₦airaland Forum

Cardinalstone on Dangote sugar;




Dangote Sugar (DANGSUGAR) FY’17 results out – Turnover rose by 20.4% YoY to N204.4 billion, behind our estimate of N220.0 billion (-7.1% deviation). After tax earnings grew by 176.4% YoY to N39.8 billion, ahead of our estimate of N37.5 billion (+6.2% deviation).

The company declared a final dividend of N1.25 which translates to a dividend yield of 5.73% based on the last close price. During the year, DANGSUGAR also paid N0.50 as interim dividend, bringing total dividend per share to N1.75.

Other highlights:
Q4 revenues recorded negative growth for the first time in three financial years, with declines of 6.7% QoQ and 24.0% YoY respectively to N41.4 billion. The upward price review which started in 2016 was critical in upholding revenue figures as volumes suffered during the quarter, largely impacted by logistics bottlenecks, notably with respect to the Apapa gridlock.

Q4’17 gross profit margin improved YoY to 23.0% (Q4’16- 7.3%) owing to decline in the cost of raw sugar during the quarter as well as improved FX liquidity compared to Q4’16. On a QoQ basis however, the gross margin figure reflected a contraction (Q3’17- 32.9%) as production costs climbed 7.1% despite the observed decline in revenues.

Operating profit margin in Q4’17 declined by 1051bps QoQ to 18.2%, impacted by both the contraction witnessed in gross margin and an increase in OPEX margin (Q4’17- 5.3%; Q3’17- 4.3%). However, operating profit margin expanded by 1430bps on a YoY basis, driven by the contraction in cost margins experienced in FY’17 (combined COGS and OPEX margin: Q4’17- 82.4%; Q4’16- 97.0%).

Net finance income leapt substantially by 805.8% QoQ and 1427.4% YoY to N5.3 billion in Q4’17, heavily impacted by foreign exchange gain of N3.9 billion and a write back of interest provision amounting to N203 million during the review period.

Owing to the above, together with a much lower effective tax rate of 7.7% (Q3’17- 32.9%), Dangote Sugar Plc reported a 40.8% QoQ increase in earnings to N13.3 billion. This also represents a 210.0% increase to the N4.3 billion reported in Q4’16.

RabbiDoracle:
Some things don't add up in the report. Is this FORTE OIL or FORTE POWER?

Let's look at the breakdown of the revenue and cost of sales .

For Power generation:
Revenue=N 36.613b
Cost of sales= N23.648b

Then gross profit= N12.965b

For Fuel, chemical, lube and grease(core business):
Revenue=N92.83b
Cost of sales= N81.679b

Then gross profit= N11.151b

From the P & L account,

Non- controlling interest =N8.458b (after tax deduction ooo)

And on notes 21, non- controlling interest means that for Geregu power plant, Bureau of Public Enterprise has 49% stake. For Amperion Power Distribution, BSG Resources Limited has 38% stake and Shanghai Municipal Electricity Power Company has 5% stake.

So in both cases Forte oil should have more than 50% stake in the operation of the power plant and the distribution company.

Now if the non-controlling interest is 8.458b after tax, this is 65% of the gross profit from power generation. Where is Forte oil's stake in the power generation?

If the bulk of the PAT goes to non-controlling interest, this shows that much of the profit is from power generation. How about the fuel, chemical,lube and grease?

Do we still need to call this company Oil? It should be POWER!!!

This is the oracle that I know, analytical!

Any company with complex shareholding structure is a no no for me.
Always very difficult to make a projection as to profit that will go to the shareholders.

As it is with FO, so also is Transcorp. I no fit do complex calculation.

BBFE:
To all of you quoting me, the post above lead to my subsequent posts.

And for the records, I might not know many things in this life, but managing my funds and investment management can never by any of them.

The aim of my post is that people have different investment appetite and invest accordingly. That an investment does not meet you style doesn't mean it is wrong.

Japaul is a badly managed company. The records are there for everybody to see.
Those who want to speculate can continue to buy and sell,but those who want to invest will do better to stay off for now.

robobo:
Overall however its beta than Access if u consider that PAT also grew albeit just by upper single digit unlike decline in all of ACCESS (PBT / PAT / OCI) and there is no OVERSIZE FX (derivative) income coming to the rescue (like ACCESS)

Although OCI fell as spotted by Oga Wanajo (im would only be concerned about this if this income line (i.e. OCI) is distributable which i doubt, as i think its largely accounting entries).

i doubt if UBA mm wld be as efficient as Access if it face similar avalanche on Monday.


N.B i hold both

wld take a closer look later in d day

UBA did well to separate OCI from their PAT last year.Ditto for this year also and that means OCI is not distributable. (OCI is not included in the calculation of EPS.)
They might have envisaged that that line of profit is not sustainable.
It is a better performance when compared with access.

We wait to see how market react to this going forward.

PETERiCHY:
I was expecting CP to tell us the fair price of Accessbank is now N4 but he kept mute bcuz he's trapped in the boat.

This life self

Ah ah, access is still selling below its fair value notwithstanding the below par performance of the bank in the latest result.

Jejebaba:
Whoever has Access bank should put it up for sale now by cutting his losses before it gets to 9 naira (Dr Agba projection). Dont mind the MM and Stanbic and co trying to defend the stock. Access bank needs to be punished for that paltry dividend of 40kobo.
Some of us are waiting to keep avergaing down from 10.65 to 9 naira.
Wealth must change hands.

I want to believe the current price is a reflection of the result.
Access has been known to be stingy with dividend payment and many investors have already factored that in.

yom2:
if u are long enough in this MKT .u ll know that major acquisition still remains best options for poorly run or moribund companies and 80% of the time it has worked out. let me take u back memory lane: ( 1)Benue cement company which metamorphosed to dangote cement (2) national salt company(3)ibtc acquired by the south African bank(4)interbrew (5)forteoil e.t.c. during dangotes acquisitions, a lot of people with bigotry and parochial interest kicked against it. now tell me what's d story today?

I don't think you really understand what is happening in japaul.
Nobody is saying you should not buy but at least you should have some knowledge of what and why you are buying .

robobo:
thats my fear going forward for nigerian banks after the extra ordinary FX gain and TBills income of last two years (which brings with it sustainability question)

same thing i.e FX gain (from derivatives) was pivotal for Zenith (yet to critically look at GTB) for 2017 and Zenith had stated as per conference call that they expect more from that line of income (which might have necessitated the current sell off).

if you understand derivative to be a very volatile and risky venture then u might start getting concern for Nigerian banks.

N.B I am heavy on the banks though seriously thinking of taking advantage of next bull to cut down cos of this concern except this concern is allayed before then

Can you shed more light on how banks make/loose money on derivatives.

rebekah2011:
Oga, I agree with you. Like or hate them they are spot on most of the time. I remember when Oga Wanajo sounded a note of caution on my darling UCAP. I was waxing lyrical saying it must perform than last year. Emotions. Oga RabbidOracle and others that most have termed prophets of doom are only doing the job of helping to balance our emotions. There are some stocks that will bring quick money but the reversal could be disastrous. At least we know that no matter what they say, the market has the final say.

You can't compare oracle posts with that of wanajo.
Warning people about taking positions in some stocks is not the problem and I can't remember the last time anyone throws stone at wanajo.
What oracle and mendes have been doing here lately is to say the least childish

Ogesab:
Please guys is flourmill a sell or hold now? I have received enough haircut. I don't want more. Thanks to my wigs. Bought between 30 and 30.50.

cc Agba, Oracle, wanajo, currentprice, fxuser et al. Help a sister o

Does anyone actually know

currentprice:
22 will be more juicy but i doubt it as well.

with zenith cp fairprice. picking some at currentprice is not going to be bad idea. i think i will pend my plan of reentering mkt next month at Q1 result to pick some zenith 2morrow

You fit lend me some money make I start to dey buy too.

currentprice:
if it is other company i will agree but i believe zenith will still top up this 2017 PAT in 208

My own thinking too.
I believe the big banks will find a way to top up their profit in 2018 while the smaller one will continue to struggle.
I had the same concern last year when the profit were boosted by fx gain and here we are they are still doing better.

Agbalowomeri:
What about 14?

May be some other time.
If oil price goes below N30

Agbalowomeri:
Next bus stop 22

I don't think it will go back to 22

fxuser:
Zenith breaks further below N29
U wud think they didn't declare dividend


#nawa

I beg,let it go further down o.
I have my eyes on the stock.
Don't want to miss the opportunity this time around .
Missed the last race from N22.00 just because of N0.20k.

Agbalowomeri:
This is no more probability o

Yes, it is

DeRuggedProf:
I always love FCMB'S MM....
The game never changes, year in year out.....
I rate them very high in this game of thrones.....
You will never know how WICKED they are until you refuse to correct your ways after multiple warnings...
They are so forgiving....

Lol

DeRuggedProf:
Very true, but which one?

It is all a game of probability,and that is why I spread my net wide .
If I bet on five and I am right in three, wrong in one and neutral in one,then I will be fine.

DeRuggedProf:
Fair price is not always fair....

Relativity of fair price, goes with market dynamics.

locodemy:
once we see results and take advantage of the results,why wait for April again.
If results are delayed till April,we go wait till April and get much cheaper than now.
Do you get the drift?

Nobody knows what will happen on the NSE in April.
How are you sure that you will get them cheaper in April.

Agbalowomeri:
We will get the bargain in April

I don't believe in timing.
Last year you said we would get the best bargain in December, I don't think that was the case.
Some stocks will definitely be cheaper now than they will be in April.

Agbalowomeri:
Not yet, we still have a minibull in May then over to elections

There seems to be no correlation between election year and NSE performance.
Think we have discussed this before.

rationalmind:
Agreed boss, not even buying anything.

Who else has noticed that the only thing preventing most stocks from going on full offer is the amount of offer available, the lower the offer, the faster the journey to full offer

This is the time to make more money.
Buy good stocks at a price significantly below fair value.

rationalmind:
Sterling bank seems to have a healthy dose of support around the 1.80 levels, I should be diving but I keep remembering fidelity at 3....lol

If you must buy anything now, it will be better if you buy ones with good numbers.

locodemy:
Oga fxuser.I hope you don secure your bald head against stone..

Don't think there will be any stone for fxuser.
His analysis are professional with every sense of maturity.

DeRuggedProf:
Cause he has seen it sell much higher in the past and believe the market must be wrong......

Hmnn nn

Mpeace:
Bought more diamonds today. Hope it falls more tomorrow so I can buy more. A day without diamond is a day wasted.

Why do you think diamond is a good buy at this point.?

mendes911:
Yes oooo.

Just like the people that bought Diamond and Fidelity weeks back. They are truly enjoying the 2nd round.

I don't chase stock and will not advise anyone to do so.
However , those who understand TA very well will not mind chasing a moving train.

Yes, those who did not understand the game bought fidelity and transcorp near the 52 week high. You must admit that some actually bought at N1 and N1.40k and sold at N2.80k and N2.20k respectively. They have chopped round 1 clean month and are now waiting for the 2nd round while some are still keeping their money under pillow waiting for the market to crash by fire by force.

mendes911:
At the appointed time, Flourmills will come and pick people up at their respective bus stops. It's like a train station that runs in a loop. It will always run away to pick up passengers. Sometimes, it may veer off the loop, return to an earlier bus stop and then continue.

Never ever chase a moving train. E dey break head!

By then, some will be going for 2nd round.

Mpeace:
Ok sir. I take that to mean that there is hope na.

Hope is not a strategy o

Mpeace:
Bros una no dey try for me oh. Try give me small hope naa. eg If I ask a question and the answer is negative, make you delay small in answering. You know all my stocks are high PB stocks make I no come carry stroke now. For your info, my stocks are: Diamond, Oando and FBNH so pls carry small small dey comment on those stocks.

Na real high BP stocks.
OYO

onegentleguy:
The best amongst the best from the man of ZENITH !! ...a fantastic all-touching result.

For even if I have to discount everything with the aim of playing on the side of caution, My Fair Price is now slightly above a 38% premium from todays closing price of N31. ...which is approx N43.
...and so ZENITH remains a BUY from my end.

However the MARKET thru his agent Mr TIME might have other plans.
But we now have our eyes on the man from ZENITH.

A very good result.
The bank might be the one with highest dividend yield this year in the banking sector.
A buy for me too.