August 14, 2026/Cordros Report
Following a strong operating performance in H1-26, we update our 2026E estimates and outlook for Dangote Cement Plc (DANGCEM). Our revised 2026E forecasts point to revenue growth of 20.6% y/y (Prev.: +19.7% y/y), reflecting expectations of stronger performance from the Nigeria OpCo (+19.3% y/y | Prev.: +17.9% y/y). However, we lower our EBITDA margin forecast to 46.5% (Prev.: 46.9%), reflecting increased cost pressures from the elevated oil price environment.
We also raise our effective tax rate assumption to 34.0% (Prev.: 30.0%), in line with management expectations, and consequently lower our EPS forecast to NGN78.69 (Prev.: NGN82.94). Reflecting these revisions, we lower our target price to NGN1,041.59/share (Prev.: NGN1,077.80/share) and retain our HOLD rating on the stock.
On shareholder returns, we forecast 2026E DPS of NGN70.00, implying an 89.0% payout ratio and a dividend yield of 6.8% at the current market price (NGN1,034.00/share). Based on our revised 2026E estimates, DANGCEM trades at 13.1x P/E and 7.4x EV/EBITDA, compared with MEA peer averages of 16.1x and 8.9x, respectively.
Pricing drives revenue upgrade; higher costs and taxes temper earnings: We raise our 2026E revenue growth forecast to 20.6% y/y (Prev.: +19.7% y/y), reflecting a stronger revenue outlook for the Nigeria OpCo at 19.3% y/y (Prev.: +17.9% y/y), primarily driven by a higher realised price growth assumption of 16.0% y/y (Prev.: +12.5% y/y). Meanwhile, we retain our Pan-African OpCo revenue growth forecast at 14.7% y/y. On costs, we raise our COGS and OPEX growth forecasts to 15.8% y/y and 24.0% y/y, respectively (Prev.: +14.5% y/y and +20.6% y/y), largely reflecting higher raw material input costs (+18.9% y/y | Prev.: +17.7% y/y) and haulage expenses (+25.3% y/y | Prev.: +20.3% y/y) amid the elevated oil price environment.
Consequently, we lower our EBITDA margin forecast to 46.5% (Prev.: 46.9%). Below the operating line, we now forecast net finance costs to decline by 24.8% y/y (Prev.: -13.9% y/y), largely reflecting a 37.9% y/y reduction in interest expense due to a lower debt balance (-35.8% y/y). However, the benefit from lower financing costs is offset by a higher effective tax rate, which we raise to 34.0% (Prev.: 30.0%) in line with H1-26 levels and management expectations. Accordingly, we lower our EPS forecast to NGN78.69 (Prev.: NGN82.94).
Capacity buildout drives a heavier capex cycle: DANGCEM is entering a higher investment phase as it targets an additional 25.00Mt of capacity to reach c.80.00Mt before 2030, alongside continued investment in CNG-powered trucks across its operating regions. Accordingly, we forecast capex intensity of 14.1% in 2026E (2025FY: 11.6%) and an average of 11.9% over 2026E–2030E (2021–2025: 9.1%). We expect the programme to be funded primarily through operating cash flows and supplier financing, with limited incremental debt. We believe strong cash generation, and low leverage provide sufficient funding headroom, with OCF margin averaging 32.4% and net debt/EBITDA averaging just 0.1x over our forecast horizon.
Valuation: Our target price is NGN1,041.59/s, derived from a 50/50 blend of DCF and sector relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN861.01/s) and FCFE (NGN800.54/s) estimates, assuming an 18.7% WACC, 20.1% CoE and 4.0% terminal growth rate. Similarly, our multiple based FV was derived from a blend of EV/EBITDA (NGN1,237.85/s) and P/E (NGN1,266.94/s) estimates, utilising MEA peer averages for both factors (8.9x and 16.1x, respectively) as multipliers.