Champion Breweries Plc has reported its Unaudited Financial Results for the half year (H1), ended June 30, 2022, with a profit after tax (PAT) of N1.076 billion in half year H1 2022 compared to N445.23 in half year H1 2021 representing 141.60 per cent growth year-on-year.
Curiously, despite the impressive rise in earnings, the company’s net profit margin in recent periods hovers around 15 per cent on average. In fact, in 2020 financial year, it was as low as 2.25 per cent, but stood at 15.66 per cent in H1 2022, representing a growth of 71 per cent year-on year.
Net profit margin measures the profitability of a company and a good net margin varies by industry, but a margin of 10 per cent is considered average, while 20 per cent and above is considered high or good.
Comparatively, Champion Brew’s net margin is better than other key peers in the industry. For instance, in Q1 2022 financial year, Champion Brew’s net profit margin stood at 16.69 per cent compared to Guinness’s 2.90 per cent and Nigeria Breweries’ 0.78 per cent
A cursory view at the financials shows that higher growth in cost of sales has been a major factor affecting the company’s bottom line. For instance, in H1 2022, revenue rose by 42 per cent year-on year-on-year to N6.862 billion, while costs of sales rose by 46 per cent to N4.209 billion, broadly due to increased cost of raw materials, which is a major component of the company’s cost of sales. Cost of sales constituted 76 per cent of total expense, while raw materials and consumable constituted 49 per cent of cost of sales.On the company’s balance sheet, total assets grew marginally by 6 per cent year-to-date to N14.185 billion in H1 2022 compared to N13.487 billion in Financial year 2021. The low growth was caused by a dip in cash and cash equivalent, inventories and trade and other receivables notwithstanding the high growth in prepayment (99 per cent).
Net Operating Income stood at N1.512 billion in H1 2022, compared to N661. 3 million in H1 2021 (129 per cent growth year-on-year)
Operating expenses was N5.454 billion in H1 2022, compared to N4.223 billion in H1 2021 (29 per cent growth year-on-year)
Total Liabilities stood at N3.326 billion, compared to N4.267 billion as at December 2021 (8.84 per cent year-to-date growth).
Shareholders Fund was N10.294 billion, a 12 per cent year-to-date increase relative to December 2021’s value at N9.220 billion.
Champion Breweries Plc operates in the NGX consumer goods sector and has been listed on the NGX since September 1, 1983. The company is currently the 40th most valuable stock on the NGX with a market capitalization of N31.3 billion, which makes about 0.115 per cent of the Nigeria Stock Exchange equity market.
In terms of capital gain, Champion Breweries has gained 70.2 per cent Year-to-Date. It started the year with a share price of N2.35 and closed its last trading on August 3, 2022, at N4 per share.
In terms of trading liquidity/volume, Champion is the 46th most traded stock on the NGX over the past three months; from May 4 to August 3, 2022. Within this period it traded a total volume of 75.9 million shares and YtD trading volume of 136,572,349 million (daily average volume of 955,051 shares). This average daily volume is good and may indicate that the stock is competitive. Also between July 29 and August 2, 2022, the stock has traded above the daily average volume; an indication of a price climax. So investors should be cautious because sharp price moves coupled with steep volume increases can often be a sign of imminent price reversal.
Also with a low free float, trading can be risky. Champion Breweries Plc as at June 30, 2022, has a free float percentage and value of 3.58 per cent N104,769,443.86 respectively. Champion Breweries Plc as at June 30, 2022, has 7,829,496,464 outstanding shares; 96.41 per cent of the outstanding shares are owned by Raysun Nigeria Limited (86.36 per cent) and Akwa Ibom Investment (10.06 per cent). This is not compliant with the NGX’s free float requirements for companies listed on the Main Board.
The NGX Rule Book; Rule 12:1 (4) (a) requires a minimum free float of twenty per cent (20 per cent) of companies’ issued share capital; or (b) The value of its free float is equal to or above N40 billion on the date the Exchange receives the Issuer’s application to list. Free float, means the number of shares outstanding and available to be traded on a securities exchange.
Notwithstanding, the company has shown consistent growth in revenue and earnings at least in recent periods. Over the past one year, earnings grew by 142 per cent
The company’s earnings per share grew by 142 per cent to N0.14 from N0.06 in H1 2021. EPS is a good measure of a company’s profitability; it indicates how much money a company makes for each of its shares. Investors should note that they do not have access to the EPS; a portion of it may be distributed as dividend or a portion of it or all can be retained for expansion and growth and comparing EPS in absolute terms may not have much meaning to investors. But it is, when compared to share price, it helps determine the value of earnings and how investors feel about future growth. This gives rise to the price-to-earnings ratio and with the company’s price-to-earnings ratio (19.4x) compared to the peer average (17.3x), the stock is priced higher and so expensive.
compliant with the NGX’s free float requirements for companies listed on the Main Board.
The NGX Rule Book; Rule 12:1 (4) (a) requires a minimum free float of twenty per cent (20 per cent) of companies’ issued share capital; or (b) The value of its free float is equal to or above N40 billion on the date the Exchange receives the Issuer’s application to list. Free float, means the number of shares outstanding and available to be traded on a securities exchange.
Notwithstanding, the company has shown consistent growth in revenue and earnings at least in recent periods. Over the past one year, earnings grew by 142 per cent
The company’s earnings per share grew by 142 per cent to N0.14 from N0.06 in H1 2021. EPS is a good measure of a company’s profitability; it indicates how much money a company makes for each of its shares. Investors should note that they do not have access to the EPS; a portion of it may be distributed as dividend or a portion of it or all can be retained for expansion and growth and comparing EPS in absolute terms may not have much meaning to investors. But it is, when compared to share price, it helps determine the value of earnings and how investors feel about future growth. This gives rise to the price-to-earnings ratio and with the company’s price-to-earnings ratio (19.4x) compared to the peer average (17.3x), the stock is priced higher and so expensive.
With continued inflationary pressures and hike in interest rate, which are likely to impact on the cost of production and consumer demand, the company’s top and bottom lines are likely to be affected, thus may contract future margins and growth.
“The performance of the Company is subject to seasonal fluctuations as a result of weather conditions and festivities. The Company’s full-year results and volumes are dependent on the performance in the peak-selling season, typically resulting in higher revenue and profitability in the last quarter of the year. The impact from this seasonality is also noticeable in several working capital-related items such as inventory, trade receivables and payables,” says the company.
SWOOTs market capitalization up by N42 bn w-o-w
The combined market capitalization of stocks worth over one trillion (SWOOTs) appreciated by 0.21 per cent to close at N20.05 trillion from N20.01 trillion the previous week, reflecting a growth of N42.15 billion. Stocks included in this classification are AIRTELAFRICA, BUA CEMENT, DANGOTE CEMENT, NESTLE and MTNN Plc.
MTNN Plc’s share price closed at N214.9 at the end of the week’s trading sessions to reflect a growth of 7.40 per cent week on week. This means that the total amount gained by investors was N301 billion, causing a rise in the company’s market capitalisation.
The communications company, a competitor of Airtel Nig Plc, has a total market capitalization of N4.37 trillion, N2.79 trillion lower than Airtel Africa’s current market value.MTNN Plc is the third-highest in market value on the Nigerian Exchange Limited (NGX). The company released its H1 2022 financial result, reflecting a 20.07 per cent growth in revenue for the period, while profit after tax grew significantly by 28.06 per cent from N141.82 billion in H1 2021 to N181.62 billion in the current period.
Nestle Nigeria Plc’s share was up by 2.99 per cent to close the week at N1,300 per share, amidst sell-offs and buy-interests during the trading week. The Fast-Moving Consumer Goods company currently has a market capitalization of N1 trillion.Nestle Nigeria Plc is now the only company under the NGX Consumer goods Index to be worth over a trillion, following the exit of BUA Foods from the SWOOTs category.
The H1 2022 financial result revealed a profit of N27.7 billion, representing a 28 per cent increase from the prior-year period, as revenue grew by 30 per cent from N171 billion to N222 billion. Earnings per share for the period was at N12.33.
BUA Cement Plc’s share price close the week flat at N58.8, a 15.15 decline from N69.3 last week while the market capitalization stood at N1.99 billion, from N2.35 billion the previous week.The company’s H1 2022 financial report revealed revenue of N188.56 billion, reflecting a growth of 51.72 per cent from N124.28 billion in 2021. Similarly, profit after tax increased by N17.97 billion, reflecting a 41 per cent increase from N43.40 billion recorded in the corresponding period of 2021, to N61.36 billion in the current period
Airtel Africa Plc’s share price remained unchanged during the week to stand at N1905.4 per share at the end of the trading week, with a market capitalization of N7.16 trillion.As the most capitalized company on the exchange once again, it led the SWOOTs strongly, with MTNN, its competitor as second-most capitalized stock, far behind.
The telecom giant released its Unaudited Financial Statement for the quarter ended June 2022 revealing a 13 per cent growth in revenue from $1.11 billion in 2021 to $1.26 billion in the current period.The profit after tax for the period also appreciated significantly by 25.3 per cent from $142 million in 2020 to $178 million.
Dangote Cement Plc’s share retained its share price at N265.00 as it traded flat during the week. The company, which is a competitor of Bua Cement Plc and Wapco Plc, and the most capitalized cement producer on the NGX, has a total Market capitalization of N4.51 trillion.Dangote Cement Plc is the third most-valued company quoted on the exchange and makes up roughly 22 per cent of the total market capitalization of all stocks worth over one trillion.
The H1 2022 financial result revealed a profit of N172.10 billion, representing a 33.83 per cent increase Y-o-Y. Meanwhile, Revenue for the period stood at N808.04 billion, a 17.01 per cent increase from the corresponding period of 2021.