July 29, 2025/Cordros Report
In this note, we update our outlook and estimates for Lafarge Africa Plc (WAPCO) for 2025E following a robust H1-25 performance. During the period, WAPCO delivered a strong 80.3% y/y revenue growth — driven by both higher pricing and increased sales volumes — higher EBITDA margin (+912bps y/y), and a 352.1% y/y surge in EPS to NGN8.24. Considering this, we revise our year-end target price (TP) upward by 57.6% to NGN165.06/share (previous: NGN104.71/share) and reiterate our “BUY” rating. The upward revision reflects our reassessment of revenue growth expectations, primarily to capture stronger pricing trends, and improved EBITDA margins, supported by lower cost of sales estimates as cost optimization efforts continue to materialize. Accordingly, we now forecast 2025E EPS at NGN16.20 (+160.5% y/y) and a total dividend per share of NGN8.00, implying a dividend yield of 6.2% based on the last closing price of NGN129.00/s (28 July). On our revised estimates, WAPCO currently trades at a 2025E P/E of 8.0x and EV/EBITDA of 4.3x.
Strong topline and leaner Ops to sustain earnings momentum: We now forecast a 48.7% y/y increase in revenue for 2025E (previously: +40.7% y/y), driven primarily by an upward revision in our average cement price assumption to NGN161,750.00/tonne (+30.0% y/y | previous: +23.0% y/y to NGN136,000.00/tonne), largely supported by stronger traction in the company’s premium product segment. Meanwhile, we maintain our volume growth projection at +27.1% y/y, which translates to total sales volume of 6.41 million tonnes. On the cost side, we revise our cost of sales growth estimate downward to +29.4% y/y (previous: +36.5% y/y), reflecting expected benefits from ongoing cost containment initiatives — particularly increased use of alternative fuels — which should drive down energy cost growth to +24.3% y/y (previous: +34.8% y/y). Conversely, we revise our operating expense (OPEX) growth forecast upward to +34.7% y/y (previous: +29.3% y/y), reflecting rising overhead, administrative, and distribution costs tied to higher volumes. Nonetheless, we project EBITDA margin to expand by 714bps y/y to 39.1% (previously: +199bps y/y to 33.9%), primarily reflecting higher revenue growth relative to costs. As a result, we now forecast a 160.5% y/y growth in 2025E EPS to NGN16.20 (previously: +110.0% y/y to NGN13.06).
EBITDA margins poised for multi-year expansion: WAPCO’s EBITDA margin is expected to rise steadily over the forecast horizon, reaching 47.0% by 2029E from 31.9% in 2024. This reflects structural improvements in cost efficiency and operating leverage. Margin gains will be supported by alternative fuel & raw material substitution, deployment of CNG trucks, and expanded use of rail and waterways to reduce logistics costs. In 2025E alone, EBITDA margin is projected to hit 39.1%, a 10-year high — setting the tone for sustained profitability as cost optimization efforts mature and topline strength compounds across the period.
Valuation: Our target price is NGN165.06/s, derived from a 60/40 blend of DCF and relative valuation (P/E & EV/EBITDA) estimates. Our DCF FV is derived from an equal blend of FCFF (NGN131.13/s) and FCFE (NGN127.88/s) estimates, assuming a 27.6% WACC and a 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN212.67/s) and P/E (NGN224.09/s) estimates, utilizing Bloomberg Middle East & African (MEA) peer average 2025E multiple of 7.6x and 13.8x, respectively.
