Dangote Sugar must-sought-after at stock exchange
Dangote Sugar’s strong earning is attracting strong bid for its stock, leading to 36.21 per cent appreciation in the first half of 2023.
In 42 months, investors were richer with 48.85 per cent capital gain between 2020 and June 31, 2023. Kasimu Garba Kurfi , Managing Director, APT Securities and Funds Limited attributes this to 2022 full year and Q1- 23 results.
In its 2022 financial year, the company announced 46.02 percent increase in revenue to N403.24 billion from N276.05 billion.
Profit before tax grew 137.72 percent to N82.30 billion from N34.02 billion. Profit after tax increased 148.25 percent to N54.74 billion from N22.05 billion. The company paid huge tax of N27.56 billion, up from N11.96 billion in 2021.
Dangote Sugar also delivers good dividend which compels investors, including bargain hunters to take positions.
Months before dividend payment in anticipation of cash reward, and exit later to take advantage of price appreciation. In 2022, the company announced N12, 146, 874 to its shareholders.
The uptrend in profit came in amid rising cost as cost of sales rose from N225.85 billion in 2021 to N311.28 billion in 2022. Increase in cost is due to currency depreciation, rise in cost of raw material importation, uptick in distribution cost, rise in diesel price and tax expenses.
The company, however deployed efficient cost management strategies to tame spiralling cost. During the period, it successfully cut down selling and distribution expenses to N741 billion from N906 billion in 2021. Finance cost fell to N3.42 billion from N5.21 billion.
Fund managers expect Dangote Sugar to maintain its stellar performance for the rest of 2023. The optimism is on the back of impressive Q1-23 result and price gain in H1-23. In Q1-23, revenue rose 8.23 percent from N94.44 billion in Q1- 22 to N102.22 billion. Profit before tax grew to N18.33 billion from N13.60 billion.
This is in spite of increase in finance cost to N8.05 billion from N3.50 billion. The result confirmed the effectiveness of the company’s cost containment strategies as selling and distribution expense declined to N174.56 billion from N260.81 billion in Q1-22. Cost of sale rose only marginally from N74.98 billion in Q1- 22 to N76.47 billion in Q1- 23.
Dangote Sugar’s backward integration policy is building further investor confidence in the company’s ability to successfully contain cost of raw sugar importation, grow bottomline and returns. The company pursues its 10 year sugar development plan tenaciously.
By the sugar development policy, Dangote Sugar aims to produce 1.5 million metric tonnes per annum from locally grown sugarcane.
In pursuant of the plan, the company has commited huge resources into its Dangote Taraba Sugar Limited, Dangote Nassarawa Sugar Limited and Dangote Adamawa Sugar Limited in which it targets expanding sugar refining capacity from 3,000 tonnes per annum to 9,000 metric tonnes. As part of the backward integration project, Dangote.
Sugar is poised to grow its sugar plantation from land area of 8,700 hectare in 2022 to about 24, 200 hectare in 2030.
In the face of global economic uncertainty, the company has put in place sound risk management strategies and sustainability plans to shield investors capital from the vagaries of business environment. To assure shareholders of its culture of transperency, the company’s Board of Director has put in place corporate governance culture that is topnotch.
