- BUA Cement has seen its share price surge to about 12.55 per cent as investors’ confidence rebounded
- The company embarked on a price slash, leading to investors’ confidence surging
- Reports say the company’s share price has moved from N35 per share to its current share price of N105.80 per share
Investors are showing renewed confidence in BUA Cement after the company slashed the price of its product from N5,000 to N3,500 per bag.
Legit.ng reported that the price is yet to be affected by dealers who said they still sell old stocks and have not received new ones reflecting the current ex-depot price.
Credit: Anadolu Agency
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BUA Cement’s earnings grow to N64 billion in 2023
The share price of the cement company has soared by 12.55% over the past week to an all-time high of N105.80 as of October 13, 2023, a Nairametrics report said.
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The price increase last week boosted the yearly gains of the company’s share price, showing sustained positive sentiment among investors.
The company’s share price has spiked by 202% since it was listed at N35 per share three years ago.
The company has maintained compound earnings and an annual growth rate of 25% in the last five years.
During the first half of 2023, BUA Cement recorded a stable performance despite the economic situation. It grew its earnings to about N64 billion, compared to N61 billion recorded in the same period the year before.
The company’s share price increase can be attributed to the growing number of investors in the company’s earnings and potential prospects.
The recent downward price adjustment of the company caused a boost in investors’ confidence.
BUA Cement’s share jump boosted by price cuts, leads Dangote, others
BUA Cement’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin in the first half 2023 slowed by 1.3pp to 45.2%.
The result comes despite an increase in revenue per ton, increasing to N67,192 per ton from N56,454 per ton in the first half of last year.
Some of the indicators led to 18% in cost of sales and 74% in selling and distribution expenses in the first half of 2023.
Currently, the company’s stocks are trading at a price-to-earnings ratio of 34.39x, above the average price per earning of cement products at 19.20x, and Dangote Cement’s 13.75x and WAPCO-Lafarge’s 9.16x.
BUA Cement achieved four-quarter earnings per share of N1.09 to bring its EPS to N3.05.
On October 3, 2023, BUA Cement announced a price cut that rattled the industry, leading to speculations that competitors such as Dangote Cement and WAPCO-Lafarge would follow suit soon.
Analysts believe the cement war is looming
Industry analysts said the company aims to stimulate competition in an industry enjoying a near-monopoly by Dangote Cement and Large.
Business Editor of the Nigerian Xpress, Emeka Okoroanyanwu, said the industry is dominated by Dangote Cement, which controls over 50 per cent of the market share, followed by Lafarge with over 30 percent, leaving the rest for BUA Cement.
He said:
“I think what BUA Cement did was to cause a price war in the industry. It usually happens when one company feels left out in the industry.
You see now that the company’s share price is rebounding, revealing investors have confidence in the company.”
Asked if others would follow suit, Okoroanyanwu said time will tell if the disruption is vast enough for them to embark on.
“It is a 50/50 thing. Others are watching the market to see if customers will switch loyalty. If they notice such a switch, they won’t have the option to toe a similar line,” he said.
Dangote speaks on reported plan to slash cement prices from N5,500 to N2,700 on October 1
Legit.ng reported that Dangote Group, the parent company of Dangote Cement, has denied reports that it plans to reduce cement prices by 50.9 percent on October 1, 2023.
In various messages shared on multiple social media platforms, including WhatsApp groups, Dangote Cement was reported to have planned to reduce the price of cement.
Speaking exclusively with Legit.ng, Anthony Chiejina, the Group Chief Branding and Communications Officer of Dangote Industries Limited, said the report around price reduction is false.
Source: Legit.ng
