TTM earnings
#29.82 (46.0%) based on forward earnings

Sunrisepebble:
Cardinal stone has done the maths for us.
When I’m opportuned I will try to do the analysis on how it will affect the earnings of Presco when acquisition is completed. The margins of the Ghana company look healthy but a bit weaker than Presco’s
Let me also tag @emmaodet in case he has time on his hands

Using 2023 as a reference -
Revenue was 24.6b Gross profit was 59.3% and operating profit 41.5%

Presco revenue for 2023 was 102.4b, roughly 100%more than what GOPDC generated, Gross profit 64% and Operating profit 57.8%.
I will assume with this, Presco revenue should increase by 50% but since they posted that farm size will increase by 19%, then it is safe to predict that revenue will increase around that figure too

emmanuelewumi:
What is the return on equity? Is it growing over the years? What is the net margin?

What is the compounded annualized earning growth rate in the last 3 years

Chams -

ROE
9M/2024 = 9.5% and Estimated FY2024 to be 12% NM = 8.2%, with estimate of 10% FY2024
2023 = 0.2%, NM = 0.5%
2022 = -4%, NM = -7.4%
2021 = -7.6% NM = -10.8%
CAGR net earnings can't be calculated because Charms has been on negative earnings since 2021,2022 and became positive in 2023, she has been able to increase her earnings on yearly basis by #482,551,000 to become positive in 2023 going forward.
2023 is 20,220,000 and in 2021 is negative 944,882,000

Revenue from 2021 to 2024/Sept = 3.3b - 5.1 - 9.7b - 16b (estimated for FY 2024 bcus 9m = 13b)
Revenue has been growing 70% per year from 2021 to 2024, let's assume it will drop to 30% per year for the next 3 years,
then revenue by 2027 = 30b
Assuming they maintain the 2024 net margin 10% in 2027, Net income will be 3b, EPS = 0.64 and with an estimated P/E of 7, 2027 price = #4.5 which means Chams will double in price in the next 3 years from the current price of 2.3.
If she can increase her revenue by 50% per year from 2025 to 2027 and maintain a net income margin of 10%, price will be #5 per share

Locotrader:
Ucap should settle you and oga Emma because Dem go get more than 10 clients next week

emmanuelewumi:
What is the return on equity? Is it growing over the years? What is the net margin?

What is the compounded annualized earning growth rate in the last 3 years

.

HesInMe:
Ask them o. After reading that one person bet the house in the village on it, and not wanting to miss out, I went and looked at the financials for this "tech company." Once I saw 20% gross margins, mainly from card production and biometric equipment (fingerprint scanners?), I just stopped.

That's gross margins on sales o, not net profit margin, after like 30 years in business, about half of them as a publicly listed company.

I want compensation for the time wasted.

Locotrader:
@emmaodet

People wan follow you get margin loans oooo.
Abeg help them on what to do nah.
God go bless you.

If you are using united capital as your broker, send mail to uceecare@uceemfb.com for the loan and they will process it.

Bimmms:
How can I access the loan too pls ?

If you are using united capital as your broker, send mail to uceecare@uceemfb.com for the loan and they will process it.

Heishere:
I will advise you join a reputable cooperative, deposit some funds and collect at least x3 of your deposit as loan at 7% per annum interest at most. The interest you guys are paying on these loans is killing man.

I am in a cooperative, but it is not as flexible as ucee loan.
Firstly, they don't have the loan capacity i will need.
Monthly paying back is chocking unlike bullet payment after 6 months with Ucee allowing me to invest it better.
They require sometimes guarantors or surety unlike Ucee that requires no collateral or guarantors
You can't rollover cooperative money without leading to embarrassment or disgrace while you can rollover and payback Ucee for like 3 years

Regex:
I go message you make we talk about this margin loan and other things. Happy new year brother.

No wahala bro.
Happy new year to you too

Raider76:
Please what happens if the price of the shares you gave as collateral are about to fall below the value of the collateral? Will they do a margin call?

Yes, they will do a margin call but that will be on rear occasion.
You can only access 30% of your stock portfolio, so it is very rear for your portfolio to fall below 30% now.
Mutual fund is about 70-95% portfolio for loan

emmanuelewumi:
If you want to rollover your loan, make sure you inform the a week before the loan matures

Okay thanks.
Well noted

emmanuelewumi:
I think Emmaodet is intelligent enough, 15% in 6 months is not bad based on what intelligent investors can achieve in the next 6 months.

Yhe beauty of margin loans is that you are not under pressure of making monthly payments, at maturity you can even pay just the interest and rollover the principal for as long as possible

I structure my loan in such a way my mutual fund will pay for it. So i am not worried about the payback.
Also, it is one of the few options convenient for me.
Most banks won't grant me loan because am not eligible for it since i don't work in nigeria and not under the list of accredited companies for employee loans.
I am not a full staff neither rather contractor, so it makes getting bank loans very hard.

emmanuelewumi:
With N30 million you are eligible for about N27 million.

After getting an initial loan of N5 million you can always ask for additional loan provided your collateral can accommodate it.


I used my Eurobond fund to get loan when it N900 to $1.

When the exchange moved to N1300 to $1, I applied for additional loan and I was granted

Thanks very much. Have learnt alot from you

emmanuelewumi:
Haba, you are not new in this business na. Interest rates are per annum.

Which you can always prorate

Hello bro.
Just a question - assuming i have a 30m mutual fund with ucap and have collected 5m loan from ucee but since i am eligible for up to 29m, is it possible maybe after a month to refinance my loan? by getting more loans than the initial 5m from ucee?

Streetinvestor2:
Try confirm well.I think the 30% is for the six months and not annum.

It is 30% per annum and 15% for 6 months

Princkez:
please what's the interest rate

30% per annum

Locotrader:
Plus admin expenses.
Anyway we are in a bull market but never like the stock you invested the money.Transcorp would have been better.

If I know you in person I would have given you that amount at 15% for 12 months duration without extra costs.

It's well sha

Admin charges is 1%. Reason why i was given 990k and 2.475m.
Maybe we will work together in future.

Youngzedd:
What is the interest rate?

30% per annum/15% for 6 months

Got a margin loan of 1m and asset backed loan of 2.5m from Ucee/Ucap seemlessly.
Processing time 3 days and payable in 6 months with an opportunity to rollover.
Bought Nahco 40,000 more units.
@ Oga emmaewunmi .. thanks for the awareness.

HesInMe:
Just curious: What do people see in companies like Chams? Just low valuation?

I will check their financial report out but if am to make a guess, I think they are investing on the growth. Potential growth

Omooloriredade:
I agree insurance penetration and limited bouquet of insurance products continue to be a challenge for the insurance sector. However, I disagree the main challenge is topline growth. Don't get me wrong....it is still a challenge but not the major challenge. If you grow your topline because more Nigerians take up car insurance, do you think it will improve your bottomline? No, (imo), that business is not a profitable one in Naija. I assume everyone should know the reason why.

The key to an insurance company's success (particularly in Naija) is the ability to evolve and diversify. You would still need more capital to do this. There is a blueprint to follow. Custodian, Mansard are already leading the way. A few others are now following by establishing a "holdco" structure and diversifying. You don't have to focus on traditional insurance alone. NAICOM regulation stipulates the portion of your capital that must be reserved for "reinsurance", "reserved in a deposit money bank" and available for investment. A well capitalised insurance company can veer into virtually any profitable businesses (including banking, pension fund administration/custodianship, venture capitalism, fund management etc) provided they follow the regulation including relevant organisational structure.

There are examples of insurance businesses in Nigeria that one can understudy to understand what to do and not do inorder to succeed.

Aiico - Grew premiums massively over the years but struggled with bottomline. That company should not be where it is today.
Custodian - Evolved and diversified and is now the poster child of a well run company for the sector. Aiico was not Custodian's mate once upon a time.
IEI - Started off with a bang. Entered the O&G insurance sector to chop money but they didn't know what hit them there. Fighting for survival now.

Have a look at the results of insurance companies. You will find they make money (margins) from interest and investment income not their core business of insurance. Difficult operating enviroment as many have found. There's still opportunity for growth in traditional insurance space but that is a topic for another day.

#Evolve and diversify so you can thrive!!!

Disclaimer - Just an opinion. I could be wrong.

@ Omooloriredade ..

Look at the attached picture.
You will notice insurance expense and reinsurance are always taking a chunk of the revenue leaving the shareholders with next to nothing.

HesInMe:
If only that were the problem. The main challenge in insurance in Naija is the topline: Industry premiums are not growing fast enough compared to the market potential. People are just not insuring insurable risks. It's hard enough to compel car insurance, talk less of coverage for homes, businesses, life, and health.

So you will have all these companies with all these new shares demanding a return on investment, but the investment opportunities are just not there yet. Which rational investor would buy knowing that?

@ HesinMe

The problem is not the topline rather not reflecting at the bottomline.
Look at Prestige for example -
How can you generate 13.8b and use 14.8b as insurance service expense? Total making loss from their core business.
Most insurance company only pad their EPS and PAT from investment income and not insurance income which is not sustainable on the long run

Offpoint1:
The number 1 is applicable to whole state in Nigeria, Lagos is the only state you can buy all food items in the market by 4am. And workers are already on the road to work by 5am.

Before Lagos, I left home for work by 8:45 and got to work in 10 minutes. Lagos is different ball game, even though the work distance is the same, it took me 2 hours (that's if I leave home before 6am)


Lagos conductor made me lapped a lady with a voluminous azz and I alighted with the hardest erection known to mankind. It wasn't my fault, but biology and whatever brand of perfume she wore. I knew she felt it, I wish we have the abilities to control our serpent salutation, but this guy is triggered by visuals and touches.

emmanuelewumi:
Did you consider the spread between the ROIC of about 70% and the WACC of 20%.



Once there is a spread of 5 and above, Economic value is created

Yes, I agree bro but many companies even have bad ROIC.
Imagine if roic is 30% and wacc is 20%, what is left then? Some sef, their wacc is more than roic

emmanuelewumi:
Please explain EBIT of 30% because I don't understand what you meant

What I mean is earning before interest and taxes.
While a company can decide to be paying back interest owed to lenders back slowly, a 20% wacc and above will always take a chunk before getting to PAT