November 13, 2025/Cordros Report
We revise our outlook on Dangote Cement Plc (DANGCEM) following the release of its 9M-25 results, which reflected a strong operating performance. The company’s revenue grew by 23.2% y/y, largely price-driven, while EBITDA margin expanded by 958bps y/y to 45.3%, as cost discipline held firm with COGS (+4.0% y/y) and OPEX (+15.2% y/y) growing well below topline. We raise our year-end target price by 6.0% to NGN641.25/s (Previously: NGN604.91/s) and maintain a “HOLD” rating on the stock. The adjustment primarily reflects a lower WACC of 21.9% (previously: 24.3%), reflecting a lower risk-free rate in line with moderating fixed income yields. This offset the modest downward revisions to our EBITDA margin and earnings forecasts, which have been adjusted to reflect normalizing operating spreads. Meanwhile, we maintain our DPS forecast of NGN50.00, translating to an 8.4% dividend yield based on the closing price of NGN594.00/s (as of 12 November). On our revised estimates, DANGCEM is trading at a 2025E P/E of 10.1x and EV/EBITDA of 6.2x.
Earnings trimmed despite stronger revenue outlook: We now forecast aggregate revenue growth of 21.6% y/y in 2025E (Prev: +20.3% y/y), reflecting a modest upward revision to our Pan-African revenue forecast (now -2.1% y/y vs -5.1% y/y prior), while maintaining our Nigeria revenue growth estimate at +32.4% y/y. The adjustment to Pan-Africa stems from expectations of a narrower volume contraction (-5.6% y/y to 10.50Mt vs -8.2% y/y to 10.22Mt previously), supported by firmer demand in key markets such as Tanzania (+11.8% y/y | Prev: +0.8% y/y), Congo (+2.6% y/y | Prev: -4.0% y/y), and Zambia (+2.8% y/y | Prev: -7.5%). We now project an 8.2% y/y increase in cost of sales and a 13.6% y/y rise in operating expenses (Prev: +7.3% and +9.5%, respectively), reflecting higher variable costs from increased sales volumes. As a result, we now expect EBITDA margin to expand by 606bps y/y to 44.6% (Prev: +633bps y/y to 44.9%). We estimate a 44.3% y/y decline in net finance costs to NGN296.34 billion, driven by lower interest expenses (-15.6% y/y) and a sharp reduction in net FX losses (-97.9% y/y), which more than offset a decline in finance income (-48.3% y/y). Overall, we now forecast 2025E EPS growth of 98.6% y/y to NGN59.05 (Prev: +105.8% y/y to NGN61.22).
Cash-rich earnings underscore high-quality profitability: DANGCEM’s earnings quality remains exceptional, marked by robust cash realization and limited accrual build-up. Operating cashflow (OCF) is projected to rise by 47.6% y/y to NGN1.21 trillion in 2025E, reflecting stronger profitability and tighter working-capital (WC) control (2025E negative WC balance of NGN72.34 billion vs. NGN227.64 billion in 2024). The cash conversion ratio, which indicates how effectively earnings are converted into cash, is estimated at 122.1% in 2025E (2024: 163.2%), indicating that earnings remain fully cash-backed even as conversion normalizes from last year’s unusually strong level. Meanwhile, the accruals ratio, a proxy for non-cash earnings, is still negative at -3.3% (2024: -6.1%), signalling that cash flows consistently exceed accounting profits—an impressive hallmark of conservative, high-quality earnings.
Valuation: Our year-end target price is NGN641.25/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 (NGN504.84/s) and FCFE (NGN412.45/s) estimates, assuming a 21.9% WACC, 24.3% COE and a 4.0% terminal growth rate. Meanwhile, we utilised Bloomberg’s Middle East and African (MEA) peer average 2025E P/E (15.5x) and EV/EBITDA (7.4x) to arrive at a FV of NGN917.10/s and NGN730.60/s, respectively.
