₦airaland Forum

Is earnings growth of 30% certain for the next 5 years?

emmanuelewumi:
What will you say about Sahcol.

Current PE of Nahco is 16.3, if they pay 90% of earnings as dividends the dividend yield will be 5.5%, if they can continue with their earnings and dividends growth by 30% for the next 5 years that will be about 20% dividend yield based on the current stock price

Current dividend yield plus earning growth divided by current PE

(5.5 +30) divided by 16.3

35.5/16.3

That is 2.17. I look at a minimum of 2 but 2.5 and above is preferable




Formula was developed by Peter Lynch and uses a minimum of 1.5.


I use 2 and above because of a higher required return for Nigerian stocks

sterlingD:
Are you able to execute buy or sell at the available and desired prices using the information from other apps?

Yes, I can.

But, it has been fixed now. The bid, offer and trade info are back

Should be after 2 months of closure.

Pete002:
When is TIP going to allocate the right issue to their customers' trading account

emmanuelewumi:
Please carry out your due diligence

Yes I am doing it already,

If rumour of bonus share becomes true then everyone should hold tight on their NAHCO, it's worth it plus expected dividend.

Imagine 1 for 10 bonus shares plus dividend

awesomeJ:
By pushing NGXGROUP to N113, the average broker has gotten about N200m towards, their capitalization target.
If they push it to N200 they will get additional N500m each.

I like your analysis especially with forex

MeezPat:
Is earnings growth of 30% certain for the next 5 years?

I really wish I could short this stock

A lot of people de wait for this corporate action.

Ginalex:
Walahi me to dey wait that corporate action. I no know say I fit hold stock reach this long ahswear ... If anything, I dey use their good dividend dey convince myself not to sell. Plus, if I sell now, wetin I wan buy?

MeezPat:
Is earnings growth of 30% certain for the next 5 years?

The compounded annualized earning growth rate in the last 5 years is terrific at about 100%, I believe it will slow down to 30% going forward into the next 5 years, although management believe 35% is possible

nosa2:
I really wish I could short this stock

Someone sold in January 2023 at over N8.00 after making a profit of over N5 his purchase price of N2.50 within 2 years

Index now pushing 174k.
One thing I see is that even when my projections seem not to materialize, they only just delay by a bit 😁

With average number of deals now being at 50k, I thought my 1% participation must have significantly gone down.

But thanks to X-Alert restoration.

I am able to see that total deals for the session were 65,960 out of which I was responsible for
767 trades!!!

767 trades in a single day without using a super computer

At this point, even I do not understand how it's even possible 😁😁😁

This means there's a 1.2 % chance that every retail, institutional and foreign investor that traded in this market today either sold to me or bought from me, that's super awesome.

When I already traded about N30m within the first 30 minutes, I knew the day's numbers would be impressive.

Value for me was N40.45m compared to N27.915b for the broad market.
That too is a significant 0.1% to 1.d.p

I'm still shocked at the possibility of almost 800 trades in one day, thank God! 😁😁😁


Long term goal is 1% of the market!

emmaodet:
I like your analysis especially with forex

Thanks boss

emmanuelewumi:
Someone sold in January 2023 at over N8.00 after making a profit of over N5 his purchase price of N2.50 within 2 years

The situation in 2023 is very different from the situation in 2026. I would not have been bearish in 2023 but I am very bearish in 2026

nosa2:
The situation in 2023 is very different from the situation in 2026. I would not have been bearish in 2023 but I am very bearish in 2026

Maybe sha. Nahco is a stock that has always disappointed people who want a drastic pullback. If it pullback by 10%, it will rise by 20% within a short time yet they don't have a Market Marker

Please explain further..

awesomeJ:
By pushing NGXGROUP to N113, the average broker has gotten about N200m towards, their capitalization target.
If they push it to N200 they will get additional N500m each.

How so? And who is doing the pushing you allege?

awesomeJ:
By pushing NGXGROUP to N113, the average broker has gotten about N200m towards, their capitalization target.
If they push it to N200 they will get additional N500m each.

NAHCO is in a structurally favorable industry, but doesn't the company already pay like 90% of earnings as dividends?

ogawisdom:
Yes I am doing it already,

If rumour of bonus share becomes true then everyone should hold tight on their NAHCO, it's worth it plus expected dividend.

Imagine 1 for 10 bonus shares plus dividend

PropTrader:
The money is probably in the wallet. You need to move it first from the wallet to your naira trading account for it to be accessible for share purchase.

Good day, bro.

So I was able to move the funds in my wallet, after which I was able to place order for stock.

For almost 2 days, it is saying executing .

Is that alright, or something is still missing?


Please note that I'm new in this whole stock stuff.
Thanks and thanks again.

Excellent analysis applying relevant financial ratios and apt summation👍✅

ositadima1:
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

HesInMe:
How so? And who is doing the pushing you allege?

Your phone doesn't have Google?

Did you seriously expect an explanation with this kind of tone?

You lack information and you feel this tone will somehow magically help you get it?

Stockhunter:
Please explain further..

After the demutualization, every broker got about 6m units of NGXGROUP.

when SEC announced the new capitalization guidelines, the stock was around N78 or less.

Now at N113, that's a N35 gain per share, so every broker's holding has grown by 6m × N35 which is about N200m.


Some people would be quick to want to say how about those that have sold, just cos they're looking for what to fault?

Whether anyone has sold is not the point here, the point is that between the last recapitalizion and now, brokers have gotten NGXGROUP stock and the value of what they got has gone up by about N200m in the past month.


Yet they still have 16 months to meet up.

This is quite different

mikeapollo:
Kindly reconfirm: I am seeing Oando did +1.65% today on some other platforms, including Stock bubbles

https://open.spotify.com/episode/2KvcbgQ5ZMD0iXI3ecrV7C

A summary of today's trading session on the NGX

emmanuelewumi:
What will you say about Sahcol.

Current PE of Nahco is 16.3, if they pay 90% of earnings as dividends the dividend yield will be 5.5%, if they can continue with their earnings and dividends growth by 30% for the next 5 years that will be about 20% dividend yield based on the current stock price

Current dividend yield plus earning growth divided by current PE

(5.5 +30) divided by 16.3

35.5/16.3

That is 2.17. I look at a minimum of 2 but 2.5 and above is preferable




Formula was developed by Peter Lynch and uses a minimum of 1.5.


I use 2 and above because of a higher required return for Nigerian stocks

Interesting.
Just did a little check. It's Lynch variation of PEG ratio.
And it kinda makes sense for value companies.

Thanks for the insight.

chimex38:
Interesting.
Just did a little check. It's Lynch variation of PEG ratio.
And it kinda makes sense for value companies.

Thanks for the insight.

The most important thing is the ability to correctly forecast the sustainable compounded annualized earning growth rate for the next 3 to 5 years

ositadima1:
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

Great analysis and educative. My only problem is you don't like to apply it in some other stocks. Then you will remind us that different things move share price beside fundamentals..lol
In those stocks u remember how demand and supply with probability is the major factor

i think that ASI has entered a critical stage at 173k

awesomeJ:
Index now pushing 174k.
One thing I see is that even when my projections seem not to materialize, they only just delay by a bit 😁

With average number of deals now being at 50k, I thought my 1% participation must have significantly gone down.

But thanks to X-Alert restoration.

I am able to see that total deals for the session were 65,960 out of which I was responsible for
767 trades!!!

767 trades in a single day without using a super computer

At this point, even I do not understand how it's even possible 😁😁😁

This means there's a 1.2 % chance that every retail, institutional and foreign investor that traded in this market today either sold to me or bought from me, that's super awesome.

When I already traded about N30m within the first 30 minutes, I knew the day's numbers would be impressive.

Value for me was N40.45m compared to N27.915b for the broad market.
That too is a significant 0.1% to 1.d.p

I'm still shocked at the possibility of almost 800 trades in one day, thank God! 😁😁😁


Long term goal is 1% of the market!

Drop update now Boss. We will like to learn from you.

awesomeJ:
After the demutualization, every broker got about 6m units of NGXGROUP.

when SEC announced the new capitalization guidelines, the stock was around N78 or less.

Now at N113, that's a N35 gain per share, so every broker's holding has grown by 6m × N35 which is about N200m.


Some people would be quick to want to say how about those that have sold, just cos they're looking for what to fault?

Whether anyone has sold is not the point here, the point is that between the last recapitalizion and now, brokers have gotten NGXGROUP stock and the value of what they got has gone up by about N200m in the past month.


Yet they still have 16 months to meet up.

Interesting..
The problem arises when they
all decide to sell towards the end of the 12months period to update their books..
who go wan buy that volume and value worth in billion if they eventually push to 200

https://www.youtube.com/watch?v=XzEhYf84Kto

A summary of today's trading session on the NGX

emmanuelewumi:
The most important thing is the ability to correctly forecast the sustainable compounded annualized earning growth rate for the next 3 to 5 years

Yes. that's the ish.
Generally speaking, I just think companies that carry out long-term contract agreement spanning years for the bulk of their goods or services provided won't be far off their forecasts.

chimex38:
Interesting..
The problem arises when they
all decide to sell towards the end of the 12months period to update their books..
who go wan buy that volume and value worth in billion if they eventually push to 200

They won't have to sell though, the paper value of the stocks would count towards the recapitalizion target. As per what the chairman of Apt Securities said in an interview, he's also on the board of the SEC.