June 16, 2025/Cordros Report
Lafarge Africa Plc (WAPCO) has delivered an impressive turnaround over the past twelve months, with the stock returning +152.9% in the time, driven by strong earnings growth, improved operating efficiency, attractive dividends, and investor excitement surrounding the proposed acquisition by Huaxin. Despite the rally, we believe the stock remains undervalued and presents a compelling upside opportunity. Our conviction is anchored on the company’s sustained operational excellence, sector-leading return metrics, and valuation multiples that still trail those of its peers. Thus, we reiterate our “BUY” recommendation on WAPCO, with a target price of NGN104.71/s implying a 21.8% upside from current levels.
Is the Market Finally Paying Attention?
For much of the past two decades, WAPCO’s share price — despite bouts of appreciation — has remained below its 9th October 2014 all-time high of NGN127.00/s, reflecting the overhang of legacy challenges that tempered investor confidence. Over the past 12 months, sentiment around WAPCO has shifted meaningfully. The stock has quietly staged a remarkable rally, with its share price appreciating by 152.9%, outperforming the NGX All-Share Index (ASI), which gained around 15.5% in the same period. In 2025, WAPCO’s stock has risen by about 22.9%, compared to the ASI’s return of 11.3%, reflecting continued structural reappraisal by the market. While optimism surrounding the proposed Huaxin acquisition has played a role in the re-rating, the sustained price momentum suggests a broader market reassessment of WAPCO’s fundamentals, including earnings recovery, operational efficiency, and balance sheet strength. Thus, after years of trading at a discount to intrinsic value, the market may finally be pricing in the turnaround.
How Does WAPCO Compare to Peers?
In evaluating WAPCO’s relative positioning within Nigeria’s cement sector, we analyzed a comprehensive set of indicators — including profitability and return metrics, balance sheet and operating efficiency, as well as share price performance. Across these metrics, WAPCO not only holds its ground against peers but, in several cases, materially outperforms.
Share price performance: Prior to the last 12 months, WAPCO’s share price has broadly trended upward, mostly in line (albeit at a more measured pace) with peers. Stripping out the breakout rally in the last 12 months, WAPCO had delivered a total return of 2.7x (between June 2020 and June 2024) that was directionally positive but trailed DANGCEM (+5.0x), and marginally at par with BUACEMENT (+2.8x). However, the story shifted decisively in the last twelve months, as WAPCO (+1.8x) outperformed its peers (DANGCEM: -0.3x | BUACEMENT: -0.4x) in terms of price appreciation, supported by improving fundamentals, earnings momentum, and investor optimism surrounding strategic developments. The recent surge has propelled WAPCO’s 5-year price performance by +10.0x, delivering significantly higher cumulative price return to investors over the period relative to peers (DANGCEM: 4.1x | BUACEMENT: 2.2x).
Revenue, margins, and returns: WAPCO’s topline performance is rapidly converging with peers in terms of growth, despite its smaller production footprint. In 2024FY, WAPCO delivered revenue growth of 71.8% y/y, reaching NGN696.76 billion, outperforming DANGCEM (+62.2% y/y to NGN3.58 trillion) and trailing BUACEMENT (+90.6% y/y to NGN876.47 billion), despite operating at a smaller capacity (10.50 mtpa vs. DANGCEM’s 52.00 mtpa and BUACEMENT’s 17.00 mtpa). This momentum extended into Q1-25, with WAPCO posting 80.3% y/y growth in revenue to NGN248.35 billion, nearly matching BUACEMENT’s 80.5% y/y (NGN290.82 billion) and far ahead of DANGCEM’s revenue growth of 21.7% y/y (NGN994.66 billion). Looking ahead, we forecast WAPCO’s topline to grow by 40.7% y/y to NGN980.21 billion in 2025E, outpacing DANGCEM’s 21.4% y/y (NGN4.35 trillion) and slightly ahead of BUACEMENT’s 40.6% y/y (NGN1.23 trillion).
While WAPCO’s EBITDA margin of 31.9% (2024FY) sits within industry range (DANGCEM: 38.6%, BUACEMENT: 31.0%), it recorded the smallest gap (10.06 ppts vs. peer average: 18.88 ppts) between EBITDA and PBT margins in 2024, highlighting relatively subdued financing costs. The company’s PBT margin stood at 21.9%, ahead of DANGCEM (20.5%) and nearly double BUACEMENT (11.4%). In 2025E, we expect this gap to further narrow to 3.25 ppts (peer average: 10.98 ppts), as the company maintains a low-debt capital structure.
Despite its conservative capital structure, WAPCO’s ROE of 19.8% is not far off from DANGCEM’s (23.1%) and BUACEMENT’s (19.0%) in 2024FY. Although peers are projected to lead on ROE in 2025E (DANGCEM: 31.3%, BUACEMENT: 48.1%, vs WAPCO: 30.2%), this is primarily driven by higher leverage. Importantly, we highlight that WAPCO leads in return on invested capital, with a 2024 ROIC of 47.2%, well above DANGCEM (18.0%) and BUACEMENT (19.7%). Its ROIC/WACC, estimated at 3.9x above peers (DANGCEM: 2.9x | BUACEMENT: 3.8x), further reinforces its capital efficiency advantage.
Efficiency, leverage, and liquidity: Beyond profitability, WAPCO’s operational and balance sheet efficiency stand out. The inventory turnover compares favourably with peers at 4.4x in 2024FY vs BUACEMENT (4.7x) and DANGCEM (3.1x) and is forecast to outperform peers in 2025E at 4.8x (DANGCEM: 3.0x | BUACEMENT: 3.8x). Its asset turnover also shows a marked advantage, rising to 0.8x in 2024FY (DANGCEM: 0.7x | BUACEMENT: 0.6x) and projected to reach 1.1x in 2025E, well above DANGCEM (0.7x) and BUACEMENT (0.7x).
Meanwhile, WAPCO maintains a conservative capital structure, with a debt-to-equity ratio of 0.0x and a net cash position, alongside the lowest financial leverage (2.0x) among listed cement operators. By contrast, DANGCEM (debt-to-equity: 1.3x; financial leverage: 2.9x) and BUACEMENT (debt-to-equity: 1.5x; financial leverage: 4.0x) operate with more geared capital structures. This conservatism supports WAPCO’s strong liquidity profile. Its current ratio was 1.0x in 2024FY (DANGCEM: 0.7x | BUACEMENT: 0.7x) and is projected to improve to 1.6x in 2025E, still outpacing DANGCEM (0.8x) and BUACEMENT (0.9x). Moreover, its cash ratio — a true stress-test metric — stood at 0.6x in 2024FY (DANGCEM: 0.2x | BUACEMENT: 0.1x).
Valuation Disconnect: Still Trading at a Discount to Peers
Despite WAPCO’s strong financial and operational performance, the company currently trades at a trailing P/E multiple of 9.6x, significantly below peers (MEA: 18.1x | local peer average: 25.4x | DANGCEM: 12.4x | BUACEMENT: 38.4x). Similarly, the company’s EV/TTM EBITDA of 4.5x trails that of peers (MEA: 7.8x | local peer average: 7.3x | DANGCEM: 6.2x | BUACEMENT: 8.4x). These valuation discounts persist despite a material improvement in the company’s fundamentals, driven by earnings growth, better cost efficiency, and renewed investor confidence. While we acknowledge that the market has begun to reprice the stock, we believe the current levels still underestimate WAPCO’s operating momentum and earnings durability.
Applying peer average multiples to WAPCO’s TTM metrics yields a materially higher implied fair value. For context, applying peer’s P/E band of 12.4x – 18.1x to WAPCO’s TTM EPS of NGN8.91 implies a share price between NGN110.36 – NGN161.09 per share. Similarly, applying peer’s EV/EBITDA band of 6.2x – 7.8x to WAPCO’s TTM EBITDA of NGN264.70 billion and adjusting for net debt suggests a fair value of NGN122.70 – NGN148.99 per share. This range represents a 30.0% – 89.0% upside from current levels, further supporting our bullish stance.
Recommendation
WAPCO remains meaningfully undervalued relative to both its intrinsic fundamentals and peer group benchmarks. Despite the strong rally over the past year, the stock continues to trade at a discount on key valuation metrics, even as operating performance, capital efficiency, and balance sheet strength have materially improved. Renewed investor interest, driven by strategic catalysts, robust earnings momentum, and a lean capital structure, is likely to accelerate the stock’s re-rating trajectory in the near term. As such, we reiterate our BUY rating on WAPCO with a target price of NGN104.71/s, offering an upside of 21.8% from current levels (NGN86.00/s as of 16 June 2025).
