We update our outlook and estimates for Lafarge Africa Plc (WAPCO) following the release of its 9M-25 results. The company delivered a robust performance during the period, with revenue (+62.8% y/y), EBITDA margin (+986bps y/y), and earnings (+245.9% y/y) all expanding meaningfully. These results were broadly in line with our expectations, and we anticipate the positive momentum to persist through year-end. We therefore raise our year-end TP slightly by 1.5% to NGN167.49/share (prev: NGN165.06/share), reflecting higher projected finance income (+10.8x y/y), which impacts the earnings-based leg of our blended valuation, with limited effect on the higher-weighted DCF. However, we downgrade our rating to a “HOLD” (from “BUY”) given the limited upside potential of 11.3%, as the stock now trades close to our assessed fair value. We forecast 2025E EPS of NGN16.90 (+171.8% y/y) and a total dividend of NGN8.00/share, implying a 5.3% dividend yield based on the closing price of NGN150.45/share (as of 23 Oct). On our revised estimates, WAPCO is trading at a 2025E P/E of 8.9x and EV/EBITDA of 5.1x.

Earnings outlook upgraded on stronger finance income projection: We retain our 2025E revenue growth forecast of +48.7% y/y, underpinned by a 30.0% y/y increase in average pricing to NGN161,750.00/tonne and a 27.1% y/y expansion in volumes to 6.41 million tonnes. Over 2025E–2029E, we forecast a revenue CAGR of 18.9%. We also maintain our EBITDA margin forecast of +714bps y/y to 39.1% for 2025E, supported by a stable cost environment and continued operating efficiencies. Specifically, we retain our cost of sales growth projection of +29.4% y/y, underpinned by higher energy (+24.3% y/y) and raw material (+39.7% y/y) costs. Likewise, we uphold our OPEX growth forecast of +34.7% y/y, driven by sustained logistics efficiencies, including increased CNG fleet penetration, optimized routing, and reduced fuel consumption. However, we now forecast a higher net finance income of NGN17.71 billion in 2025E (prev: NGN1.60 billion), driven by a +10.8x y/y increase in finance income alongside a lower finance cost (-84.4% y/y), reflecting the company’s modest leverage. As a result, we revise our 2025E EPS forecast upward to NGN16.90 (+171.8% y/y; previously: +160.5% y/y to NGN16.20). Over 2025E–2029E, we now project an EPS CAGR of 38.9%.

Stronger operating leverage supports incremental margin accretion: WAPCO’s incremental margin (the proportion of additional revenue that converts into operating profit) is projected to expand in 2025E, supported by stronger operating leverage as higher pricing and volume gains flow through a largely fixed cost base. This will be further supported by ongoing cost-efficiency gains driven by improved energy mix, enhanced logistics optimisation, and increased CNG fleet penetration. Specifically, we forecast incremental margins of 52.6% in 2025E (2024FY: 31.2%), implying that for every additional NGN1.00 in revenue, c. NGN0.53 will translate to profit. This step-change reinforces our view of a transition into a more margin-accretive growth phase.

Valuation: Our year-end target price is NGN167.49/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 (NGN131.65/s) and FCFE (NGN128.64/s) estimates, assuming a 27.6% WACC, 27.6% CoE, and a 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN213.23/s) and P/E (NGN233.77/s) estimates, utilizing Bloomberg Middle East & African (MEA) peer average 2025E multiple of 7.6x and 13.8x, respectively.

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