₦airaland Forum

emmanuelewumi:
Okay he was referring to the dividend yield.


Did he consider increase in the return on equity from 20% to 39%, increase in the net profit margin from 14% to 25% and increase in the equity from N504 billion to N694 billion.

The stock currently looks like a compounder if they can sustain the tempo till 2030, I see Lafarge as N800 stock in the next 4 years.

It has the highest upside potential in the sector

Based on this result alone, buying above 200 would offer no margin of safety, as it appears to be fairly valued. I can share my calculations if you’re interested.

HesInMe:
No vex. I'm not as smart as you. So you're assuming they give up on the ARPN acquisition and just grow organically?

Sorry, but I don’t engage in banter anymore. Talk to you later.

HesInMe:
Agreed: Ignore the bile (and the blind faith). What possible paths to winning do you see for Ellah, please?

I thought you had a solid understanding of financials. Take a look at their financial statements and see for yourself that they have the resources to execute, if they stay focused.

Don’t just focus on the cash they’re burning. Also examine the assets and resources they have available. As I’ve said before, and consistently maintained, if they are genuinely working toward a win, they absolutely have the capacity to achieve it with what they currently possess.

Burning cash with limited revenue isn’t necessarily a bad sign for a growth company, provided there is a clear and credible plan. Many successful growth companies have gone through far worse before stabilizing. I can name a few examples if you’d like.

pluto09:
You and this Dangote sugar.

.

crownprince2017:
See wealth exchanging hand after enduring the worst days of sugar.

Well, what do I know self.

Two things, in my limited understanding, would make Dangote Sugar attractive again (for now until plantation mature): if the exchange rate falls to around ₦1,100 or lower, and if interest rates drop to about 10% or below.

We’ve seen this kind of accumulation before, only for the momentum to get crushed back to ₦60 or even lower. Dangote Sugar has a reputation for keeping its results under wraps until the official announcement, so don’t be surprised if the current rally is driven more by hope, and by the strong performance of other Dangote businesses than by hard numbers.

The way some people think genuinely surprises me. With all the bashing of Ellah, some were saying it would drop to ₦3 or even ₦1, haba. A few comments were clearly coming from a place of hate and bile, without any attempt to hide it. Statements like “Ellah Lake holders will be executed”, lol , are completely unnecessary.

We really need to calm down. There are many ways to determine value; it doesn’t have to be only your method. Yes, the capital raise failed, okay. That’s not the end of the company, nor does it automatically mean the end of their proposed acquisition.

It almost feels like some people would physically drag Ellah down if they had the power, just to prove they were right.

For the record, I don’t own a single share of Ellah. I just don’t see it as a bad bet yet. They still have possible paths to win.

Thanks for reading.

.

Itzlinda:
What's the next forecast?

We’ll have more clarity once their financial statements are released.

ositadima1:
I’m buying 75,000 units of DangCem tomorrow. I'm dreaming of ₦800. I sold my entire position in total last week. Where’s that guy who tracks Level 2 data? You’ll see the 75k block live tomorrow.

ositadima1:
Dangcem, Lol, #40 to #50 div. Is likely.

What is the price of Dangcem again?

TerraCota:
Thank you so much for sharing your analyses - please do not delete! I usually re-read few times "until it sticks" (or sometimes with your work and Bovali, and few others, I do screenshots and save them locally.

This is FCMB’s take.

This is based on the last Q3 unaudited financial reports. Since the information is quite lengthy and takes up a lot of space, please let me know if you would like me to delete it.

The Cost of Equity: Why This Number Dominates Everything
If there is one input that dominates this valuation above all others, it is the cost of equity. Let me be very explicit about the calculation.
The risk-free rate is the Nigerian Federal Government bond yield. As of late 2025, ten-year FGN bonds trade at approximately 18.5%, and I use that as the risk-free rate. The equity risk premium has two components: the base US equity risk premium, which Damodaran estimates at approximately 4.6% for a mature market, and the Nigeria-specific country risk premium. Damodaran's approach values the country risk premium using the sovereign credit default spread scaled by the relative equity market volatility. For Nigeria in 2025, this country risk premium works out to approximately 7.9%, giving a total equity risk premium of 4.6% + 7.9% = 12.5%.

For the beta, I use a bottom-up approach. Nigerian commercial banks historically have betas relative to the NGX in the range of 0.75 to 0.90. Access Holdings is the largest bank by assets, which gives it high systemic exposure to Nigerian macro, but its pan-African diversification across 17+ countries provides some offset. I use a beta of 0.80, which is reasonable for a large-cap systemically important bank.
Putting it together: cost of equity = 18.5% + (0.80 × 12.5%) = 18.5% + 10.0% = 28.5%. This is in naira nominal terms. In USD real terms, applying a naira depreciation assumption of 10–12% per year and adjusting for the inflation differential, the equivalent USD cost of equity is roughly 12–14%, which is consistent with how international investors value frontier and emerging market banks. Both approaches reach similar conclusions about intrinsic value when applied correctly.

The sensitivity of the valuation to this number cannot be overstated. At 26% cost of equity, intrinsic value rises to roughly ₦28–30/share. At 31%, it falls to ₦14–16/share. I will return to this in the scenarios.

Building the FCFE Model and Discounting It
For a bank, Free Cash Flow to Equity is simply the cash that can be paid out to shareholders after retaining enough earnings to support future growth while maintaining adequate capital ratios. The formula is: FCFE = Net Income − Equity Reinvestment Required.
In the near term, as established above, FCFE is negative or near zero because the bank is growing its balance sheet far faster than retained earnings can fund. Annualized net income is approximately ₦568,936 million, but equity reinvestment needed to support 25% asset growth is approximately ₦813,000 million, implying negative FCFE of roughly ₦244,000 million. This is not a distress signal — it is what fast-growing banks look like. The bank funds the gap through deposit growth and wholesale borrowings, which is visible in the ₦10.6 trillion surge in customer deposits. But it does mean shareholders receive minimal free cash in the near term, which depresses current intrinsic value.

Looking forward across a three-phase model, Phase 1 covers 2025 through 2027 with net income growing at 15–18% per year in naira nominal terms as the high interest rate environment and loan book seasoning continue to compound. Net income reaches approximately ₦660,000 million in 2026 and ₦760,000 million in 2027. Asset growth slows toward 15–18% as the deposit surge normalizes, reducing equity reinvestment needs. FCFE in this phase is approximately ₦170,000 to ₦240,000 million per year. Phase 2 from 2028 through 2031 sees growth tapering toward 10–12% as the rate cycle turns and the loan book matures. Net income reaches ₦850,000 to ₦1,030,000 million by 2030, with asset growth slowing to 12%. FCFE expands meaningfully to ₦310,000–₦450,000 million as reinvestment needs shrink relative to income. In the stable phase from 2032 onward, I assume perpetual growth of 8% in naira nominal terms, which is roughly Nigeria's long-run nominal GDP trajectory. Terminal FCFE is approximately ₦660,000 million.

Discounting the Phase 1 and Phase 2 FCFE streams back at 28.5% produces a present value of approximately ₦820,000 million. This is the meat of the valuation — actual cash deliverable to shareholders before the terminal value.
The terminal value is calculated as ₦660,000 million divided by (0.22 − 0.08), where 0.22 is the stable-phase cost of equity (which I allow to compress from 28.5% as Nigeria's macro presumably stabilizes over a decade) and 0.08 is the terminal growth rate. That gives a terminal value of ₦660,000 / 0.14 = ₦4,714,286 million. I discount this terminal value back eight years at a blended rate reflecting the transition from 28.5% to 22%, applying a discount factor of approximately 0.090, giving a present value of terminal value of ₦4,714,286 × 0.090 = ₦424,286 million. Note that the terminal value only contributes 34% of total equity value (424,286 / 1,244,286), which is actually encouraging — it means the valuation is not being carried by heroic assumptions about the distant future.

Total equity value = ₦820,000 + ₦424,286 = ₦1,244,286 million.
Dividing by 53,317,838,433 shares outstanding gives ₦1,244,286,000,000 / 53,317,838,433 = ₦23.34 per share before the AT1 adjustment. The Additional Tier 1 Capital of ₦206,355 million is a perpetual instrument with a discretionary coupon that ranks ahead of ordinary equity in distributions — economically it behaves like senior equity and its coupon (₦107,628 million paid in nine months, annualized to roughly ₦143,000 million) is a claim ahead of ordinary shareholders. Deducting the AT1 capital of ₦206,355 million from total equity value and dividing by shares gives an adjusted intrinsic value per share of (₦1,244,286 − ₦206,355) / 53,317.8 = ₦1,037,931 / 53,317.8 = ₦19.47 per share in the base case.

Sanity Check: What Do the Multiples Say?
It is worth pausing here to verify that these numbers make sense relative to market comparables.
At an intrinsic value of ₦1,244,286 million for total equity, the implied price-to-normalized earnings multiple is ₦1,244,286 / ₦490,000 = 2.5x. Nigerian bank P/E multiples have historically ranged from 2x to 6x, with the large banks typically at 3–5x in normal years, so 2.5x is conservative but not unreasonable given the current rate environment and capital cycle. The implied price-to-book on tangible equity of ₦3,308,010 million (total equity less intangibles of ₦417,468 million) is ₦1,244,286 / ₦3,308,010 = 0.38x. This compares to GTCO at roughly 0.8–1.1x tangible book, Zenith at 0.5–0.7x, and UBA at 0.3–0.5x. At 0.38x, Access Holdings is priced cheaper than GTCO and Zenith but roughly in line with UBA. That relative positioning feels approximately right: Access is a larger, faster-growing franchise than UBA but arguably less capital-efficient than GTCO in the near term.

The price-to-Pre-Provision Operating Income comes out at ₦1,244,286 / ₦960,000 = 1.3x, meaning you are paying 1.3 years of franchise-level earnings before credit costs. For a bank with a 15-year+ track record of surviving multiple Nigerian currency and macro crises, that seems like a modest price if you believe the impairment cycle is near its peak.

The Three Scenarios in Full
The base case as derived above gives ₦19–24 per share with central estimate ₦19.47 after the AT1 adjustment. This assumes normalized ROE of 14–15%, COE declining from 28.5% to 22% over ten years, terminal growth of 8%, and terminal FCFE of ₦660,000 million.
The downside case assumes that the CBN recapitalization exercise forces Access Holdings to raise significant new equity at or below book value, diluting the per-share economics materially. If the bank raises ₦500,000 million in new equity at current prices, it would add approximately 15–20 billion new shares to the float, diluting intrinsic value per share by roughly 25–30%. Simultaneously, if the new capital is deployed into lower-return assets than the existing book — which is common in forced recapitalizations — normalized ROE compresses to 12%. Running the model with 12% ROE, 28.5% COE throughout (no compression assumed if Nigeria deteriorates), and 6% terminal growth gives a terminal value of ₦360,000 / (0.28 − 0.06) = ₦360,000 / 0.22 = ₦1,636,364 million and a present value of approximately ₦147,000 million. Adding discounted Phase 1–2 FCFE of roughly ₦480,000 million gives total equity value of approximately ₦627,000 million, or about ₦11.76 per share on the diluted share count. This is the ₦12–15 range I cited at the top.

The upside case assumes the recapitalization is successfully executed at attractive terms, new capital is deployed into high-return opportunities across the African network at ROE of 17–18%, and Nigeria's macro stabilizes sufficiently to allow the COE to compress to 20% in the terminal phase. Terminal FCFE rises to ₦900,000 million on higher earnings. Terminal value becomes ₦900,000 / (0.20 − 0.10) = ₦900,000 / 0.10 = ₦9,000,000 million, with present value of approximately ₦810,000 million. Discounted Phase 1–2 FCFE of ₦1,200,000 million gives total equity value of roughly ₦2,010,000 million, or ₦37.69 per share. This is the ₦32–42 range.

What Could Break This and What Would Prove It Right
The three risks that could push the stock to the downside scenario or below are all related to things outside management's control. A renewed sharp naira devaluation — not the gradual depreciation modeled here but a step-down of 30–40% in a single CBN intervention — would cause massive mark-to-market losses on the naira-denominated loan book and trigger a new round of provisioning. The FX translation reserve already shows a cumulative loss of ₦707,555 million at September 2025 (down from ₦979,653 million at January 2025), meaning the bank has already absorbed ₦272,098 million in unrealized FX losses this year alone. Another sharp devaluation would hit both the P&L and regulatory capital simultaneously. The second risk is a credit cycle following the loan book's rapid growth. Loans grew from ₦5,100,807 million in December 2022 to ₦12,894,263 million in September 2025, a 152% increase in less than three years. Bank loan books typically season over 24–36 months, meaning the NPL cycle from loans originated in 2023 and 2024 would peak in 2025–2027. The 141% surge in impairment charges in 2025 may be the beginning of that cycle, not the end of it. Third, the recapitalization. The CBN's directive requiring international commercial banks to reach a minimum capital base of ₦500,000 million creates meaningful dilution risk if Access needs to raise external capital in a challenging market environment.

What would prove the bull case right is simpler: watch the impairment charge. If Q4 2025 and Q1 2026 impairments stabilize or decline from the Q3 run rate of ₦119,915 million per quarter, the credit cycle is passing and normalized earnings of ₦490,000 million or higher are achievable. Watch the capital raise: if Access successfully issues new equity at prices above ₦20/share, it validates the intrinsic value and signals management confidence. And watch the NII margin: with CBN rates likely to begin declining in 2026, the question is how much of the 49% NII growth is rate-driven versus volume-driven. If volume accounts for the majority, the franchise is building durable earnings power.

Final Thought
Access Holdings is one of those situations where the math looks cheap but the uncertainty is high enough that it should not be a large position for anyone without a clear view on Nigerian macro. At ₦19–24/share, you are paying about 0.38x tangible book for a bank that earns 14–16% on equity, has grown total assets at a compounded 25%+ over five years, and operates the most geographically diversified banking network in sub-Saharan Africa. The normalized earnings yield at the base case valuation is approximately 39% in naira terms, which is compelling on paper. The catch is that 28.5% of that is consumed by the cost of equity before you see a real return. The margin of safety is real but not enormous. At ₦15 or below, it would be difficult to make a bearish case on a five-year view. At ₦30 or above, the upside scenario would need to materialize in full to justify holding. Somewhere in between is where the honest answer lives.

Numbers first, narratives later.
-- ositadima1

crownprince2017:
Who is buying Access, what is T.A saying? Osita, aj8 make una help check the entry level.

The Bottom Line First
Let me save you some reading. Based on a Free Cash Flow to Equity model discounted at a naira cost of equity of 28.5%, the intrinsic value of Access Holdings common shares sits in a range of ₦18 to ₦24 per share in the base case, with a downside scenario of ₦12–15 and an upside of ₦32–42 if management executes the recapitalization well and Nigeria's macro stabilizes.

What Access Holdings Actually Is
Before touching a single number, it helps to be precise about the business. Access Holdings Plc is a Nigerian financial holding company listed on the Nigerian Exchange Group. Its main engine is Access Bank Plc, one of the largest banks in Africa by total assets, which now sits at ₦52.2 trillion as of September 2025. The Group also runs Hydrogen Payment Services, AccessARM Pensions, Access Insurance Brokers, and Oxygen X Finance. In practice, virtually all the earnings come from the bank. The holding company itself generated profit before tax of ₦141.7 billion for the nine months, essentially all of it dividends and management fees from its subsidiaries.

The bank makes money the old-fashioned way: it takes deposits at one rate, lends and invests at a higher rate, and keeps the spread. Interest income calculated using the effective interest rate came in at ₦2,744,815 million for the nine months to September 2025, and interest income on financial assets at fair value through profit or loss added another ₦159,405 million, giving total interest income of ₦2,904,220 million. Against that, interest expense was ₦1,646,281 million, producing net interest income of ₦1,257,940 million. That net interest income line grew 49% year-on-year, which is the headline number that makes this bank look interesting right now. Fee and commission income added ₦600,404 million on the gross line, offset by fee expenses of ₦124,486 million, leaving net fee and commission income of ₦475,919 million — up 44% year-on-year. That combination of NII and fee growth is genuinely strong underlying performance.
The problem is what sits below those lines. Net impairment charges came in at ₦349,985 million for the nine months, up 141% from ₦144,949 million in the same period last year. That surge in provisioning ate heavily into the pre-provision profit. Fair value and foreign exchange gains collapsed to ₦255,400 million from ₦548,376 million the prior year, a drop of 53.5%, because the massive naira devaluation tailwinds of 2023–2024 have largely passed. Profit before tax came in at ₦616,248 million, up just 10.4% despite the strong revenue growth, because the combination of higher impairments and lower FX gains absorbed most of the income gains. After tax of ₦168,700 million, the effective rate of which works out to 27.4%, profit for the period was ₦447,548 million. Profit attributable to equity holders of the parent was ₦426,702 million.

Cleaning the Numbers
Raw reported profit is not the right starting point for a valuation. Two major distortions need to be addressed before we can talk about earnings power.

First, fair value and FX gains are volatile and partly non-recurring. The nine-month figure of ₦255,400 million in 2025 compares to ₦548,376 million in 2024. Neither number is a reliable guide to the future. The 2024 figure was inflated by the naira devaluation cycle; the 2025 figure is more normalized but still includes mark-to-market movements that can swing sharply. I normalize this line to ₦150,000 million annually, which represents roughly 5% of gross earnings and reflects a reasonable mid-cycle contribution from a bank with active treasury and derivatives operations.

Second, the impairment charge. The ₦349,985 million figure for nine months, annualized to roughly ₦467 billion, reflects an acceleration that is partly cyclical as the loan book reprices following the 2023 naira depreciation and partly structural as the loan book grew 30% year-on-year. Loans and advances to customers stood at ₦12,894,263 million at September 2025, up from ₦8,037,723 million at December 2023. Fast loan growth with a two-year seasoning lag means 2025–2026 impairments are elevated by design. I normalize impairments to ₦280,000 million for a nine-month period, representing a mid-cycle credit cost of roughly 2.5% of average loans, which is consistent with Nigerian bank history outside of crisis years.

With those two adjustments applied — reducing FX/fair value gains to ₦112,500 million for nine months and reducing impairment charges to ₦280,000 million — normalized pre-tax income comes to approximately ₦525,000 million for the nine months, or roughly ₦700,000 million annualized. At a 28% normalized effective tax rate, normalized net income runs at approximately ₦504,000 million per year. I will use ₦490,000 million as my working normalized net income figure, applying a small additional haircut for conservatism.
For a bank, the analog to EBIT is Pre-Provision Operating Income, which strips out impairments to show the underlying earnings power of the franchise before credit cycle noise. PPOI for nine months 2025 calculates as net interest income of ₦1,257,940 million plus net fee and commission income of ₦475,919 million plus normalized other income of ₦150,000 million minus personnel expenses of ₦358,563 million minus depreciation and amortization of ₦91,320 million minus other operating expenses of ₦714,197 million, giving ₦719,779 million for nine months or approximately ₦960,000 million annualized. That is a genuinely strong franchise-level earnings number.

Capital Productivity: Is This Bank Creating or Destroying Value?
The central question in any bank valuation is whether return on equity exceeds the cost of equity. If it does, growth creates value. If it does not, growth destroys value and shareholders would be better served by a high payout policy.
Access Holdings' total equity attributable to the parent at September 2025 was ₦3,725,478 million. The opening equity at January 2025 was ₦3,544,295 million. Using the opening equity as the denominator, annualized profit attributable to equity holders of approximately ₦568,936 million (scaling the nine-month figure of ₦426,702 million) produces a return on equity of 568,936 divided by 3,544,295, which equals 16.1%. On normalized earnings of ₦490,000 million, the normalized ROE sits at roughly 490,000 / 3,544,295 = 13.8%.
The five-year trajectory of ROE tells an important story. In 2020 profit attributable to equity holders was ₦104,683 million against an approximate average equity of ₦680,000 million, implying ROE of around 15.4%. In 2021 it was ₦158,208 million against roughly ₦900,000 million, for 17.6%. In 2022 it fell to ₦153,790 million against about ₦1,140,000 million for 13.5%, as the post-merger integration of Diamond Bank's legacy assets weighed on returns. In 2023 reported ROE spiked to roughly 35.9% on reported profit of ₦612,492 million, but that is entirely explained by the massive foreign exchange translation gains from naira devaluation — stripping those out, underlying ROE was closer to 14–15%. In 2024 reported ROE was approximately 21.5% on profit of ₦618,637 million, again boosted by FX. Normalizing for these distortions, the underlying ROE has been relatively stable at 13–16% throughout the five years. It is not a high-return franchise but it is a consistent one, and at this scale that consistency is worth something.

Reinvestment and the Capital Trap
Here is where the story gets complicated and where I think most retail analysts miss the key issue with Access Holdings.
The bank's total assets grew from ₦41,498,015 million at December 2024 to ₦52,195,257 million at September 2025, an increase of ₦10,697,242 million or 25.8% in just nine months. Loans and advances to customers grew from ₦11,487,710 million to ₦12,894,263 million, a ₦1,406,553 million increase, and deposits from customers exploded from ₦22,524,925 million to ₦33,101,559 million, an increase of ₦10,576,634 million. The bank is taking in deposits at an extraordinary rate and deploying them into investment securities (up from ₦11,343,195 million to ₦15,250,810 million) and loans.

The problem is that this asset growth requires equity capital to support it under CBN capital adequacy requirements. If the bank maintains an equity-to-assets ratio of approximately 7.6% (which is where it currently sits: 3,979,472 / 52,195,257 = 7.6%), then ₦10,697 billion of asset growth requires ₦10,697 billion × 7.6% = approximately ₦813,000 million of new equity per year. But the bank is only retaining approximately ₦217,000 million in equity after dividends and AT1 coupon payments (calculated as: profit for the period of ₦447,548 million minus dividends of ₦101,809 million minus AT1 coupon of ₦107,628 million = ₦238,111 million, less NCI share). The gap between equity needed and equity generated is large. This is why the company periodically needs to raise capital and why the CBN's new minimum capital requirements of ₦500 billion for international commercial banks are a live issue.

For the sustainable growth rate calculation, I use the retention ratio multiplied by ROE. After paying the ordinary dividend of ₦101,809 million and the AT1 coupon of ₦107,628 million against profit attributable to equity holders of ₦426,702 million, retained profit is ₦217,265 million, giving a retention ratio of 217,265 / 426,702 = 50.9%, which I round to 51%. Applying that to the normalized ROE of 15% gives a sustainable nominal growth rate of 51% × 15% = 7.65%. In naira nominal terms this is well below the 25% balance sheet growth actually being pursued, which confirms that the bank is growing beyond what internal capital generation can support and will need external equity periodically.

TRANSCORP PLC

Transcorp is basically a power company wearing a conglomerate's suit. 87% of revenue comes from electricity generation, the Transcorp Hilton and hotel portfolio make up most of the rest. Simple business, exceptional economics. The 9-month numbers to September 2025 don't lie ₦413 billion in revenue up 39% year on year, operating margin of 33%, net profit of ₦91 billion. These are world-class margins for any business, let alone a Nigerian one.

ROIC is sitting at ~35% against a WACC of around 23% in the upside scenario. That 12-point spread means every naira reinvested is creating real value on top of its cost. You don't get numbers like that without a genuine moat.

Free cash flow looks terrible because NBET, the government electricity buyer, owes Transcorp ₦477 billion in unpaid bills. That number went from ₦321 billion to ₦477 billion in just six months. The profit is real, the electricity was generated and delivered, the cash is just stuck in a government IOU. That's the entire bear case in one sentence.

Run the DCF with NBET collections gradually improving and the naira holding steady and you get an intrinsic value of ₦58 to ₦72 per share. At the current price of ₦52.90 you are still buying below fair value on a business trading at under 6x earnings with 35% ROIC and a dominant position in a country with chronic power shortages.

The risks are real, NBET default on those receivables, another naira devaluation, or a government tariff freeze would all hurt. But those risks are largely why it trades this cheap. World-class business, temporarily broken cash conversion, priced like it's in trouble. If Nigeria's reform momentum holds, the margin of safety is still very much there at ₦52.90. Do your own research.

Numbers first, narratives later.
-- ositadima1

ositadima1:
CWG appears to have already priced in much of the upside; my fair value range is ₦16–₦33. PZ is the better bet based on its six-month results and forward projections, with a fair value range of ₦61–₦115.

ositadima1:
Custodian’s 2025 results look strong, but it wasn’t a normal growth year. Total assets expanded sharply from about ₦407bn to over ₦1.0tn, mainly due to acquisitions and a big increase in investments. Although these acquisitions were funded internally, they also brought in large existing assets and liabilities, which significantly inflated the balance sheet.

Profit after tax rose to about ₦67bn, with EPS of 1,119 kobo. However, earnings were heavily supported by investment income and market-related gains of over ₦110bn, compared to an insurance service result of roughly ₦12bn. This shows profits were more investment-driven than underwriting-driven.

Operating cash flow of about ₦478bn looks very strong, but roughly ₦410bn of this came from a sharp rise in trade payables, meaning cash was boosted mainly by delayed payments rather than permanently higher earnings.

Given the mixed quality of earnings and higher sensitivity to markets, I think a reasonable valuation range is a P/E of about 5x–7x, not a high insurance multiple. Applying this to the EPS of ₦11.19 gives a fair value range of roughly ₦56 to ₦78 per share (aj8 style ). Until earnings stability is proven through a weaker market cycle, 2025 should not be treated as a clean baseline year.

Numbers first, narratives later.
-- ositadima1

CWG, PZ, Custodian as predicted. Custodian should try and get to 80 let me check something.

currentprice:
Bro. over the last 2 years, almost every stock has been a winner. With so much money flowing into the market, you could pick almost any stock and make 200–300% returns , making all of us feel like market gurus

we are waiting for the 2025 year-end audited results to get a clearer picture of what next. But based on Q3 performance, these 3 stocks look very promising on the bedsheed and could do wonders going forward

Aradel , Transcorp and Dangote sugar.

u might ask why the DS but let wait and see how things be going forward. before then, take a look at the enterprise value "^{valuation of the whole bussiness}" instead of the usual metrics you’re familiar with. dt could give you a better idea of what am seeing..

Let me focus strictly on Dangote Sugar, because once you strip away market momentum, the numbers tell a much more constrained story.

Starting with operating performance. In Q3-2025, Dangote Sugar generated about ₦43bn in operating profit (EBIT), while finance costs were roughly ₦30bn in the same quarter. That immediately tells you something important: about 70% of operating earnings was absorbed by interest expense. So even before talking about growth or valuation, the business is operating under heavy financial pressure.

If you annualise Q3 operating performance conservatively, EBIT comes to roughly ₦170bn. Applying a normal Nigerian corporate tax rate of 30%, normalized after-tax operating profit (NOPAT) is approximately ₦119bn. That is the sustainable earning power of the operations before reinvestment and financing effects.

Now look at what those earnings are generated on. As of September 2025, total assets stood at about ₦1.02 trillion, with cash of roughly ₦80bn. Removing cash gives operating assets of approximately ₦936bn. When you divide normalized NOPAT by invested capital, you get an operating return:

₦119bn ÷ ₦936bn ≈ 12.7% ROIC

That number matters only when you compare it to the cost of capital.

To estimate the cost of capital, start with equity. Nigeria’s long-term risk-free rate is around 15%. Add an equity risk premium of about 10%, and apply a beta of roughly 1.1 for a leveraged consumer industrial business. That gives a cost of equity of:

15% + (1.1 × 10%) ≈ 26%

Now look at debt. Based on reported finance costs and outstanding borrowings, Dangote Sugar’s pre-tax cost of debt is roughly 18–20%. After the tax shield, that comes down to about 13%.

Given the company’s capital structure, roughly 70% debt and 30% equity in economic terms, the weighted average cost of capital works out to:

(30% × 26%) + (70% × 13%) ≈ 17% WACC

This comparison is critical. Dangote Sugar’s ROIC of ~12–13% is below its WACC of ~17%. That means, on a purely economic basis, the business is not currently creating value with growth. At best, it is treading water.

Growth also requires reinvestment. Even assuming a modest 4% long-term growth rate, and using the current ROIC level, the reinvestment requirement is:

Reinvestment rate ≈ g ÷ ROIC
≈ 4% ÷ 12.7% ≈ 31%

Applied to NOPAT, that means Dangote Sugar must reinvest roughly ₦37bn every year just to sustain low-single-digit growth. That reinvestment comes before any free cash is available to capital providers.

After reinvestment, free cash flow to the firm is approximately:

₦119bn − ₦37bn ≈ ₦82bn

That is enterprise-level cash flow, before debt service. And this is where the balance sheet becomes decisive.

Financial liabilities are still above ₦736bn, while cash is under ₦80bn, leaving net debt of roughly ₦650bn. With this level of leverage, a significant portion of enterprise cash flow is structurally redirected to lenders. The Q3 interest burden already demonstrates this reality in practice.

Cash flow confirms the picture. Despite reporting profits, operating cash flow remains weak and at times negative, meaning the business is still not self-funding. It continues to rely on refinancing, short-term borrowing, and working-capital movements rather than internally generated surplus cash.

This is why enterprise value on its own can be misleading here. Yes, EV captures the whole business, but when ROIC is below WACC and leverage is high, enterprise value does not automatically translate into equity value creation. The economics are constrained by financing, not optics.

On backward integration, the financial statements are very clear. Biological assets are about ₦18–19bn, which is less than 2% of total assets, and that figure has not grown meaningfully year-on-year. Inventories, at around ₦130bn, are still dominated by imported raw sugar and refined stock. Gross margins remain around 19–20%, which suggests that local sourcing has not yet reduced FX exposure or input costs in a material way.

If backward integration were already working at scale, we would expect to see ROIC rising, margins expanding, or operating cash flow improving. None of those shifts are visible yet in the numbers. For now, backward integration remains a long-term strategic promise, not a current economic driver.

So when Dangote Sugar is highlighted based on Q3 performance or enterprise value, I think the math needs to be acknowledged. The business is operating with ROIC below WACC, heavy reinvestment needs, and a leveraged balance sheet. Any upside case is therefore macro-dependent, on lower interest rates, FX stability, and time, rather than already embedded in the operating fundamentals.

That distinction is important if we’re being honest about what the numbers are actually saying.

Numbers first, narratives later.
-- ositadima1

Pennystockwarri:
https://open.spotify.com/episode/5a8OpockhzcokdjPtn5OCp

A walkthrough Custodian investment interim FY 2025 earnings

A Few Thoughts on the Custodian FY25 Commentary

Thanks for sharing the Custodian FY25 walkthrough. The numbers are helpful, but I think some of the conclusions drawn from them deserve a closer look. Pulling figures from the accounts is useful, but interpretation is where the real value of analysis should come in.

The main point that stood out to me was the suggestion that Custodian may have borrowed money to fund the sharp increase in assets and investments. When you look at the actual balance sheet, that conclusion doesn’t seem to hold. Interest-bearing borrowings actually declined year-on-year, falling from roughly ₦3.4bn to under ₦1bn. So the balance-sheet expansion was clearly not debt-driven.

The jump in payables is real and significant, but payables are not the same thing as borrowing. In a group like Custodian, payables typically relate to reinsurance premiums, claims settlements, investment settlement timing and acquisition-related obligations. These are operating liabilities, not financing liabilities. They can temporarily inflate cash and financial assets, but they do not represent leverage in the traditional sense.

On the asset side, the move from about ₦407bn to over ₦1tn looks dramatic, but the story is actually visible in the accounts. Custodian consolidated acquired businesses, expanded its financial asset base significantly, and carried large timing balances from unpaid obligations. Assets and liabilities grew together, while equity increased by about ₦78bn, largely from retained earnings and some valuation reserves. That points to scale expansion, not unexplained balance-sheet risk.

The jump in quoted equity investments is also worth questioning, but it should be framed carefully. There are several plausible explanations here, consolidation of subsidiary portfolios, IFRS reclassification, or portfolio reallocation, none of which automatically imply aggressive or hidden risk-taking. It’s fair to ask for clarity, but it’s a stretch to imply borrowing without evidence.

On valuation, I also think the argument needs tighter logic. Highlighting a ~30% ROE and a low P/E, while at the same time suggesting fair value should be at or below book, creates a disconnect unless the case is explicitly that earnings quality is unsustainable. That point wasn’t fully developed, even though it’s probably the most important debate around this stock.

Overall, the numbers raised are valid, but the interpretation around leverage and funding could be stronger. Most investors can read financial statements; what differentiates good analysis is correctly classifying what the numbers actually represent and tying that back to risk and valuation in a consistent way.

deathwing:
Thoughts on CUSTODIAN as a longterm investment?

Custodian’s 2025 results look strong, but it wasn’t a normal growth year. Total assets expanded sharply from about ₦407bn to over ₦1.0tn, mainly due to acquisitions and a big increase in investments. Although these acquisitions were funded internally, they also brought in large existing assets and liabilities, which significantly inflated the balance sheet.

Profit after tax rose to about ₦67bn, with EPS of 1,119 kobo. However, earnings were heavily supported by investment income and market-related gains of over ₦110bn, compared to an insurance service result of roughly ₦12bn. This shows profits were more investment-driven than underwriting-driven.

Operating cash flow of about ₦478bn looks very strong, but roughly ₦410bn of this came from a sharp rise in trade payables, meaning cash was boosted mainly by delayed payments rather than permanently higher earnings.

Given the mixed quality of earnings and higher sensitivity to markets, I think a reasonable valuation range is a P/E of about 5x–7x, not a high insurance multiple. Applying this to the EPS of ₦11.19 gives a fair value range of roughly ₦56 to ₦78 per share (aj8 style ). Until earnings stability is proven through a weaker market cycle, 2025 should not be treated as a clean baseline year.

Numbers first, narratives later.
-- ositadima1

KarlTom:

Ellah Lakes isn’t exactly failing, but it’s also not really operating at scale yet. Most of what’s on the balance sheet is still tied to development, not steady cash flow. The company is spending more cash than it’s earning, and unless costs are cut sharply and one part of the business starts generating real income soon, more funding or dilution looks likely.

Anyone looking at it as a short-term earnings or quick turnaround story may want to go through the numbers again.

Numbers first, narratives later.
-- ositadima1

GeeKudi:
With an EPS of N30 (debate this for as long as you wish ), I see OANDO rising to N100 in the shortest term.

One way or another, the share price must move up. If the company intends to restructure, the price has to rise first; otherwise, existing shareholders would be severely diluted. If crude prices increase in the international market, the share price would likely rise as well. I don’t see a realistic scenario in which the price fails to move higher if management is serious about executing a turnaround.

That said, it’s important to be honest and not mislead investors. An EPS of ₦30 does not mean the underlying business is performing well, over 80% of that EPS is derived from non-core sources. I would not use that figure as the basis for any valuation.

I maybe very wrong ooo, i made a lot assumptions.

pluto09:
Shouldn't the exchange of share for debt lead to improvement in equity.
Why should this result in extra burden for shareholders with a worsening negative equity position?

Total shares were about 12 billion. Following agreements with a major shareholder, roughly 4 billion shares were returned to the company, likely in exchange for outstanding debt owed to Oando at the group level. My understanding is that the arrangement involved surrendering an equivalent equity stake to settle debts that were already considered impaired.

Under this structure, those shares are being redistributed to minority shareholders in stages, effectively converting the debt into equity. Until all of these shares are fully reissued, EPS is calculated based on the active shares in circulation, not the total issued share capital.

Does this make sense? It’s giving me a headache too. lol

iskalamong:
Please see the message below:



Cheers!

Iskalamong!

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pluto09:
You mean the company paid 325b for 4.29b of its own shares?

You’re correct, I understand what likely happened. The treasury shares arising from the OODP arrangement are still debited at their value in the equity section.

So it appears that all the tranches investors are celebrating aren’t exactly free after all. LOL

pluto09:
eps was calculated using 8.152b instead of 12b.
Any idea how they arrived at this?
What is their output of crude oil (boe) now?

Remember the agreement between Oando and Ocean and Oil Development Partners (OODP). As part of that arrangement, OODP returned roughly 4 billion shares in exchange for outstanding debt. Those shares are now being re-circulated to minority shareholders in tranches. As a result, based on the number of shares that have so far been redistributed, only about 8 billion shares are currently active, while the remainder are held as treasury shares and therefore excluded from the EPS calculation until they are subsequently reissued.

Regarding production, output appears to be in the range of 30,000–40,000 barrels of oil equivalent per day (boe/d) based on publicly available information.

emmanuelewumi:
That will create additional 60 billion shares if N3 Trillion debt is converted to equity

Streetinvestor2:
It is well as I read results here.Some come with style to market the stocks in thr portfolio.They are next best thing even when its price is already on the top based present FA.
Then they make the others look so bad even when decisions has been in process to address this existing wahala.
Make una dey fear God.

The main issue I always have with a company in distress .Is the company crawling out or digging deeper into the well. It is the case of some companies on ngx.
If the company in distress is digging deeper into the problem then run,if that is not the case otherwise all u need is patience if you are not here for quick money.

That is likely why they are not restructuring yet. At some point, they may attempt to drive the share price to the ₦250–₦500 range, at which stage a restructuring involving the issuance of 6–9 billion new shares would be more palatable. Others have done this before, and it is reasonable to assume they could find a way to execute a similar strategy.

In the meantime, management can work on reducing operating expenses, revaluing assets to alleviate negative equity and improve balance-sheet optics, and positioning the company more attractively.

If they are fortunate enough to benefit from a sustained rise in international crude prices, excess cash flows could be used to gradually deleverage.

There maybe several paths available if management is genuinely committed to improving the company’s fundamentals.

emmanuelewumi:
I will write about the negative vibes others can write about the positive vibes of Oando


Shareholders fund is negative N553 billion

Debt is N3 Trillion

Finance cost is N59 billion

Working Capital is negative N3.2 Trillion

Net operating cash flow is negative N147 billion

Free Cash Flow is negative N259 billion.

A quick look at Oando PLC’s FY2025 results. The company reported profit of approximately ₦241 billion, only about ₦50 billion, roughly 20%, was attributable to core operating activities. The bulk of earnings came from non-operational sources such as impairment reversals, finance income, and FX or tax-related adjustments, all of which are volatile and mostly non-recurring.

Meanwhile, cash interest paid during the year exceeded ₦200 billion. Group equity closed the year at roughly –₦554 billion; on a purely mechanical basis, this would likely have flipped positive but for the approximately ₦325 billion charge related to treasury shares, while the precise economic nature of this transaction, whether a conventional cash buyback or a restructuring-driven capital adjustment, remains unclear.

To maintain a clean balance sheet, one option is to increase operating profit by more than fourfold, or alternatively to restructure the capital structure by converting debt into equity. The first is difficult but potentially achievable if the company can significantly reduce operating expenses. The second is easier to execute and could benefit investors over the long term, as an annual interest burden of around ₦200 billion is substantial to sustain.

pluto09:
Oga, which valuation method did you use to arrive at N70 fair price for CWG?

CWG appears to have already priced in much of the upside; my fair value range is ₦16–₦33. PZ is the better bet based on its six-month results and forward projections, with a fair value range of ₦61–₦115.

leo1234:
Everyone is right in a bull market.

Maybe. But at least I have tools to back my views. These days, I focus on the structural edge of the market. I no longer make predictions; I state my position based on structure.

Dividends are strong drivers in the Nigerian market, so prices often adjust accordingly. It’s not about what I personally use, if you look closely, you’ll see that dividend yields rarely exceed 12%. When one or two stocks trade well above that level and their fundamentals are sound, that’s a structural observation, not a prediction.

I don’t do predictions. I’ll leave that to those here who believe they have a crystal ball.

I told you guys that GTCO is a ₦112 stock based on my dividend model.

In other news, Cadbury added another 7%, pushing my JiJo to 20.9%.

Can we get it to 30%? I might need to set up a poll 😄

ositadima1:
According to my dividend discount valuation, GTCO should be at a minimum of ₦112. Just wait for the emotional sellers to push it down a bit, then enter. As long as they can maintain this ₦8 dividend—hopefully even increase it next year—the outlook remains strong.

ositadima1:
My own JIJO dey for Cadbury. Since I enter, e don do only 2.94%. As things be, after broker fees nothing remain o. E be like say na chicken I go buy this December.

So Cadbury follow the 10% crew today? No wahala, we dey do 12% plus.