₦airaland Forum

Adinije:
Gimme excel formula biko

Two calculations, and they are the same; I just used 1% in one and 8.7 in the other. If you look at the results, you'll understand why . With another 100,000 units, your BE will be around 12.4, while with the previous 1.6 million units, your BE will be around 11.5. Play around with it.

Download the excel sheet "Book3"

ojesymsym:
This one na for PhD students ma, I wanted the night class version which you and one other chap have provided.

Thanks a lot

Dey play

Adinije:
Both your formula and his formula got me the same answer but 17k shares cannot breakeven.

My dear, you will need a lot more units to come close; you will need about 1.6 million units to average down to 11.5 . Check your calculations or use Excel.

Adinije:
I tried this calculation but it didn't put the stock on green.

Get this book and see if you can find something valuable in it (2024 edition). I just got a copy; let's see if I can find the time to look at it.

Adinije:
I tried this calculation but it didn't put the stock on green.

Given:
ANS = Additional Number of Shares needed to break even
CNS = Current Number of Shares
OP = Old Share Price (your initial purchase price)
CP = Current Share Price

Formula:
ANS = CNS × [OP − CP × (1 + 1%)] / [CP × 1%]

This formula calculates the additional number of shares you need to buy to get as close to break-even as possible.

Note ; The percentage (1% in this case in the numerator and denominator) used to adjust the current price can be varied. A smaller percentage will get you closer to the current price, but keep in mind that achieving the exact break-even point would theoretically require an infinite number of additional shares due to diminishing returns as you get closer to the break-even point.

This is not advanced mathematics; it is just simple algebra. Try it out and let me know if it works for you. To confirm if you are correct, add your total previous investment (Current Number of Shares times Old Share Price) to the new calculated Additional Number of Shares needed to break even times the Current Share Price. Then, divide by the sum of the Additional Number of Shares needed to break even and the Current Number of Shares to get your BE. Bear in mind that I didn't add charges to avoid overcomplicating the formula with too many terms.

I hope you still remember BODMAS

Streetinvestor2:
Your move is much in order. I did it with con oil and JB.The only difference I sold them with good profits and moved it to my betnaija stock. I still have good BE with sugar

Same thing with UCAP. My BE is around 2.6, so I am very comfortable when it dips like today. In fact, with this interim dividend, I will be getting more than I initially invested. It is like free money. But with DS, chai, I entered and kept adding to it, bringing up my BE. I saw the signs and should have left earlier. People like CP left near the peak and even bought a car for his wife from the proceeds. but it is well.

Streetinvestor2:
I will be happy to see it too at that price. I have not finished buying it for my next generation. They have a product that is always in demand or don't even meet local demand

Like I mentioned in the analysis, the company has a good product and market share, which is evident from the increasing revenue. However, they also have a significant problem. Look at how Buafoods is managing theirs. I don't like the fact that my money has been sitting idle for a year. I will return when I see value again; after all, DS sells in millions every day. Maybe I'll come back with double what I pulled out today when I feel more comfortable.

I don't know anything, so follow the "experts". I just try what I can.

Heishere:
it was an emotional investment in the first place. Normally I invest in stocks with at least >=10% dividend yield. I was averaging up on DS because of the merger. I still believe in the merger and will average down like Ogg advised...

Good luck.

Ginalex:
NS has already gone below his entry. DS is within his recommended entry region but the lower the better

I never knew CP pulled entry prices from a hat; I thought he used the FA, aka bedsheet. How do you expect the old entries to still hold in light of new information? It is well. If I tell you that if the merger lingers till year-end DS will touch 20, you will say I don't know what I am talking about. Watch that 46 closely; if it breaks through that before breaking through 30, then I know 20 is not happening. But if it gets to 30, then hmmmm.

By the way, I pulled out today with a small loss. I have invested since the middle of last year. I was in when it hit 80, and now this. Let me put the money somewhere else while I watch it. I will come back in later when I see improvements. If the merger happens while I am out, it's ok. You win some and you lose some. Let the money be generating some returns first. I wish the people on the bus luck. I will keep posting my analysis as I get more info.

Heishere:
Thanks for the comfort. So I should average down?

You want to commit more money to a company that has clear issues? This looks more like an emotional move to me. If I were you, even if I wanted to average down, I would wait to see positive financials or corporate disclosure. Even if a merger is planned, how do you merge a company that is carrying negative equity? It will surely significantly reduce the controlling ratios of DS (I maybe very wrong).

Anyway, Mcy56 said the loss has already been priced in. The experts have spoken, sha.

Based on the H1 financial statements for Dangote Sugar Refinery Plc, here's an analysis with insights, recommendations, projections, and an opinion on whether to hold, sell or buy:

Key Insights:

1. Revenue Growth: The company has shown strong revenue growth, with H1 2024 revenue of N295.6 billion, up 45.8% from N202.8 billion in H1 2023.

2. Profitability Concerns: Despite revenue growth, the company has swung to significant losses. Net loss for H1 2024 was N144 billion, compared to a loss of N28 billion in H1 2023.

3. High Finance Costs: The main driver of losses appears to be extremely high finance costs, which jumped to N234.2 billion in H1 2024 from N90.7 billion in H1 2023.

4. Negative Equity: As of June 30, 2024, the company has negative equity of N64.8 billion, indicating significant financial distress.

5. Liquidity Issues: While cash and cash equivalents remain substantial at N183.1 billion, current liabilities far exceed current assets, suggesting potential liquidity problems.

Recommendations:

1. Debt Restructuring: The company urgently needs to address its high finance costs. Management should consider restructuring its debt or exploring alternative financing options.

2. Cost Management: While revenue has grown, cost of sales has grown at a faster rate. The company should focus on improving operational efficiency and reducing costs.

3. Working Capital Management: There's a need to improve working capital management, particularly in terms of inventory and receivables.

4. Capital Injection: Given the negative equity position, the company may need to consider raising additional capital to strengthen its balance sheet.

5. Diversification: To reduce risk, the company could explore diversifying its product range or expanding into new markets.

Projections:

Given the current trajectory, without significant changes:

1. Revenue: Likely to continue growing, potentially reaching N500-550 billion for full year 2024.
2. Profitability: Losses may continue or even widen if finance costs aren't addressed.
3. Liquidity: May face increasing liquidity pressure, potentially leading to difficulty meeting short-term obligations.

Opinion on Hold/Sell/Buy:

Given the significant financial distress indicated by these results, my recommendation would be to SELL.

Rationale:
1. The company has swung to substantial losses.
2. Negative equity indicates severe financial distress.
3. High finance costs are eroding any operational gains.
4. There are potential liquidity issues on the horizon.

However, it's important to note that this recommendation comes with caveats:

1. The sugar industry in Nigeria has high barriers to entry and Dangote Sugar is a major player.
2. If the company can successfully restructure its debt and reduce finance costs, it could potentially turn around quickly.
3. The strong revenue growth suggests underlying demand for the company's products remains strong.

For existing shareholders, holding might be considered if they have a high risk tolerance and believe in the company's ability to turn around its financial situation. For potential new investors, it would be prudent to wait for signs of financial stabilization before considering a purchase.

As always, this analysis is based on the financial statements and general market knowledge. Investors should conduct their own due diligence and consider their individual financial situations and risk tolerance before making investment decisions.

Agbalowomeri:
Una go talk say na my mind corrupt pass for here😂

U did not see this abi?

yMcy56:
There's no shaft in Tony's stocks for now....
I think they'll still find a way to move it up......let the Dividend hunters commot finish first..
Make we dey watch dem sha........and keep eye on the price movement....

What is the meaning of this shaft, is it crankshaft in car or watin?

Ginalex:
I am😩. Although I had exited Dangsugar at 47. If not na wotowoto I for dey collect from both ends. Just waiting for the perfect reentry price for Sugar

Wotowoto from both ends, Chineke m.

Omooloriredade:
It's all there in the report. I couldn't get the formatting right but I hope you can make sense of the images attached at the summary.

The source - Shareholder loan -equity conversion

Image # What it was used for - Debt repayment ($342M is c. N512B)
Image #2

The effect - Zero borrowings and jump in Equity
Image #3

Reasonable enough for me as SEC is yet to approve the RI (Notes 17, pg 12).

It was approved by the SEC as stated in the corporate disclosure.

Now, regarding the equity conversion, this looks more like the RI (Rights Issue) took place(in advance ). I don't see why shareholders would lend 500 billion with nothing in exchange, especially when an RI is approved by the SEC.

Laso09:
If the money had come from the right issue ,that should have led to an increase in OS which is not the case.

I never said the money came from a rights issue. I asked a simple question: Was the rights issue cancelled?

Laso09:
Do you have an idea where that money came from?

Was the right issue cancelled? 😄 This would cause the outstanding shares to balloon to 188 billion units. Then, if buyers are looking at equity that would amount to 2.4 naira per share when distributed across the huge OS.

It seems they are also involved in currency speculation, as their cash flow statement shows a huge 200 billion from forward call/put options (whatever that means).

Despite good products and increasing revenue, their operations is a value destroyer.

emmaodet:
Bro, please did you upload the FY reports of zenith from 2020 to 2023 into Claudia to get this comprehensive report?
I am using Claudia now too but my report is not as comprehensive as yours

You need to be specific about what you want, including the calculations you need and how you want the results presented. Also, check its results as it can make mistakes.

Note that the post you quoted is not from the Claude. Python things.

Also, don't upload the files as that would use up your free quota. Instead, copy and paste the pages with the financials.

KarlTom:
This detailed breakdown is appreciated.🌹
It confirmed my initial submission that DS (as a lone entity) is not far off from BF...

I maintain that DF will outdo BF.

Bua Foods' revenue was 729 billion, while Dangote Sugar's was 440 billion and NASCON's was 80 billion. Given that rice was the third segment, would you expect 200 billion from rice alone? Note that Bua also has flour, which contributes to their pasta variety.

But... , this is not my main point; I was focusing on efficiency—using resources efficiently while keeping costs low. In 2023, Bua performed much better. If Dangote Sugar had operated with the same efficiency as Bua, it would have felt the forex impact much less (especially on share holders). As you have seen, I like to base my reasoning on numbers, even though I may not always get it right.

ositadima1:
Why was BUA Foods more efficient than Dangote Sugar in 2023? Dangote Sugar lost 170 billion in forex exchange, while BUA Foods lost only 80 billion. Based on rough calculations, if Dangote Sugar had been as efficient as BUA Foods (here I mean in terms of reduced cost of sales, DS would have had extra 100 billion or more), they would have ended the year with no losses or very minimal losses. Dangote Sugar should look to BUA Foods to learn from their playbook.

Consolidated Metrics Comparison (Dangote Sugar vs BUA Foods), 2023:

Return on Equity (ROE): -93.08% vs 42.78%
Return on Assets (ROA): -12.28% vs 10.47%
Net Profit Margin: -16.71% vs 15.37%
Current Ratio: 0.77 vs 0.91
Quick Ratio: 0.68 vs 0.76
FCFE (in '000 Naira): 94,498,754 vs 216,089,523

Now, let's consider scenarios without forex losses for both companies:

Dangote Sugar's forex loss: 148,328,367 ('000 Naira) (my previous 170 billion was wrong)
Adjusted Net Income: 74,568,059 ('000 Naira)

BUA Foods' forex loss: 81,864,676 ('000 Naira)
Adjusted Net Income: 193,962,173 ('000 Naira)

Adjusted Metrics (without forex losses) - Dangote Sugar vs BUA Foods:

Return on Equity (ROE): 94.10% vs 74.01%
Return on Assets (ROA): 12.41% vs 18.12%
Net Profit Margin: 16.89% vs 26.59%
Current Ratio: 0.77 vs 0.91 (unchanged)
Quick Ratio: 0.68 vs 0.76 (unchanged)
Adjusted FCFE (in '000 Naira): 242,827,121 vs 297,954,199

Analysis of Adjusted Scenarios:

1. Profitability: Without forex losses, both companies show strong profitability. Dangote Sugar's performance improves dramatically, with its ROE even surpassing BUA Foods'. BUA Foods maintains excellent profitability ratios, with a higher ROA and Net Profit Margin.

2. Liquidity: Liquidity ratios remain unchanged as they are not directly affected by the forex losses.

3. FCFE: Both companies show significantly improved FCFE without forex losses. Dangote Sugar's FCFE increases by about 157%, while BUA Foods' FCFE increases by about 38%.

Key Observations:

1. Forex losses had a substantial impact on both companies, but the effect was more pronounced for Dangote Sugar.

2. Without forex losses, both companies demonstrate strong profitability, with Dangote Sugar showing a remarkable turnaround.

3. BUA Foods maintains a higher ROA and Net Profit Margin even after adjustments, indicating potentially better operational efficiency.

4. Liquidity remains a concern for both companies, with ratios below 1, suggesting potential challenges in meeting short-term obligations.

5. The adjusted FCFE for both companies is significantly higher, indicating strong cash generation capabilities when forex impacts are removed.

6. BUA Foods still generates higher FCFE than Dangote Sugar in the adjusted scenario, but the gap narrows considerably.

Conclusion:
When forex losses are excluded, both Dangote Sugar and BUA Foods demonstrate strong financial performance. The adjusted figures reveal that both companies have solid underlying operations. BUA Foods still maintains an edge in terms of operational efficiency and cash generation. The forex losses highlight the significant impact of macroeconomic factors on these companies' financial results, emphasizing the need for robust forex risk management strategies.

Streetinvestor2:
The backward integration is the game changer for sugar.And alhaji said in the next 4 yrs they won't be importing raw sugar. The company will be fully home grown business. 14 billion in biological asset is huge..Sugar I bided at initial public offer for 10k units and was given only 3k plus unit then.Sugar follow for my retirement stock even as they no pay dividend for the first time last yr

I have pencilled down 7 stock as my retirement stock mostly because of dividend. As I rebalance my portfolio from loot from other stocks over the yrs I will be increasing them

Description of Biological Assets (Note 17 of 2023 Financial Reports)

Biological assets consist of growing cane, which is expected to be harvested as agricultural produce for sugar production. These assets have been measured at fair value less the cost to sell. As of December 31, 2023, the group has a total of 8,283 hectares of growing cane (2022: 8,092 hectares).

Yield Estimation and Sugar Production Potential

The yield of sugarcane varies significantly based on factors like soil quality, climate, and farming practices. We can make a rough estimate using the following assumptions:

Average yield: Approximately 60-100 tons of sugarcane per hectare per year
Given area: 8,283 hectares
Conservative estimate: 70 tons per hectare

This results in:

8,283 hectares times 70 tons/hectare = 579,810 tons of sugarcane per year

The amount of sugar produced from sugarcane also varies, but on average:

1 ton of sugarcane yields about 100-110 kg of sugar

From our estimated yield:

579,810 tons times 100 kg/ton = 57,981,000 kg or about 58,000 tons of sugar

Future Independence Projection

Achieving full independence in sugar production will take much more than four years. The Dangote Refinery has an installed capacity of 1.44 million tonnes per year, would require about 24 times its current (8,283 hectares) size.

Based on the balance sheet, the value of the biological assets increased from 6.9 billion to 14.4 billion while the land area increased from 8,092 hectares to 8,283 hectares. Acquiring an additional 191 hectares likely cost around 7.5 billion, indicating that acquiring sufficient land to meet the refinery's capacity would require approximately 7 trillion naira (or 336 billion, ok i am getting conflicting numbers and i am sleepy too ).

In conclusion, substantial investment and expansion are needed to achieve the desired production capacity.


Note that I used help of Claude to make this assumptions.

KarlTom:
Fact remains that BF will definitely be more effective. If we can get the data, we will discover that Bua Sugar was not as effective as a seperate unit.
At the bolded, there are a lot of factors:
1. Reduction in repetition and redundancy.
2. DS is implementing backward integration. This will reduce FX losses/dependance.
3. The cost of sales will definitely reduce mainly via wages and logistics.
4. etc

I am speaking from a FMCG perspective...

Technically, point 2 shouldn't be on the list. Merger or not, backward integration has been on DS's radar for a long time. I think it relates to the line item for biological assets, which are now worth approximately 14 billion.

The rest remains to be seen regarding how the merger alone will double current efficiency.

KarlTom:
You compared ONE part of DangoteFoods with all FIVE parts of BuaFoods.
The fact that the margin was not up to 1:3 says a lot...

May I also add that the unification of BUA made them MORE efficient. I expect same when DangoteFoods eventually floats.

If you look closely, my comparison is based on efficiency since they are both in the same space. From your perspective, DS has performed much worse, with only sugar having a bigger cost of sales compared to a whole conglomerate of products.

Though, DS is significantly larger than BUA's sugar sector.

Why do you think the merger alone will make it more efficient? They are still individual products made at different plants.

Look at my post again and see that the difference in efficiency is almost twice as much.

I am still betting on sugar despite the fact that the numbers are not looking great due to the huge forex losses.

According to BusinessDay, the price of sugar has more than doubled, so I expect the first half of the year (H1) to be positive; if not, that's it for me.

DS has been investing heavily in a line item called biological assets, which is now a whopping 14 billion. It better be what I'm thinking, as they need to be more reliant on local raw materials.

Let it not be that they are just valued based on being part of the Dangote ecosystem, like Transcorp Hotels is with Tony, because when it falls, there won't be anything to hold on to LOL.

https :// businessday. ng/agriculture/article/nigerias-average-sugar-price-hits-5-year-high/

Why was BUA Foods more efficient than Dangote Sugar in 2023? Dangote Sugar lost 170 billion in forex exchange, while BUA Foods lost only 80 billion. Based on rough calculations, if Dangote Sugar had been as efficient as BUA Foods (here I mean in terms of reduced cost of sales, DS would have had extra 100 billion or more), they would have ended the year with no losses or very minimal losses. Dangote Sugar should look to BUA Foods to learn from their playbook.

yMcy56:
....and where's the analysis? 🤔
You didn't see cross deals in my post?
Today na Friday, maybe you don dirty your eyes again....
Oya, insult me as you did the last time. 🤔

I understand that I might have hurt your feelings, and I apologize for that. Nonetheless, my point stands. Accumulation and buying are essentially the same thing. If someone is accumulating, then someone else is decumulating. This alone is not enough to decisively judge the market direction.

This same phenomenon occurred with Dangote Sugar and FBNH, among many others. But, today they are trading far below the prices at which those huge volumes were exchanged.

yMcy56:
Heavy accumulation/cross deals ongoing in TRANSPOWER in chains of 98k units.....
Over 20M units crossed so far......
Maybe they're ready to move it up again who knows....
30M.......

OANDO sighted @19.50 as at now.....

Anyone not yet in this OANDO bus, you better buy some units for keep.......if you like keep waiting for it at 7.07 or below or keep waiting for Peter's 9Naira, the day Peter will show you his screenshot of how he's well seated @18, una go shock....

I am not saying the price will not move up (moving down is also possible), but why is it that when you people see these sorts of exchanges, you call it buying? Is there nobody at the other end selling, or is it just "buying" when it appeals to you? In my understanding, buying pressure, aka demand, is when there are more buyers than sellers, and the price moves up. What if the person or persons selling the 30 million units didn't find this many buyers? What would happen to the price then? I think until you see demand lining up with little supply, that is when you can reasonably say we are in a buyer's market(or seller's market).

This analysis of yours looks like gambling. We only know that they are offering huge loads and these huge loads are being bought; we don't know why. As I said before, you can gamble and win. I wish you luck.

Streetinvestor2:
You dey mind the guy.How about other companies that declared forex gain.Does this equally apply to foreign banks with branches in nigeria. Why is the useless government trying to steal from shareholders who have made loses in other companies that declared loss because of the forex policy. The thieves you have as house members decided to add 20% of thr own since the executives want to collect 50%.
I can't wait for the protest to turn to revolution against this few criminals

Our lawmakers and their poor judgment are like two sides of the same coin. You claim that the forex gains by the banks are due to the unification of the currency market and, as such, the government should have a share as large as 70%.

What about the many companies that lost billions in the same event? Shouldn't the government partake in those losses as well? In a reasonable climate, Nigeria might get this money but will ultimately end up paying more.

Many companies lost a significant amount and need to be duly compensated by the government.

Let them start with dangotesugar joo.

@OGG, despite all the long grammar and jargs , I'm pleased to see that your post is becoming more consistent with mine. Monetary policy cannot solve the problem in isolation; it needs support from good fiscal policies

ositadima1:
I am not a fan of Emefiele, to be clear, but how can one defend the Naira when only in charge of monetary policies? If the other ministers responsible for managing fiscal policy were failing, how could the monetary side alone be expected to save the day? It is bad that Emefiele was singled out, but the other ministers who also failed alongside him are free.

Let's consider a company analogy: monetary policies are akin to financial management, while fiscal policies are similar to operational management.

Your comparison is not exact.

Hehe, what are the antifragile companies, please help o, I go pay sub once I make some money, I promise.

onegentleguy:
Some may assume the latest monetary policy decision by the apex bank to be a relaxation in policy direction, but that's not the case.
It seems the regulator still sees an aggressive rate expansion as a "bullet-proof" means to tame surrounding risk/inflation.
The minor 50bps/0.5% increase in MPR (compared to past average upward revisions) is the CBN trying to mask her aggressive hawkish stance when in fact, the adjustment on the asymmetric corridor suggest otherwise.

For context, a 400bps/4% increase in the SLF-side of the corridor from +100 to +500 and corresponding disproportionate review in the SDF-side from -300 to -100 clearly infers that the CBN believes in, and is continually looking or should we rather say-- HOPING that an upward adjustment in rates can cover up for the negative real return created by the heightened surrounding risk/inflation and Naira asset pricing.
The problem with this sought of "hope" is that the apex bank might be neglecting the actual impact these upward reviews have on funding cost and by extension, the real side of the economy which this so-called policy seeks to protect.

An asymmetric corridor of +500/-100 is the CBN effectively telling DMBs that we can afford to lend you money @ 31.75% but borrow from you @ 25.75% (ref: +5/-1% around the MPR)
That 200bps/2% margin skewed in favour of the SLF-side of the corridor (above the previous guide) clearly suggest that the bank may aside looking to speed-up liquidity sweep from the system, also attaches a higher risk premium to Naira asset pricing, hence the disproportionate margin btw the SLF and the SDF.

It looks like the Apex bank is "trying to fight a battle but also instigating one at the same time".
I dare say that the CBN can not win this "war". ...not with this approach! And especially NOT when the fiscal side is playing dumb!

Implication and inference:
-- More pressure on CoF.... likelihood of further increase in surrounding risk/inflation. Could be marginal MoM in Q3, but broader in Q4.

-- DMBs with pre-existing healthy loan book and whose operating business model is investment driven than loan-based will do well.

-- From the micro-end, investing in coys/businesses with a "hedged capital structure" can not be overemphasized. At this point, the need for capital preservation is just as important as the quest for it's growth.

-- Rates in the FII may remain elevated in the near term. Right now it's not just the banks that need your money, the CBN and in recent time the govt, also needs it!

-- Increased awareness and participation in investable securities as the quest to bridge the widening gap/disequilibrium btw purchasing power and surrounding risk widens. (one of the few reasons the equity market may not reprise downward... driven by select anti-fragile coys and supported by favourable asset pricing)

-- Select healthy equity names from sectors that are bound to benefit from the "dislocation" in macro-end will do well.

It is well

Simplifying

1. Central Bank's approach:
Simplified: The Central Bank's actions seem contradictory. They're trying to solve problems but might be creating new ones. Their strategy probably won't work, especially since the government (fiscal policies) isn't helping much.

2. Cost of Funds (CoF) and Inflation:
Simplified: Borrowing money will likely become more expensive. Prices might rise a little in the next 3 months, but could rise more quickly in the 3 months after that.

3. Banking sector implications:
Simplified: Banks that already have a good mix of loans and investments will do better than banks that rely mostly on making new loans.

4. Investment strategy:
Simplified: It's smart to invest in companies that have protection against economic ups and downs. Right now, keeping your money safe is just as important as trying to make it grow.

5. Fixed Income Instruments (FII):
Simplified: Interest rates for savings and bonds will probably stay high for a while. Banks, the Central Bank, and the government all need money, so they're willing to pay higher interest.

6. Equity market outlook:
Simplified: More people might start buying stocks to protect their money from losing value. This could keep the stock market from falling, especially for certain strong companies.

7. Sector-specific opportunities:
Simplified: Some healthy companies in industries that can do well during tough economic times will likely perform better than others.

8. Overall economic environment:
Simplified: The economy is facing big challenges, but this creates both risks and opportunities for investors.