April 11, 2017/Cordros Research
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The management of Dangote Sugar Refinery Plc (DANGSUGAR) hosted earnings call with analysts last week to discuss the company’s performance in 2016, update on recent developments, and provide guidance for 2017. Our key takeaways are presented in this report.
We reviewed our estimates
After the call, we made the following changes (against previous estimates) for 2017F: (1) -20% sales volume, from -28%, (2) reduction of gross margin to 14.7%, from 18.9%, and (3) downward review of EBITDA to N28.2 billion, from N32.5 billion, and PBT to N25.9 billion, against N28.4 billion previously forecasted. Notwithstanding the downward revisions, the latest estimates of revenue (+21%), EBITDA (+31%), and PBT (+31%) remain well-ahead of 2016’s realized. But at a TP of N7.31 (previously N8.31), 19.4% ahead of current market value, we lower rating on the stock to HOLD (previously BUY).
