April 18, 2024/Cordros Update

We update our views on WAPCO (BUY, TP: NGN48.24), DANGCEM (SELL, TP: NGN460.77) and BUACEMENT (SELL, TP: NGN60.84).

For WAPCO, we revised our TP upwards by 8.5% to NGN48.24/s and maintain our “BUY” recommendation on the stock. The re-rating was driven by our expectation of improved sales in 2024E coupled with the management’s demonstrable competence to optimise costs and improve business operations. Also, we acknowledge that the management is engaged in some potentially value-accretive strategic initiatives, which we believe will potentially position the company for sustained growth and operational excellence over the long term.

For DANGCEM, we increased our 2024E TP by 16.0% to NGN460.77/s with a “SELL” rating on the stock based on the current elevated market price. The increase in our TP is driven by our expectation that the group will sustain topline expansion in 2024E, driven mainly by upward price adjustments as volumes return to growth. Notably, volume growth from the Pan-African region is expected at single-digit as most plants are at full capacity while we are optimistic of a recovery in Nigeria’s sales volume.

Meanwhile, we increase our TP for BUACEMENT by 2.7% to NGN60.84/s and maintain our “SELL” recommendation on the stock given that it is currently trading at a significant premium (P/E: 68.8x) compared to local (35.2x) and MEA (20.9x) peer averages. The upward revision in our TP is underpinned by our expectation of sustained revenue expansion in 2024E, driven explicitly by volume growth which should be sufficient to limit the impact of rising costs, protect margins and ensure profitability.