August 11, 2026/Cordros Report
We update our 2026E estimates for BUA Cement Plc (BUACEMENT) following the release of its H1-26 results. During the period, the company posted revenue growth of 25.6% y/y, EBITDA margin expansion of 758bps y/y to 54.1% and EPS of NGN9.59 (+79.6% y/y). Following our review, we revise our 2026E revenue growth estimate to +27.9% y/y (Prev.: +25.4% y/y) and EPS estimate to NGN17.72 (Prev.: NGN16.82). These revisions reflect upward adjustments to our sales volume (+6.1% y/y | Prev.: +4.0% y/y) and net-finance income (NGN40.27 billion | Prev.: NGN24.94 billion) forecasts. Accordingly, we raise our target price to NGN297.80/s (Prev.: NGN273.08/s) and upgrade our rating to a “HOLD” (Prev.: “SELL”). We also forecast a 2026E DPS of NGN15.00, translating to a dividend yield of 4.7%. On our 2026E estimates, BUACEMENT trades at a 2026E P/E of 17.8x and EV/EBITDA of 13.6x relative to MEA peer averages of 15.0x and 11.5x, respectively.
Higher volumes and net finance income lift earnings: We revise our 2026E revenue growth forecast to 27.9% y/y (Prev.: +25.4% y/y) reflecting an uptick in projected sales volumes to 8.59Mt (Prev.: 8.42Mt) while our average realised price projection is retained at c.NGN175,610.30/t (+20.6% y/y). Meanwhile, we maintain our COGS growth projection at 12.5% y/y, in line with our prior estimate, while OPEX growth is revised higher to 30.3% y/y (Prev.: 25.2% y/y). The COGS outlook continues to reflect an energy cost growth assumption of +27.5% y/y, held steady despite elevated oil prices as the company continues to benefit from the solid fuel initiative at the Obu plant and stable input cost dynamics. For OPEX, the upward revision reflects a steeper growth outlook for distribution expenses (+45.3% y/y | Prev.: +35.3% y/y), as H1-26 trends point to more sustained cost pressures across BUA’s haulage network than previously anticipated. Reflecting our revised revenue and cost assumptions, we now expect EBITDA margin to expand by 480bps y/y to 52.6% (Prev.: +417bps to 52.0%). Furthermore, we project net finance income of NGN40.27 billion (Prev.: NGN24.94 billion), reflecting a larger projected cash balance. Finally, we project an EPS growth of 68.6% y/y to NGN17.72 (Prev.: +60.0% y/y to NGN16.82).
Stronger cash generation supports a rising dividend profile: BUACEMENT’s dividend trajectory has strengthened considerably alongside the recovery in earnings. Precisely, DPS increased from NGN2.15 in 2024 to NGN10.00 in 2025, and we forecast a further increase to NGN15.00 in 2026E, representing a 50.0% y/y rise and implying a payout ratio of 84.6%. We expect robust operating cash flow generation (2026E: c.NGN648.00 billion) to provide sufficient coverage for this distribution, supported by stronger profitability and improved cash conversion. Beyond 2026E, we expect continued earnings growth and healthy cash conversion to support further dividend increases. Accordingly, we forecast DPS to rise to NGN50.00 by 2030E, translating to a 2026E–2030E CAGR of 35.2%.
Valuation: Our target price is NGN297.80/s, derived from a 60/40 blend of DCF and sector relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN374.45/s) and FCFE (NGN261.64/s) estimates, assuming a 16.5% WACC, 23.8% CoE and 4.0% terminal growth rate. Similarly, our multiple based FV was derived from a blend of EV/EBITDA (NGN269.03/s) and P/E (NGN265.82/s) estimates, utilising MEA peer averages for both factors (11.5x and 15.0x, respectively) as multipliers.