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…Revenue Soars 90.5% In 2024
BUA Cement has announced a significant increase in revenue for the 2024 financial year, with a 90.5% year-on-year growth.
This impressive performance was driven by a combination of higher cement prices, which rose by 56.8%, and increased sales volumes, which grew by 25.7%.
Despite this strong revenue growth, the company’s earnings only increased by 6.4% year-on-year. This modest growth in earnings was due to higher costs and expenses incurred by the company during the year.
Looking ahead to 2025, analysts at Cordros Research expect BUA Cement to continue its strong revenue growth, driven by increased construction activity and additional output from its newly commissioned production lines. However, the research firm has maintained its “SELL” rating on the company due to its high valuation.
BUA Cement’s shares are currently trading at a price of NGN83.70, which is considered high by analysts. Cordros Research has set a target price of NGN51.54 for the company, indicating a potential downside risk for investors.
Overall, while BUA Cement’s revenue growth has been impressive, its high valuation and modest earnings growth have raised concerns among analysts.
The research firm projects BUACEMENT’s cement revenue to grow by 44.0% y/y in 2025, driven by a 30.9% y/y increase in sales volume and a modest price adjustment of +10.0% y/y. Strong sales volume growth will be supported by increased construction activity, driven by the government’s infrastructure agenda and additional output from the newly commissioned production lines.
Cordros Research also expects BUACEMENT to maintain a pricing edge, with its price per ton projected to be c.16.0% lower than peers. However, the firm forecasts a 42.6% y/y rise in COGS and a 46.4% y/y increase in OPEX, reflecting higher energy costs, operation and maintenance service charges, and distribution costs.
Consequently, Cordros Research expects the EBITDA margin to settle at 31.1% (2024: 31.0%), while EPS is projected to rise by 49.4% y/y to NGN3.26 despite a projected 38.2% y/y increase in net finance costs.
The research firm’s year-end target price is NGN51.54/s, derived from an 80/20 blend of DCF and sector relative valuation (P/E &EV/EBITDA) estimates.
