Nigeria’s most valuable firms gain N4b capitalisation in one month
By Jeph Ajobaju, Chief Copy Editor
Nigeria’s five most valuable companies closed October with a N14.8 trillion ($36.1 billion) combined market capitalisation, up from N14.4 trillion in September.
The firms – Nestle, BUA, MTN, Airtel, and Dangote Cement – are quoted on the Nigerian Stock Exchange (NSE) with their Stocks Worth Over One Trillion (SWOOT) naira in market value.
The NSE has about 160 actively quoted stocks.
And Nairametrics, which coined SWOOT, writes that the five companies are so large that they make up about 67.5 per cent of the entire market capitalisation on the NSE valued at N21.9 trillion.
Nestle
Nestle was the least capitalised SWOOT at N1.17 trillion in October. Its share price fell from N1,480 per share in September to N1,400 in October.
A major reason was its results for the third quarter of 2021 (Q3 2021) which posted N18.2 billion profit before tax (PBT), down on N15.4 billion in Q3 2020.
Investors expected a better performance post pandemic. Nevertheless, Nestle remains one of the most profitable companies in Nigeria and the results still delivered a return on average equity of over 100 per cent.
Nestle has a price to earnings ratio of 27.1x.
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BUA Cement
BUA Cement, one of the largest cement conglomerates in the country, increased its market cap 9 per cent to N2.43 trillion in October. The bullish sentiments was due to the impressive results declared in Q3 2021.
Its PBT was N24.9 billion, up from N20.3 billion in Q3 2020, riding on robust cement sales. Revenue grew to N62.6 billion from N55.2 billion.
Nairametrics notes that BUA is also one of the most expensive stocks on the exchange due to its high price to earnings ratio of 35.7x.
Airtel
Airtel Africa is one of the two telecom firms in the quintet of the largest companies in Nigeria by market capitalisation. It gained 9 per cent in October valued at N2.9 trillion, but it was not its highest market valuation this year.
Airtel was worth as much as N3.4 trillion between February and June. However, profit-taking by investors has reduced interest in its stock, forcing down share price.
Airtel also released its results from Nigeria for the period ending September which shows a 27.1 per cent rise in revenue to N450 million. Investors seem to have appreciated the revenue and profit growth.
Airtel is an expensive stock trading at a price to earnings multiple of 11.07x. But it is growing at a faster rate than its earnings multiple with a PEG ratio of 0.3x. Investors consider companies with a PEG ratio of less than one as extremely cheap.
MTN
MTN is the most profitable company (based on public records) and also the second most capitalised on the NSE. At a market value of N3.6 trillion ($8.7 billion), MTN is just shy of its all-time high of N3.67 trillion.
It reported N415 billion revenue in Q3 2021, up 23 per cent year on year (YoY) and pre-tax profit of N106 billion, up 47.5 per cent YoY. It is one of the best in returns, matching the likes of Nestle, with a return on average equity of over 100 per cent.
So MTN is worth a lot more. It currently trades at a price to earnings multiple of just 12.66x but could easily be worth over N5 trillion in a very bullish market.
Dangote Cement
Dangote Cement is Africa’s largest cement company with a combined market valuation of about N4.7 trillion ($11.6 billion). The cement behemoth did not record changes in its market valuation month on month (MoM) but continued to deliver impressive numbers.
Its revenue rose 16.5 per cent to N331.6 billion in Q3 2021 and pre-tax profit inched up 13.9 per cent to N124.2 billion.
Dangote Cement reports a very high return on equity averaging 31.2 per cent this year. Its share price also contains a price to earnings multiple of 13.92x. It could be worth N5 trillion by early next year if it sustains its performance, and reward investors with a much higher dividend payout.
Banks missing on list
No Nigerian bank made the cut since none is worth up to N1 trillion in market capitalisation. The bank with the highest market cap is GTB with about N824 billion. It was a member of SWOOT in January when it was priced appropriately.
However, tech unicorns like Flutterwave, Paystack, and Interswitch are knocking on the SWOOT door and could be worth as much in the next few years.
Others, like the Nigerian National Petroleum Corporation (NNPC), could be worth more than Dangote Cement if they get listed on the NSE. Dangote Refinery could also be in the mix, based on the valuation the NNPC used when it invested in it.