₦airaland Forum

ositadima1:
Revenue hit ₦1.066 trillion, up 53% year-on-year. Normalized EBIT came to ₦387.9 billion at a 36.4% margin, EBITDA was ₦422.7 billion (39.6% margin), and profit after tax was ₦273.1 billion. The company is sitting on ₦388 billion in cash against only ₦166 billion in borrowings, a net cash position of ₦222 billion, and has proposed a ₦6/share dividend, five times last year's payout. These are not the numbers of a struggling cement company.

To value WAPCO properly I used a Damodaran-aligned DCF, which means starting from what the business actually earns operationally rather than headline profit. After stripping out non-recurring other income, the PPE impairment reversal, and the ₦30.2 billion finance income earned on cash deposits (which I account for separately), normalized NOPAT, net operating profit after the 33.6% effective tax rate, comes to ₦257.5 billion. The next step is invested capital. Lafarge Africa runs with structurally negative working capital of ₦103 billion, meaning customers pay before the company settles its suppliers. Combined with PPE of ₦448.6 billion, total invested capital is ₦347.1 billion. Dividing NOPAT by invested capital gives a Return on Invested Capital of 74.2%, which was 75.1% in 2024. For context, most global cement companies operate at 10–20% ROIC. Every naira reinvested in this business creates significant value.

For the discount rate, I used a WACC of 25.6%, built from a risk-free rate of 18.5% (Nigerian T-Bill yield), Nigeria's equity risk premium of 10.5% (Damodaran), and an unlevered cement sector beta of 0.72. The company's near-zero leverage keeps WACC close to the cost of equity. This is a high discount rate but it reflects the Nigerian macro reality, not a criticism of the business.

Free cash flow to the firm in 2025 was ₦88.1 billion on a reported basis, suppressed by a ₦129.6 billion working capital absorption as rapid revenue growth caused inventories and receivables to balloon. Normalized for a more sustainable working capital trajectory, FCFF is approximately ₦187.8 billion or ₦11.65 per share. Running a three-phase DCF on conservative assumptions, revenue growing at 20–25% decaying to 5% terminal growth, EBIT margins compressing gradually from 37% to 30%, produced an initial intrinsic value of approximately ₦123.5 per share (Base Case). Against the current market price of ₦210, that initial model flagged the stock as roughly 41% overvalued.

However, two factors I subsequently incorporated change the picture materially. The first is the near-complete 3.5 million tonne capacity expansion. Against current installed capacity of ~10.5mt, this is a 33% increase in one move. At a conservative 60% utilisation in year one, that's 2.1mt of incremental volume adding approximately ₦210 billion in revenue, rising to ₦300 billion annually at 80% utilisation from year two. This alone shifts 2026 revenue growth from a modelled 20% to approximately 38%. The second factor is Huaxin Building Materials, the new 83.81% Chinese owner who completed their acquisition from Holcim in 2025. Huaxin runs domestic operations at EBITDA margins of 35–45% and their operational playbook, clinker optimization, fuel switching, procurement centralization, conservatively adds 2–3 percentage points of EBIT margin over the next two to three years. On ₦1.5 trillion of 2027 revenue, 2pp of margin improvement alone is ₦30 billion of additional annual NOPAT.

Incorporating both factors into the revised model, the bear case (capacity delayed, margins revert to 30%) gives ₦105–₦120 per share. The base case (capacity online H1 2026, margins holding at 37–40%, Huaxin delivering modest efficiency gains) gives ₦185–₦210 per share. The bull case (full ramp, Huaxin pushes margins toward 42%) gives ₦260–₦310 per share. At ₦210, WAPCO is sitting at the top of the base case and the entry point of the bull case, a completely different conclusion from the initial overvaluation call.

The honest assessment is this: the business is genuinely exceptional, ₦210 is a fair price for it, and the upside to ₦260–₦310 is credible without heroic assumptions. But three risks deserve monitoring. The ₦96.6 billion dividend proposal raises the question of whether Huaxin intends to grow the business or extract cash, if it's the latter, the growth thesis weakens. Naira depreciation remains a structural risk given USD-linked input costs in energy and clinker. And Dangote and BUA will not ignore a 3.5mt capacity addition from a competitor without a pricing response. The first real read on how this plays out will be Q1 2026 results, specifically utilization rates on the new line. If that comes in at or above 60%, the bull case becomes the base case and ₦210 will look cheap in hindsight.

Thank you

Sunrisepebble:
I heard they had commenced even before the announcement

Ok. Thats great. Thank you.

Sunrisepebble:
I think so too. I’ve used an EV/Ebitda of 7x for the FY result which is what the Chinese company used to value the business when they bought it.
Don’t forget the knew capacity coming onstream though, an extra 3.5mt per annum. I’ve heard they’ve almost completed it so that should drive growth very soon, as well as the Chinese’ operational efficiency.

That chinese efficiency plus the chinese captive market ( large construction companies) is something to look forward to.

Sunrisepebble:
I think so too. I’ve used an EV/Ebitda of 7x for the FY result which is what the Chinese company used to value the business when they bought it.
Don’t forget the knew capacity coming onstream though, an extra 3.5mt per annum. I’ve heard they’ve almost completed it so that should drive growth very soon, as well as the Chinese’ operational efficiency.

I thought they just commenced the new line with the recent announcement?

ositadima1:
Based on this result alone, buying above 200 would offer no margin of safety, as it appears to be fairly valued. I can share my calculations if you’re interested.

Please share

Sunrisepebble:
EPS N17
DPS N6
Dangcem N57 EPS
NFA/DYOR

DPS of N6 for Wapco or Dangcem?

9Months or full year?

Sunrisepebble:
Same here. Because I know they plant to use internal cash flow rather than raising external money. But with their other business they’ve acquired they’ve still paid decent dividends. I think it’ll be fine

ok. that is soothing to hear.

Sunrisepebble:
Wapco is our retirement stock

The only fear i have for this one is that those chinese might cut dividend to finance expansion (ashaka &shagamu expansion recent news) which could affect price sentiment on NGX, otherwise this one na rock solid

mikeapollo:
You are poking virtually every stocks.
What did you say or do when Wale was paying N2-N3 dividend annually around 2006-2011? It may still happen again.

By the way, I will be very okay if I collect N100 per share to exit Oando, if sanctioned by the Court.

My reading of the Oando recent moves (2025/2026),, particularly after the Eni acquisitions.

1. The share redistribution was a condition by a major lender ( possibly Afrexim) because the holder of the shares (and the debt it was swapped for) Ocean and Oil were insiders. meaning WT surrender the shares at N93/share as a payment for the debt owed by Ocean and Oil to satisfy a drawdown/availment pre- condition pursuant to the Afrexim credit lines.

2. recent result were deliberate accounting gimicks to take advantage of tax credits from earlier losses (from the conocophillips years/acquisition), else it will be forgone once new tax regime per PIA act/Eni acquisitions kick in. (Sunrise mentioned something like this some moons back

3. Financial books clean up has commenced (possibly after tax credit advantage from earlier losses has finished).

4 The first thing WT is doing from the Financial books clean up was to get back some if not all the shares he surrendered earlier via RI. meaning he exchanged the shares for debt at N93 and is buying it back (via RI) at 50, nearly 100% gain.

5. The clean up to continue via debt to equity/ bonds sale (as mentioned by karl some few days ago).

6. Oando might find it true worth/ balance after the clean up (which could take as much as 18-24 months to fully implement). WT could also decided to go private at that point (as mentioned by Agba)


Not a sale or buy recommendation. just my bird eye view of the whole scenario.

Selah

KarlTom:
No sir.

However, the debt-to-equity is very necessary, and I believe it will come later this year. Possibly bonds and PP...

Thank you

KarlTom:
I forsee 60+

Reasons:
In other not to cause too much dilution, they need the SP to be as high as possible before the debt-to-equity conversion.

$300m (or ₦450bn @₦1500/$) of RBL is to be converted to equity

If SP is ₦50 = 9bn units
If SP is ₦60 = 7.5bn units
If SP is ₦75 = 6bn units

Hello Chief

is there a debt to equity in the recent notIfIcation?

i only saw that of RI

mikeapollo:
I don't think Wale bought any Oando shares at 91-92; don't get it mixed up.
But I agree with you that it is in his interest to sell the shares at very high price, even more than N100m

Oga Mike na u dey get am mixed up, no be me.

no be Oando exchange 4.2b shares for N390b sooooooo?

who be Oando who be Wale??

or u think say because them call am "exchange" den no be buy/sale? ok oooooooooooooooooooo?

i beg na carpenter me i beee, i neva get company.

i don face my front

byeeeeeeeeeeeeeeeeeeee

mikeapollo:
It may be much easier for Wale to sell Oando at N100 to strategic, long-term partners e.g. foreign or institutional investors.
But that price may be a bit too high for an offer to the general public may, unless there are some excellent news that could push up the price e.g. further acquisition of interests in oil wells etc.

How much of recent PO was actually bought by retail investors?

Oga Mike i beg wake up. Most company doing RI/PO in NGX already had strategic, long-term partners e.g. foreign or institutional investors.

if a RI/PO fails, it will not be because retail investor fail to buy because of pricing but rather because there is no strategic, long-term partners e.g. foreign or institutional investors lined up.

it will be Wales headache to go and look for strategic, long-term partners e.g. foreign or institutional investors at above 91-92, otherwise it will mean he be mugu for buying same thing at 91-92.

shikena

KarlTom:
Might not be related.

OandO peaked in September 2024 (₦95) whereas the Settlement Deed was dated December 20, 2024

Anyway at the is point it will be foolhardy for Wale to raise funds via equity at anything less than 91-92.

That will be total recklessness.

KarlTom:
Might not be related.

OandO peaked in September 2024 (₦95) whereas the Settlement Deed was dated December 20, 2024

before settlement deed, there must have been agreement to exchange/ sale which should ideally precede the settlement deed

Sunrisepebble:
No news yet on financials

ok. thank you

KarlTom:
I don't think the bolded is a good explanation of the agreement.

4,279,042,004 Ordinary shares of Oando PLC held by OODP Nigeria was transferred to OandO plc in settlement of the outstanding obligation of $253.3m (~ ₦390bn).

Check note 37 of the UFS...

now i see the reason why it moved up to 91-92 at some point during the recent past

Sunrisepebble:
I can confirm he has been buying GTB but not sure if it’s for merger purposes

Hello Chief, been a while.

Any news on WAPCO? (chinese buyer/result/possible dividend)

yMcy56:
Turn of the cements in market.....
* Could it be that a new investor is coming onboard DANGCEM?......or, another tranche of share buy is closed by?
- over N1.6bn expended on DANGCEM so far...
-- Yet to move officially......

* WAPCO
Over N2.2bn in transactions so far......

* BUACEMENT
Showing momentum already.......
@160 as at now

WAPCO

Court case or Q3 result or is it both?

Shalom428:
Insightful

Quite insightful, which makes one wonder if the team responsible for the tax reform did have DEEP engagements with major market operators before enactment or they just dont care (typical Nigerian elite ways) believing they will go ahead anyways, then if it (25% CGT) breaks something (dry up the market) then they will rush and fix a band aid ( a rushed amendment through the National Assembly).

DeRuggedProff:
Here is the prompt:

Thank you Prof. i am reallyy grateful

DeRuggedProff:
Excellent — I’ve extracted the core financials from Oando Plc’s Q2 2025 report. Let’s execute a military‑grade forensic breakdown across your requested 13 fronts. This will be long and highly detailed.

.

De Prof i will grateful if you can be kind enough to share the prompt that generated the above.

ositadima1:
Not too bad. I think they have very large receivables — they sold a lot on credit. If they can collect before year-end, they’ll be fine. Over ₦130 billion in receivables.

I guess you wanted to qoute 430 billion. check the notes in 11.1 (extract below) the bulk of the loan relates to Transpower (a subsidiary) which should benefit from the impending settlement of over 4 trillion power debt waiting to be securitised (via bond) by the FG

"A significant portion of the trade receivable relates to receivable from the NigerianBulkElectricityTradingPlcwhich is the regulatory body for the power business in Nigeria."

DeRuggedProff:
My ChatGpt prompt whenever an earnings report is released :
*ChatGpt Finance Prompt:*
Give me a full detailed and forensic financial and investment analysis of the attached results here. Cover in details the income statement, balance sheet, cash flow, profitability, liquidity, solvency, and valuation ratios. Compare it with industry benchmarks and historical performance. Conclude with a buy, sell, or hold recommendation, with clear reasoning. Peruse in details all the notes in the financial statement and indicate all red flags.
Determine the fair price based on this attached result using at least three most standard valuation models.
Include recent corporate actions or capital raises.
Assess dividend sustainability.
Factor in macroeconomic risks like FX and inflation.
Include chart patterns or breakout signals if possible.
Determine if there is any window dressing of this results. Fish out all grey areas.

I applied this prompt to the current Oando results. See below what I got in response:

Thank you

opaclem:
🏢 Oando Plc – Q1 2025 Financial Summary

Reporting Period: January – March 2025
Prepared by: ChatGPT
Date: June 24, 2025

---

📊 Financial Highlights (Q1 2025 vs Q1 2024)

Metric Q1 2025 Q1 2024 YoY Change

Revenue ₦932.6 billion ₦915.4 billion +1.9%
Gross Profit ₦85.4 billion ₦31.4 billion +172%
Operating Profit ₦(120.3) billion ₦117.2 billion ▼ Negative
Finance Income ₦149.6 billion ₦8.2 billion +1,721%
Profit Before Tax ₦(52.6) billion ₦70.3 billion ▼ Negative
Tax Credit ₦165.6 billion ₦(11.0) billion ▲
Net Profit (PAT) ₦113.1 billion ₦59.3 billion +90.5%
EPS (Basic & Diluted) ₦9.00 ₦5.00 +80%



---

💰 Balance Sheet Snapshot (as of March 2025)

Item Q1 2025 FY 2024 Change

Total Assets ₦6.83 trillion ₦6.43 trillion +₦400bn
Total Liabilities ₦7.07 trillion ₦6.80 trillion +₦270bn
Total Equity ₦(240.1) billion ₦(361.0) billion ▲ ₦121bn
Cash & Equivalents ₦303.9 billion ₦221.8 billion +37%
Total Borrowings ₦3.04 trillion ₦2.77 trillion +₦270bn



---

🎯 Valuation (based on EPS ₦9)

P/E Ratio Fair Price Estimate

5× ₦45
7× ₦63
8× ₦72
10× ₦90


Estimated Fair Value Range: ₦45 – ₦72
Current Market Price: ~₦62


---

🧠 Strategic Recommendation

Short-Term Traders: ✅ Hold or ride momentum while technicals are strong.

Long-Term Investors: ⚠️ Exercise caution. Although EPS has surged, core operations remain further. loss-making. Wait for consistent operating profit and reduced leverage before accumulating

Good day chief

I will appreciate if you can please oblige the prompt use for above

Olaide1295:
There’s a renaissance capital document that explains it.
GT seems to be safest. Fidelity, FirstHoldCo, Zenith, UBA
, Access are affected in that order.

Chief, i wld appreciate if can be kind enough to share the full report

Thank you for this. The best insight so far

KarlTom:
There is a share purchase agreement in place since 1 December 2024.

Invariably, this implies that the incoming owners will have a say in certain matters affecting the company...

If you were HUAXIN, you won't really leave HOLCIM to unilaterally decide the DIV payout, would you?

the purchase document shared when the news broke specifically has a condition that stated that value at negotiation (Dec 2023) would be maintained.

so how is value created after 2023 should be there concern.

i beg i no get strength, i never chop or you go buy lunch for me

like i said i don face front

Sunrisepebble:
New owners want to preserve cash which is expected, but with potential FY results they could have easily paid even N2

How can new owners want to preserve the cash of a company that they are yet to own, which they negotiated at 2023 value and then because of that want to partake/ share in profit made in 2024 when they are yet to pay/take over?

it is only here that such happenssssss

i beg make i face front

Fundlocator:
How will that happen?
Grab it from shareholders?
They would make new offer into Oando after a memo has been released?
Based on the released memo, Oando does not have the Unilateral power to
withdraw the offer again.
Should new investors need to invest, management would relinquish some of their stake,
if they feel they need such investment.

Wale no go even try am, after wetin hin see for Mangal and Volpi hand? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

lolllllllllllllllllllllllllllllllll

Fundlocator:
How will that happen?
Grab it from shareholders?
They would make new offer into Oando after a memo has been released?
Based on the released memo, Oando does not have the Unilateral power to
withdraw the offer again.
Should new investors need to invest, management would relinquish some of their stake,
if they feel they need such investment.

Wale no go even try am, after wetin hin see for Mangal and Volpi hand

lolllllllllllllllllllllllllllllllll

Streetinvestor2:
I am ok with how ever they want to redistribution it.I have converted to long than 5 yrs investment. If he had decided not to redistribution and shareholders still get default in debt .what would you have done.All those bad loans banks wrote off in shareholders fund in the past yrs like fbn.what could you do.
He has done well in this one for shareholders. If he had gone ahead to delist at #7 plus .what would you have done.
When I see good I will appreciate

Very apt. if you coming from zero and you get to 1 that is 100% gain though in absolute term it might look very small (base effect)


Wale is actually betting on the performance of the coy going forward. my reading is that tranche 1 wont be distributed until after June 30th (meaning distribution would be same 1 for 12) while tranche 2 of part 1 might not be distributed until end of FY 2025 hence each distribution would be acting like a dividend and will be timed to coincide with release of result.

hmmmmmmm. Cunny man die cunny man bury am