November 13, 2025/Cordros Report
In this note, we update our outlook on BUA Cement Plc (BUACEMENT) following the release of its 9M-25 results. During the period, the company delivered strong operating results with EBITDA margin expanding by 19.04ppts y/y to 46.9%, supported by a 47.2% y/y increase in revenue driven by price/volume gains, alongside slower cost of sales growth (+6.7% y/y) due to lower input and energy costs. Building on this momentum, we raise our target price by 18.8% to NGN116.83/s (Previously: NGN98.33/s), reflecting an improved EBITDA margin (+16.73ppts y/y to 47.8%) and earnings (+402.9% y/y) outlook. Despite the earnings upgrade, we maintain a SELL rating, as the stock’s current market price (NGN162.00/s) remains above our fair value estimate. We also forecast a DPS of NGN10.81, implying a 6.7% dividend yield at the last closing price of NGN162.00/s (12 Nov). On our estimates, BUACEMENT trades at a 2025E P/E of 14.8x and EV/EBITDA of 10.1x.
Higher EBITDA margin supports earnings upgrade: We now forecast BUACEMENT’s 2025E revenue to grow by 36.3% y/y (Prev: +40.6% y/y), following a moderation in our volume assumptions, which partly offsets the upward adjustment to our price outlook. Specifically, we now expect sales volumes to rise by 4.8% y/y to 8.85Mt (Prev: +12.9% y/y to 9.53Mt), while average cement prices are projected to grow by 30.0% y/y (Prev: +24.5% y/y). The lower volume outlook reflects expectations of weaker demand in key regional markets where BUACEMENT maintains a significant share. On the cost side, we now project a muted 0.5% y/y rise in cost of sales (Prev: +7.3% y/y), supported by lower volume-driven variable costs and a sharper moderation in energy cost assumptions (-45.0% y/y vs -35.0% y/y prior). We also revise our operating expense forecast to +40.7% y/y (Prev: +43.3%), following a cut in distribution cost growth (+47.9% y/y vs. +57.9% y/y prior). As a result, we now expect EBITDA margin to expand by 16.73ppts y/y to 47.8% (Prev: +15.40ppts y/y to 46.4%), driving a 402.9% y/y surge in EPS to NGN10.97 (Prev: +354.5% y/y to NGN9.92).
Improving solvency and liquidity metrics reflects gradual deleveraging: BUACEMENT’s balance sheet strength is set to improve in 2025E, supported by strong cash generation, and lower leverage. The debt-to-equity ratio is projected to decline to 0.8x in 2025E (2024: 1.5x | 5yr average: 0.9x), while net debt/EBITDA improves to 0.5x (2024: 1.8x | 5yr average: 1.5x), reflecting improved cash generation. Liquidity ratios are also expected to show a marked recovery, with the current ratio rising to 1.2x (2024: 0.7x | 5yr average: 0.9x) and quick ratio to 0.9x (2024: 0.4x | 5yr average: 0.7x) – both largely in line with short-term solvency thresholds. Cash ratio is also forecast to rise to 0.6x (2024: 0.1x | 5yr average: 0.4x), underscoring stronger cash reserves driven by improved FCF conversion and moderated capex outlays. Collectively, these trends point to a healthier balance sheet and enhanced financial flexibility.
Valuation: Our year-end target price is NGN116.83/s, derived from a 50/50 blend of DCF and sector relative valuation (P/E & EV/EBITDA) estimates. Our DCF FV is derived from an equal blend of FCFF (NGN92.77/s) and FCFE (NGN87.04/s) estimates, assuming a 24.5% WACC, 26.2% COE and a 4.0% terminal growth rate. For our EV/EBITDA valuation, we applied the Bloomberg 2025E Middle East & Africa (MEA) peer average multiple of 7.4x to BUA Cement’s projected EBITDA, yielding a fair value estimate of NGN117.18/s. On a P/E basis, we used the 2025E Bloomberg MEA peer average multiple of 15.5x, which, when applied to our EPS forecast of NGN10.97, results in a fair value of NGN170.33/s.
