₦airaland Forum

Bigdeal01:
Betaglass declared divided of N1.40k from EPS of N22.70k. This is way too poor. What do shareholders gain from companies like this? Capital appreciation?

2023 they paid N1.17k from EPS of N10.74k

It's their Culture of low payout. Management argues they need to retain earings because of the capital intensive nature of the Bussiness. They never wants to borrow to fund capital investments.

emmanuelewumi:
Look at the compounded annualized earning growth from 2020 to 2024, from 2021 to 2024, from 2022 to 2024, then year on year earning growth from 2023 to 2024.

The trend will give you an idea if earning growth is slowing down or increasing and what to forecast for the next 3 to 5 years

If you Dollarize the Revenue, it is not as spectacular at it looks in Naira.
The Bussiness depends on Flight volumes it handles and Price increase. If you look at the Flight volumes it reports on the backpage, it's been quite sticky (no growth).
The past performance has been blend of Hike in Handling rates (2021), Fx(2023-2024) and Covid Recovery(2020-2021) volumes.
2025 will look good with the return of Fly Emirates to Nigeria in Oct last year (one of their biggest customers) and possible successful 400% hike in Domestic handling rates they are currently pushing for.

But using past performance to project the Next 3-5 years will be hard, because with stable volumes, how far can they push for more Price increases going forward, if fx remains stable.

Streetinvestor2:
You have serious believe in the current management. ... 50%
Let see how q1 2025 will be then

Close to a quarter of the Bussiness is owned by the current Chairman Dr Fadeni (Indirectly), through his family run Bussiness Godsmart. They are paying out 90% Eps as Dividend, the Incentive is there. Dr Fadeni Will run that Company like his baby.

I'm big on the Insider Ownership. 70% of my thesis is on it, so that's what my eyes is on.

BabsO2:
Just hearing LI LU from you. Who is he?
Just saw a video yesterday of Toyota's $13,000 EV being launched. Excellent Videos. Even in Naija at the price one is tempted to buy. The EV world is going to be very competitive in the coming years at the rate it's going it may crash oil prices and crush oil companies!

Watch this Documentary


https://www.youtube.com/watch?v=L6kQmoAke2A

BabsO2:
It will be nice to see why he invested in BYD.

Sold something and bought just a little more UBA. Could not resist the N37 that has a N3 dividend attached. Also knowing the last rights which I didn't take was done at N35. A nice support point I hope,

Do you know about LI LU?
He's the Only Guy that Carlie Munger trusted with his Investment.

LI LU has been an Investor in BYD since early 2000 before they started making Cars. He must have influenced Warren as well.

KarlTom:
2.34bn worth of shares traded in MTNN.

Wagwan

Some Analyst working with Brokers are still updating their recommendations on MTN. I have only read SBG report with a Target Price of #330, the report is very detailed and the Analsyst is damn Good.
People are taking positions now before the market starts moving. I heard a businessman I knew has gotten up to 5M shares in the last few days.

MTN is a 400 Naira Stock, but DYOR and have a patient capital.

Obviouslyblunt:
I personally would go for the A15 over a he A16. If not anything, that dimensity processor is way faster than the Helio g99 on the A16. Go for the A15 5G

Thank you a lot

Looking to buy between a new
A15 5G 6GB RAM
or
A16 4G 6GB RAM

Which should I go For?

Any Reviews would be appreciated

missyojo

PharmAlfred:
Big buyers are busy accumulating MTN. It has been trading at a certain range daily. The moment they are done, you will have to buy MTN at N300+. Keep an eye on it.

MTN is a N400 + Stock
The Negative Equity in its book is the reason Institutional investors are not interested, also because they were burnt last year so the market hates uncertainty currently in the business.
But if you look at MTN, they will easily clear the Negative Equity before 2026YE.

Their Revenue in FY 2024 will be N3.2T+, if they do even a 30% Revenue Increase on that for 2025FY that's over N4T in 2025.
For a business that has done a 15% - 18% profit margin in the Last 5 years (their Margin will likely expand to 20% with the Tariff increase), that's over N800B in Earnings for FY 2025.

MTN traded above 10x earnings in the last 5 years.
do 10x of N800B and compare that to the current M.cap

DYOR (I could be wrong you know)

KarlTom:
Not to burst your bubble but I keep seeing the bolded wrt CONHALL.

I do not think they have any intention to sell off their holdings in ARADEL so long may 'the loot' continue...

Does CHI own stake in Aradel?
Please knindly point me to your Source

KarlTom:
Not to burst your bubble but I keep seeing the bolded wrt CONHALL.

I do not think they have any intention to sell off their holdings in ARADEL so long may 'the loot' continue...

Please reconfirm this Info. From what i checked, It's Aradel who Owns about 2.7B shares in CONHALL, not the other way around.

Please correct me if I'm wrong and kindly point me to the right source of your Info.

emmanuelewumi:
The CFO had a question and answer session with journalists last week it is on YouTube.

You can Google it

Do you mean the one with CFA Society Nigeria?

It's for Students who are working on CFA Equity Research Competition.

emmanuelewumi:
According to you the purported N300 billion revenue forecast in 2029 is not possible.

They made a revenue forecast of N39 billion for 2024 but achieved N53 billion

Presco made a full year EPS forecast of N49 for 2024 but achieved N104

Don't joke with companies that are modest with their projections

Q1 2025 result prove if they still have room for growth.

They make the Nairs equivalent of between $10,000 to $20,000 per foreign aircraft they handle .

They are also diversifying into cargo handling of the exportation of agricultural produce

They both beat their 2024 forecast by high margins because:
They both benefited from Naira losing over 40% in 2024.
For Presco specifically, International Palm Oil price Increased in a lot this year, so it's 2 circular Tailwinds for them.
If Naira remain stable, it will tune down their Music.

I own both businesses and still adding to my position every Month.

Streetinvestor2:
None..lol.Na for naija dem dey make the money

No It's a dollar business. Has everything to do with FX.

emmanuelewumi:
EPS increased from 20k in 2020 to N6.60k in 2024. That is over 100% compounded annualized earning growth rate

Going forward I assume a compounded annualized earnings growth rate of 30% for the next 5 years

Justified forward PE should not be less than 12

That's over 500B M.Cap in five years?

I want to argue that, but your estimates are very conservative... I think it's possible if Naira doesn't strengthen, cause naira weakness and Covid recovery is the reason behind the high compounded Growth rate we've seen in the past 5 years.

If Naira Remains stable your Estimate will look overstated.

emmanuelewumi:
At N97.6 EPS it should get to N900 or thereabout. I don't use average 5 years PE.

I use justified PE based on the return on equity, earning growth and the spread between the Return on Invested Capital and risk free yield of about 20% on FGN bond

Can you kindly share or Unpack how you use this Justified PE, Sir. Use any example you are very comfortable with

Emndy:
See the call option in yellow, callable after 36months.

Thanks

emmanuelewumi:
It appears you did not read the offer documents.

The clause is there

Thanks, I only saw the abridged version

emmanuelewumi:
2025 forecast for the Oil Plantation in Ghana

Revenue GHC 752 million (N78 billion)
Gross profit GHC 377 million (N39 billion)
Operating profit GHC 376 million (N29 billion)


2025 forecast for Presco.
Revenue grew at a compounded annualized growth rate of 52% from 2019 to date, it actually grew by 88% between 2023 and 2024. For the purpose of this forecast I will use 40% revenue growth,.
Gross margin for 2024 was 76% but I will use 70%, Operating margin for 2024 was 62.5% but I will use 55%

Revenue N224 billion
Gross profit N157 billion
Operating profit N123 billion.

Combined 2025 Operating profit of Presco and that of the business in Ghana will be
N123 billion+N 29 billion = N152 billion which is a conservative estimate

Presco currently has a debt of N58 billion the corporate bond will increase it to N158 billion. The total debt will about the same value with the estimated operating profit for 2025

With this there is a very high probability that the corporate bond will be liquidated between 3 and 4 years

Liquidating the Corporate Bond before 7 years would depend on the type of Bond issued.

emmanuelewumi:
2025 forecast for the Oil Plantation in Ghana

Revenue GHC 752 million (N78 billion)
Gross profit GHC 377 million (N39 billion)
Operating profit GHC 376 million (N29 billion)


2025 forecast for Presco.
Revenue grew at a compounded annualized growth rate of 52% from 2019 to date, it actually grew by 88% between 2023 and 2024. For the purpose of this forecast I will use 40% revenue growth,.
Gross margin for 2024 was 76% but I will use 70%, Operating margin for 2024 was 62.5% but I will use 55%

Revenue N224 billion
Gross profit N157 billion
Operating profit N123 billion.

Combined 2025 Operating profit of Presco and that of the business in Ghana will be
N123 billion+N 29 billion = N152 billion which is a conservative estimate

Presco currently has a debt of N58 billion the corporate bond will increase it to N158 billion. The total debt will about the same value with the estimated operating profit for 2025

With this there is a very high probability that the corporate bond will be liquidated between 3 and 4 years

I like the way you do back of the Envelope Analysis and it is always accurate and yet conservative.
This is very Insightful, Thanks for sharing

Sunrisepebble:
For Presco, they aim to pay for half of the acquisition this year. Will the profits from the Ghana plant start accruing to them or until the transaction is fully completed?

It's a $125M Deal, $65M initial Deposit.

40% of the GOPDC Revenue come from Rubber Exports (USD revenue).
The Asset Generated Operating Profit of $12.7M in 2023, $17M projected in 2024.

Even if the Operating profit remains stagnant at $17M (but it will always grow), the Asset will pay off itself in 10-12 years with no additional input from Presco, then they own it forever.

The Asset is being financed by a N150bn bond program with a c.24% coupon, if the Naira weakens, it gets paid off faster.

The deal is likely not a negotiated deal because the Majority Foreign Owners of Presco own the GOPDC Assets, they want to consolidate their ownership, so its almost a steal for Presco.

I may be wrong with my Analysis

HesInMe:
See correct biz. Numbers don't lie. Instead people will be trying to "Cham" us into buying 20% gross margin trap. Presco's only problem is valuation. My secret hope is that they will allow us convert their debt into equity at a discount down the line.

Buy High Quality at a Fair Price

emmaodet:
Nice breakdown.
Do you have a software for the chart you created?

I did it with Microsoft Excel. Was once a Graphic Designer and a Data Analyst

emmaodet:
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+

They are struggling to find cullet bottles to help their Energy mix, so their Energy mix is deteriorating and they can't control it.
Look at the growth in Cost per tonne of its production process and compare that to Revenue per tonne growth, the number is off.
If you look at the cost to know why it is growing faster than revenue, you will see that the energy cost has increased by 3x, while the raw material cost has increased by 2x or less.
They operate an energy-intensive business, and with the energy cost out of their control, it turns me off.

But that's not everything I don't like about the business. Look at their FCF/share, it was negative 3 out of 5 times in the last 5 years because of CapEx.
I usually don't like capital-intensive businesses. Being a Capital Intensive business (Their Furnance would always need heavy repairs or replacement), I can't bet on a consistent positive FCF/share in the Future. When I add that to their compounded earnings growth in the last 5 years, it looks poor for a good capital appreciation for my money.

unite4real:
The current market price is not N49.

It is N64.90

I copied this from my Analysis I wrote last year when it was at #49/share

NettyNelly:
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.

Since my thesis is that the market has yet to recognize the company's recently improved earnings, I chose to value the stock purely from an earnings perspective, based on how much the market has historically paid for such earnings.


Beta Glass reported an improved EPS of ₦2.4, ₦4.78, and ₦6.68 in Q1, Q2, and Q3 2024, respectively. This sums up to a 9-month EPS of ₦13.86. I forecast a full-year (FY) annualized EPS of ₦18.46, which assumes the company will earn an EPS of ₦4.6 in Q4. At the Current ₦ 49 share price, this projection translates to a forward P/E ratio of 2.65, which is remarkably low for a company with a 5-year average P/E of 5.

If we multiply the average P/E of 5 by our forecasted FY EPS of ₦18.46, we arrive at a target price of ₦92, representing an 88% upside from the current price of ₦49 per share.

Alternatively, if we take a more conservative approach and assume the company will earn just ₦2 in Q4, the FY EPS would be ₦15.86. Multiplying the same average P/E of 5 yields a target price of ₦79, representing a 62% upside from the current price of ₦49.

My assumption of ₦2 EPS for Q4 2024 is highly conservative. Post-COVID, the only instance where the company earned less than c.₦2 was in Q3 2022, with an EPS of ₦1.46. Apart from that, the business has consistently earned at least ₦2 per share over the last 16 quarters. I believe my target price would be met as the market reprices to 5x earnings or more on the back of strong full-year results, that it is yet to recognize.



Below is a chart I created to illustrate the market doesn't reflect current earnings.

emmaodet:
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.

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

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.

Sunrisepebble:
I don’t have a price target/fair value yet for NAHCO to be honest.
My source has marketed it to me for almost two years now. My first entry was at 44.85 and hoping I can solidify the position well below that level but it doesn’t seem to be slowing down at the moment. Based on watching their facts behind the figures and some analysis that was done here with @emmaodet and pa Emma using the revenue projection of the firm for next five years. I think it’s still a buy. Revenue is indexed to USD but paid in naira and they’ve recently started earning revenue from a new contract with Emirates after they came back to Nigeria which I think should show in Q4 results. I think there’s also a pending court case for them to get concession to manage the international airports

From the analysis of FY 24, the projection was that they could pay a potential N5 dividend which is a 10% yield. Similar to the Tier 1 banks

RE: FBNH, the div yield is too low for me


Looks like a good one to me. But wouldn’t rush to buy it

Good Analysis.

Also Insiders have skin in the Game.
5 yrs YoY Compounded Growth Rate is 70%

It's fundamentally sound business with solid position.
I have some units I have been buying monthly, WAC is 38 Naira.
My Target price is 60 Naira. But I'm not selling even at my target price.

When you are in a happy position to own a high quality business like that, there's nothing else to do, than to watch the paint dry.
It's a coffee can Investment for me.

Sunrisepebble:
Presco with the Ghana Acquisition for Export and USD/Euro revenue is a no brainer for a company that already has Gross margins of 72% and CPO prices are expected to trade slightly higher this year

Export?
On normal production seasons, Malaysian Palm Olein are shipped to the coast of West Africa at competitive prices. Ghana is not excluded. I wonder where the Ghanaian company exports to for USD/EUR.
Do you have info about that?

Have you looked at this Acquisition?
Are they not overpaying for that Asset?

emmanuelewumi:
Please invest in what you understand or know the story behind them.

Get in touch with your financial advisor or use the internet to get the information you need.

Thank you

That's the most important thing, my Boss. I'm not new here, but I have been a silent observer for some years now. I have learnt a great deal about NGX from what you and other great minds have shared here from your selflessness, so I place a premium on your Insights.

I spend most of my time reading books (Currently reading Chris Meyer's "Invest like a Deal Maker" you recommended and have read some other of his books before) and then use this platform as Nigeria's Value Investors Club, lol.

PS: If you have time, look at this book by Pulak Prasad "What I learnt about Investing from Darwin", he's a great writer and shares some of your Investment philosophies.

Sunrisepebble:
Yes, my new MH stock but MH with good intentions

What I am seeing in Vitafoam is the same as Beta Glass. Just that Beta Glass would materialize faster, with a 60% upside or more from here.

Beta Glass PAT ranged from 4bn - 6bn in the last 5 years, with no substantial earning growth.
But they have already earned 8.3bn in 9m 2024, with an FY annualized earnings of 11bn in View. But the stock is still trading at the 2019- 2023 price range.
They have a new Management team installed this year; a New COO joined in Q1, a New CFO in mid-year, and a new CEO in Oct.

If you look at the parent Company Frigoglass, they are making efforts to increase their export Market, that's inline with these new appointments.

NettyNelly:
Pa Emma, can you share your understanding of their business model and how they make money.
From the Little I found out, it seems they charge airlines (on contract basis), and clearing agents on a regulated tariff, but I don't have a full picture of how that works.

1. Is their earnings dollar indexed?
2. What are the possible risks that would impact the company's earnings?

I would appreciate your insights on this, Sir.

emmanuelewumi