₦airaland Forum

onegentleguy:
One of the worrying issue with LARFAGE WAPCO was the disservice the parent coy (LARFAGE holcim) did to the Nigerian entity. ...because ever since some past coperate actions (specifically mergers), the company's financial performance on the back of very poor management efficiency has been to say the least abysmal !!
The merger with Ashaka cement and Unicem were not properly accounted for. I recall I stated it then that larfage would've been better off expanding on their own than embarking on those mergers. In retrospect, the company paid/gave in more for those margers as could be seen from comparing all involved entities ENTERPRISE VALUE, PBT MARGIN and EBITDA MARGIN as at the time. (comparing that of larfage to ashaka cement and unicem)
That said, the greatest problem with this coy is that of COST MANAGEMENT AND OPTIMIZATION !! Opex margin has been on an upward trajectory since these mergers.
To put things in perspective, operating cost has grown at a CAGR of near 26%, which is at an over 158% faster rate than the 10% CAGR in revenue in the last 3-4 years.
The company's ROAA, ROAE, NET MARGIN, FCF, RoIC and EM also tells of a very 'bad story'.

The SIGNS to most of these issues were always there for any descerning investor to see. ...particularly in the last 6 quaters.
I recall we highlighted some of these RED FLAGS when I advised folks to SELL OFF their holding in the coy at the beginning of Q1 2018 after doing an analysis on the company.
Then, LAFARGE was selling for near N50. ...current price is now N20.7, which is a near 60% loss. ...and which would now require a whooping 142% uprise before an investor can breakeven and sell at the same N50 again !!
With LAFARGE, I always knew the last rights fund raise wouldn't put them in any good stead. Worse still, the company went ahead to pay over N90B as dividend from the money. ...when they were clearly in huge debt and there was need to optimize cost. Money that should've been utilized on delaveraging.
Outside that, the result print is also showing a few areas of funding mismatch. ...a clear case of gross incompetence on the part of management. Just take a good look at their recent spat of results.
Its clear that the company currently lacks foresight on the need for INNOVATION, coupled with the big issue of COST OPTIMIZATION.
Aside DC, CCNN is also not making things any easy for them. In my view, CCNN has done far much better in the short to mid term.

My advise:
It's best to stay off LARFAGE. ...unless of course, ur investment horizon is of the very long term. But even then, I'd prefer to remain on the side line until there are signs of a positive change in trend with their financials.
Like I always tell folks;
"When u see a company running a business where COST is growing faster than REVENUE on the back of decelerating EARNINGS and at the same time, they keep coming for ur money, RUN and ask questions later !!
If in doubt, u can indulge the past shareholders of Oando.

DISCLAIMER: NOT to be reckoned as any sought of recommendation. ...when in doubt, pls do well to engage the services of an investment manager/adviser for guidance.

Let's hope that things will get better for them !!

austinkenneth:
My opinion is that anybody buying wapco is in for more pain as the company will keep reporting forex losses.

These forex losses arise mainly from the business they do with their parent company. That's why the do not make any effort to clear them.

Meaning they'll keep recurring thereby fleecing the minority shareholders.

U might be having a wrong view of things with the parts in bold my dear. ...and here's why;
LAFARGE' current FX denominated loans are HEDGED.
The company learnt a bitter lesson after it had a combined FX related loss of near N37B between 2016 to 2017.
What it has now done is to seek fx cover/protection for its dollar related loans from the CBN. ...which was done via a non-deliverable forward contract format.
The interpretation of this is that LAFARGE is also well covered should the CBN decide to devalue the Naira later this year.
Other positive for the coy include;
1) The company's cost line accrued from their high debt burden should further ease out as near 70% of the current rights proceed shall be subjected to delaveraging.
Current efforts on restructuring should also help to curb down their cost and expense line(opex, admin exp) which has been a major drag on the coys earnings line. A cursory look at the coys Q3 2018 financial print, and u will observe that there was a moderation in the usual pressure from some of these cost input.
In the past I have always said that one of the greatest challenge with LAFARGE is the issue of COST MANAGEMENT & OPTIMIZATION. ...so the importance of this line can not be over emphasized.

2) The company's South African arm which hitherto has had a repeated negative GROSS and EBITDA MARGIN is now back in the positive territory, following a better performance in Q3 2018. This should 'serve some breath of fresh air' to LAFARGE AFRICA(the group) given that the running of that arm has also eaten deep into the coys overall earnings.

That said, I am also of the view that the weight with its negative still outweighs the positives.
I am particularly worried about the coys finance expense(which was up by near 35% YoY), and ensured a negative PAT, despite a gap up in revenue on the back of an increase in sales to over N72 B !! That line may likely witness even more pressure given that the company also plans to expand either of their Shagamu or Ashaka plant. So I expect a little more strain in their cost line. ...particularly CoS and FC and ultimately GROSS and PBT MARGIN.(short term in view)
Unless of course, the company decides to sell/divest from its SA arm and fund the expansion/construction from the generated cashflow.
Then again is the worry over the impact of significant dilution that the on-going rights issue will give rise to. The company's OS is expected to see an addition of over 7.4B shares ...which in the short term will impact on the coys ROE, EPS and EM.
See other worries from the post above.

At its Friday's closure price N12.80, the stock presents an MoS discount to tap from. ...'cause using a mix of valuation model, I have a FV estimate of N19.50.
Which presents the possibility of a 52% price appreciation to market. However, my worries over the present risk inherent in the coy can well surmount that discount.
So is the equity price of LAFARGE cheap at the moment? ...YES. Especially if ur investment perspective is of the long term.
Is there a possibility that it can get cheaper? ...YES.
So I'll prefer to take a few more drug of patience with this coy. ...we believe that the coys financial print for FY 2018 and Q1 2019 will give a clearer guide on the right way to go !!

My inference;
Sometimes, cheap might be expensive. ...and at other times, a seeming discount might actually be a premium in disguise.

My advise;
Pls follow ur instinct.

DISCLAIMER: NOT to be interpreted as any sought of recommendation. ...due diligence should still remain ur 1st priority.

Redoil:
oando again how sure are you

Their newsletter last year says do. That by q3 2019 they would complete paying 90%

maishai:
IN retrospect ,CCNN fortunes changed when BUA owned by abdulsamad rabiu came in, thing is the moment the price flew from #6 range to #30 range coincided with the time the new 3mmt plant in sokoto started production..... This plant dwarfed the older plant on all metrics( cost, capacity utilization,efficiency etc),,,,,,,
Something similar might happen with wapco, they have aquired ashaka cem & unicem from flour mills @ strategic points in the country for cement sales far from Dangote...... THEY have started the upgrade of Ashaka cem( slowed down a bit as a result of boko haram in gombe environs), I dont have much info on unicem...

At #2300 a bag of cement, there is chance for a thirld revolution in the cement industry......I will patiently wait, @ the close of the rights issue wapco price will definitely go down as old investors who didnt take their rights cut losses....... I will wait till full year to see whether their hugh sales revenue has started trinkling down to investors then make the ultimate move

I completely missed CCNN at N4 and will never for get that. Funny I wanted to buy at a time but diverted the money to something else (land) of which today there i AC no headway abt that.

Why do you think there'll be a 3rd revolution based on the cement price of N2300 per bag?

onegentleguy:
U might be having a wrong view of things with the parts in bold my dear. ...and here's why;
LAFARGE' current FX denominated loans are HEDGED.
The company learnt a bitter lesson after it had a combined FX related loss of near N37B between 2016 to 2017.
What it has now done is to seek fx cover/protection for its dollar related loans from the CBN. ...which was done using a non-deliverable forward contract format.
The interpretation of this is that LAFARGE is also well covered should the CBN decide to devalue the Naira later this year.
Other positive for the coy include;
1) The company's cost line accrued from their high debt burden should further ease out as near 70% of the current rights proceed shall be subjected to delaveraging.
Current efforts on restructuring should also help to curb down their cost and expense line(opex, admin exp) which has been a major drag on the coys earnings line. A cursory look at the coys Q3 2018 financial print, and u will observe that there was a moderation in the usual pressure from some of these cost input.
In the past I have always said that one of the greatest challenge with LAFARGE is the issue of COST MANAGEMENT & OPTIMIZATION. ...so the importance of this line can not be over emphasized.

2) The company's South African arm which hitherto has had a repeated negative GROSS and EBITDA MARGIN is now back in the positive territory, following a better performance in Q3 2018. This should 'serve some breath of fresh air' to LAFARGE AFRICA(the group) given that the running of that arm has also eaten deep into the coys overall earnings.

That said, I am also of the view that the weight with its negative still outweighs the positives.
I am particularly worried about the coys finance expense(which was up by near 35% YoY), and ensured a negative PAT, despite a gap up in revenue on the back of an increase in sales to over N72 B !! That line may likely witness even more pressure given that the company also plans to expand either of their Shagamu or Ashaka plant. So I expect a little more strain in their cost line. ...particularly CoS and FC and ultimately GROSS and PBT MARGIN.(short term in view)
Unless of course, the company decides to sell/divest from its SA arm and fund the expansion/construction from the generated cashflow.
Then again is the worry over the impact of significant dilution that the on-going rights issue will give rise to. The company's OS is expected to see an addition of over 7.4B shares ...which in the short term will impact on the coys ROE, EPS and EM.
See other worries from the post above.

At its Friday's closure price N12.80, the stock presents an MoS discount to tap from. ...'cause using a mix of valuation model, I have a FV estimate of N19.50.
Which presents the possibility of a 52% price appreciation to market. However, my worries over the present risk inherent in the coy can well surmount that discount.
So is the equity price of LAFARGE cheap at the moment? ...YES. Especially if ur investment perspective is that of the long term.
Is there a possibility that it can get cheaper? ...YES.
So I'll prefer to take a few more drug of patience with this coy. ...we believe that the coys financial print for FY 2018 and Q1 2019 will give a clearer guide on the right way to go !!

My inference;
Sometimes, cheap might be expensive. ...and at other times, a seeming discount might actually be a premium.

My advise;
Pls follow ur instinct.

DISCLAIMER: NOT to be interpreted to mean any sought of recommendation. ...due diligence should still remain ur 1st priority.

Thumbs up

Chai! People can copy things sha. Just to say two words!

onegentleguy:
U might be having a wrong view of things with the parts in bold my dear. ...and here's why;
LAFARGE' current FX denominated loans are HEDGED.
The company learnt a bitter lesson after it had a combined FX related loss of near N37B between 2016 to 2017.
What it has now done is to seek fx cover/protection for its dollar related loans from the CBN. ...which was done using a non-deliverable forward contract format.
The interpretation of this is that LAFARGE is also well covered should the CBN decide to devalue the Naira later this year.
Other positive for the coy include;
1) The company's cost line accrued from their high debt burden should further ease out as near 70% of the current rights proceed shall be subjected to delaveraging.
Current efforts on restructuring should also help to curb down their cost and expense line(opex, admin exp) which has been a major drag on the coys earnings line. A cursory look at the coys Q3 2018 financial print, and u will observe that there was a moderation in the usual pressure from some of these cost input.
In the past I have always said that one of the greatest challenge with LAFARGE is the issue of COST MANAGEMENT & OPTIMIZATION. ...so the importance of this line can not be over emphasized.

2) The company's South African arm which hitherto has had a repeated negative GROSS and EBITDA MARGIN is now back in the positive territory, following a better performance in Q3 2018. This should 'serve some breath of fresh air' to LAFARGE AFRICA(the group) given that the running of that arm has also eaten deep into the coys overall earnings.

That said, I am also of the view that the weight with its negative still outweighs the positives.
I am particularly worried about the coys finance expense(which was up by near 35% YoY), and ensured a negative PAT, despite a gap up in revenue on the back of an increase in sales to over N72 B !! That line may likely witness even more pressure given that the company also plans to expand either of their Shagamu or Ashaka plant. So I expect a little more strain in their cost line. ...particularly CoS and FC and ultimately GROSS and PBT MARGIN.(short term in view)
Unless of course, the company decides to sell/divest from its SA arm and fund the expansion/construction from the generated cashflow.
Then again is the worry over the impact of significant dilution that the on-going rights issue will give rise to. The company's OS is expected to see an addition of over 7.4B shares ...which in the short term will impact on the coys ROE, EPS and EM.
See other worries from the post above.

At its Friday's closure price N12.80, the stock presents an MoS discount to tap from. ...'cause using a mix of valuation model, I have a FV estimate of N19.50.
Which presents the possibility of a 52% price appreciation to market. However, my worries over the present risk inherent in the coy can well surmount that discount.
So is the equity price of LAFARGE cheap at the moment? ...YES. Especially if ur investment perspective is that of the long term.
Is there a possibility that it can get cheaper? ...YES.
So I'll prefer to take a few more drug of patience with this coy. ...we believe that the coys financial print for FY 2018 and Q1 2019 will give a clearer guide on the right way to go !!

My inference;
Sometimes, cheap might be expensive. ...and at other times, a seeming discount might actually be a premium.

My advise;
Pls follow ur instinct.

DISCLAIMER: NOT to be interpreted to mean any sought of recommendation. ...due diligence should still remain ur 1st priority.

Ok

... ALL THINGS WORK TOGETHER FOR GOOD TO THEM THAT LOVE GOD ...

https://www.nairaland.com/3560501/holineness-righteousness-revival-daily-messages/19#74922113

Mpeace:
I would rather go for diamond, take my N1per share and end up in Access. Or I go with Fidelity that will clearly make more that 100% this year(all things being equal). Then put my long term fund in Oando. Oando will soon start paying investors as it plans to pay off 90% of its debts this year.

https://www.vanguardngr.com/2017/10/oando-declares-n383-5bn-turnover-q3-2017-debt-reduces-n18bn/

https://www.google.com/amp/s/www.thisdaylive.com/index.php/2018/08/28/oando-eyes-growth-after-curbing-2-5bn-debt/%3Famp
Please has SEC released Result of Oando’s forensic audit ?

veecovee:
... ALL THINGS WORK TOGETHER FOR GOOD TO THEM THAT LOVE GOD ...

Na so. Amen.

austinkenneth:
I completely missed CCNN at N4 and will never for get that. Funny I wanted to buy at a time but diverted the money to something else (land) of which today there i AC no headway abt that.

Why do you think there'll be a 3rd revolution based on the cement price of N2300 per bag?

Africa is a developing continent, with a huge need for infrastructural development (every tom dick and harry is thinking and talking of building something)....Cement happens to be the sole material used for binding in construction, but the nature of cement is such that It is extemely expensive to transport especially by road and the equipement to produce it is also prohibitly expensive......enter chinese technology, the chinese have crashed the procurement of a fully integrated cement plant from about $3 billion to $600 million.......(Dangote was the first to key into this, he now has has about 10 lines in his Nigeria Operations, the opportunity to key into dangote for me is gone).....................CCNN is gathering momentum to take off and Larfarge is on the mark.........You can easily break even in 3 years operating this chinese plants compared to others............High quality Limestone the chief raw material in cement is mainly concentrated in Nigeria along the west african coast, other countries with comparable grade have seen Dangote site production unit in this countries........So the future is CEMENT EXPORT to neighbouring Countries,,,,,,,,,All cement plant locations in Nigeria are situated in Good enough places to supply neighouring countries, also unlike Rice, frozen foods & Vegetable oil, Cement can never be smuggled into country profitably.............I wait to see how this 3 companies will interplay.......Dangote has consistently paid more than #6 dividend the past 5 years.........I will wait for fullyear report from wapco,,,,,Let me see If they are really ready for business or want to continue the mago mago of paying dividend as debt servicing to Parent company......

Chibuking81:
https://www.vanguardngr.com/2017/10/oando-declares-n383-5bn-turnover-q3-2017-debt-reduces-n18bn/

https://www.google.com/amp/s/www.thisdaylive.com/index.php/2018/08/28/oando-eyes-growth-after-curbing-2-5bn-debt/%3Famp
Please has SEC released Result of Oando’s forensic audit ?

Oando is a stock i want to buy purely in anticipation of bull season.......never for investment purposes....How can a company especially a Nigerian company lock up #400 billion out of #1 trillion (>25%) as intangible assets that never translated to patent , copy rights or trade secret against competitors.......OANDO will definitely make me rich this year, Im buying around election trading days and will sell when i smell the first bull season

maishai:
Africa is a developing continent, with a huge need for infrastructural development (every tom dick and harry is thinking and talking of building something)....Cement happens to be the sole material used for binding in construction, but the nature of cement is such that It is extemely expensive to transport especially by road and the equipement to produce it is also prohibitly expensive......enter chinese technology, the chinese have crashed the procurement of a fully integrated cement plant from about $3 billion to $600 million.......(Dangote was the first to key into this, he now has has about 10 lines in his Nigeria Operations, the opportunity to key into dangote for me is gone).....................CCNN is gathering momentum to take off and Larfarge is on the mark.........You can easily break even in 3 years operating this chinese plants compared to others............High quality Limestone the chief raw material in cement is mainly concentrated in Nigeria along the west african coast, other countries with comparable grade have seen Dangote site production unit in this countries........So the future is CEMENT EXPORT to neighbouring Countries,,,,,,,,,All cement plant locations in Nigeria are situated in Good enough places to supply neighouring countries, also unlike Rice, frozen foods & Vegetable oil, Cement can never be smuggled into country profitably.............I wait to see how this 3 companies will interplay.......Dangote has consistently paid more than #6 dividend the past 5 years.........I will wait for fullyear report from wapco,,,,,Let me see If they are really ready for business or want to continue the mago mago of paying dividend as debt servicing to Parent company......

Ok. Tnx

On Oando.... Does anyone know the reason for the huge tax credits they have been getting since last year?

austinkenneth:
On Oando.... Does anyone know the reason for the huge tax credits they have been getting since last year?

They have not really enjoyed huge tax credit when you compare with what seplat (67 billion in 2017)and wapco(37billion in 2016) enjoyed in resent times.
Remember oando once made a loss of over 200billion, I expect huge write backs from that loss by way of tax credit.

Information is power. Always learn and do your own research. Last week was a profitable week. This week has it's own pot of gold waiting to be picked. Shine eyes well.

Coolcash1:
Anyway, as una Don dey disturb me for my stock pick for the week, here they are;

NEM insurance
Diamond
CCNN
Wema
STI
Oando
FBN
Caverton
Okomu
Access
TCP
FCMB

DD strongly advised...

Sorry o. Why Fidelity no dey your list. I beg explain because I don put tasere money o.

STOjo:
Sorry o. Why Fidelity no dey your list. I beg explain because I don put tasere money o.

That's his own stock pick, nothing is wrong with Fidelity. Hope you entered at a lower price sir.
Diamond is also a good buy, I just hope the price can come down small.

^^ Mcy56. You don chop ban again .
Pele o
Antispam bot is high on ogogoro

Will NSE Index behave like Diamond Stock?
After forcing many shareholders to sell their holdings in panic, Diamond stock rallied from a low at 0.66 to a high at 2.39 within a space of 2 weeks. This happened after Diamond broke a long time support located at 1.08. As that was not enough, it later created a lower low signalling that all may not be well with the stock. But all of a sudden, gbam! we saw a rejection candle, a higher - high and and and over 200% increase.

Just looking at the NSE index, I noticed it just broke a long term support; fell a bit and for the past 7 trading days, it's been bull upon bull. Now, I am wondering, could this be Diamond in the making? If yes, then I need the index to create a "high" or break exiting swing high at around 32000 and then we could have Diamond bank behaviour in the making. If I didn't see these features, then, I want to stay aside...

PLAN YOUR TRADES AND TRADE YOUR PLANS

[quote author=Mcy56 post=74946571]That's his own stock pick, nothing is wrong with Fidelity. Hope you entered at a lower price sir.
Diamond is also a good buy, I just hope the price can come down small.[/quote ] finally u don accept diamond

STOjo:
Sorry o. Why Fidelity no dey your list. I beg explain because I don put tasere money o.

I guess that's the stock pick for the 'WEEK' for him, so that does not necessarily mean fidelity bank is not a good stock, For me 2 things decides a 'stock pick' QUALITY and CHEAP So in terms of quality , yes fidelity bank qualifies, but in terms of being cheap, no(for this week), if it comes a little lower during the week, then maybe it might fit in

Former President, Chief Olusegun Obasanjo on Sunday said President Muhammadu Buhari has succeeded in deceiving Nigerians for the first time and they would be fools to play into his hand for the second time.

He likened Buhari’s government to “Abacha era”, saying the security institutions are being misused to fight all critics and opponents of Buhari.

“Buhari has succeeded in deceiving us first time and we will be fools to allow ourselves to be deceived the second time,” Obasanjo said in the state of the nation address titled “Points of Concern and Action.”

https://www.dailytrust.com.ng/nigerians-will-be-fools-to-fall-for-buhari-again-says-obasanjo.html

PETERiCHY:
Former President, Chief Olusegun Obasanjo on Sunday said President Muhammadu Buhari has succeeded in deceiving Nigerians for the first time and they would be fools to play into his hand for the second time.

He likened Buhari’s government to “Abacha era”, saying the security institutions are being misused to fight all critics and opponents of Buhari.

“Buhari has succeeded in deceiving us first time and we will be fools to allow ourselves to be deceived the second time,” Obasanjo said in the state of the nation address titled “Points of Concern and Action.”

https://www.dailytrust.com.ng/nigerians-will-be-fools-to-fall-for-buhari-again-says-obasanjo.html

I hope you won’t commit suicide when Buhari is declared winner in Febuari ?
Cos I don’t know why exactly you have decided to start derailing this beautiful thread with politics. There’s a whole fucking_ section for politics.
Nonsense!

Valueinvestor:
I guess that's the stock pick for the 'WEEK' for him, so that does not necessarily mean fidelity bank is not a good stock, For me 2 things decides a 'stock pick' QUALITY and CHEAP So in terms of quality , yes fidelity bank qualifies, but in terms of being cheap, no(for this week), if it comes a little lower during the week, then maybe it might fit in

how low will it get for it to be CHEAP.

STOjo:
Sorry o. Why Fidelity no dey your list. I beg explain because I don put tasere money o.

Fidelity is expensive for now.. It needs to come down to value zone.

DOLLARTEX:
how low will it get for it to be CHEAP.

For me picking fidelity bank in bits from 1.80 and below (if it ever happens) would not be a bad idea, Currently with an earning yield of about 37% and a target of 10%dividend yield, afterall fidelitybk has been known for good payout ratio. Anyway I may be wrong.

Chibuking81:
Zenith bank 2018 final year result might come out next week Friday, with final year dividend of #2.50/#3, bonus might be included. Their earning per a share keep on moving high. Possibility of their price hitting above #30 in the next 40 to 60 days is high. They might still go down again within this period, but the possibility of upward movement any moment from now is high.
My opinion though. Not buying nor selling recommendation.

DD is allow, please this does not call for attack.

You may be right in term of dividend but I strongly doubt that of bonus share. Jim already has about 3billn shares I don't think he needs any zenith shares any more rather he would use his billion naira dividend to acquire more companies of interest

Lafarge Africa Shifts Offer Period for N89b Rights Issue
https://businesspost.ng/2019/01/21/lafarge-africa-shifts-offer-period-for-n89b-rights-issue/

Sovereign Trust Insurance Applies to Raise N2.09b via Rights Issue
https://businesspost.ng/2019/01/21/sovereign-trust-insurance-applies-to-raise-n2-09b-via-rights-issue/

Zenith Bank Board Approves 2018 FY Results
https://businesspost.ng/2019/01/20/zenith-bank-board-approves-2018-fy-results/

Access Bank Confirms Plan to Sell N15b Green Bonds
https://businesspost.ng/2019/01/20/access-bank-confirms-plan-to-sell-n15b-green-bonds/

aremso:
You may be right in term of dividend but I strongly doubt that of bonus share. Jim already has about 3billn shares I don't think he needs any zenith shares any more rather he would use his billion naira dividend to acquire more companies of interest

Jim Ovia about to collect #9 billion for 2018, aside all contract and runs he does for zenith bank.......THERE IS GOD O!!!!!!