November 3, 2026/InvestmentOne Report
The strong 9M:2026 results owe much to HBM’s first half. Revenue grew 18.93% YoY to NGN928.25bn, operating profit rose 28.24% to NGN382.68bn and PAT increased 30.90% to NGN271.99bn. Q3 was different. Revenue declined 5.19% YoY to NGN249.84bn and PAT fell 15.26% to NGN63.64bn. Against Q2, the drops were 27.27% and 42.35%, respectively.
Cement accounted for the shortfall, with Q3 sales down NGN15.37bn, while aggregates, concrete and other products together added NGN1.69bn. Management attributed the weaker quarter to planned maintenance that restricted production at existing plants. When a cement line is taken down for repairs, fewer tonnes are available for dealers and construction sites even if demand is present.
We expect HBMNG to deliver FY:2026E revenue and PAT of NGN1.25tn and NGN365.44bn, respectively, with a recovery in Q4 dependent on improved production efficiency and lower maintenance costs. Looking ahead, the Sagamu and Ashaka expansions should support stronger cement volumes and earnings growth from 2027, although commissioning delays, elevated production costs and tighter liquidity remain key concerns.
Following our assessment of the 9M:2026 results, particularly the weaker Q3 performance and increased pressure on cash flow, we have revised our earnings expectations and lowered our 12-month target price to NGN392.37 from NGN423.22. This represents a potential upside of 12.11% from the NGN350.00 reference price. We therefore maintain our OVERWEIGHT rating.
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