Equity Analysis /

Unilever Nigeria: UNILEVER NIGERIA: Earnings strong again in 3Q 17, but we maintain Sell on valuation grounds

    Esili Eigbe
    Esili Eigbe

    Head of Consumer Research

    Tellimer Research
    23 October 2017
    Published byTellimer Research
    Unilever Nigeria reported 9M17 earnings last Friday, posting EPS of NGN1.28, +208% yoy. This implies Q3 17 EPS of NGN0.30, +196% yoy and -45% qoq.
    Other highlights
    (1) Revenue: +39% yoy to NGN69.1bn in 9M17, +37% yoy and +5% qoq.
    (2) EBIT: +222% yoy to NGN9.2bn, +425% yoy and -24% in Q3 17.
    (3) PBT: +352% yoy to NGN6.8bn, +916% yoy and -38% qoq in Q3 17.
    (4) Net operating cash flow: +59% yoy to NGN4.1bn in Q3 17.
    (5) Goss debt: -60% qoq to NGN8.0bn.
    (6) Capex: +77%, but fell 43% to NGN667mn in Q3 17.
    This is another set of strong results from Unilever Nigeria… but we maintain our Sell rating on valuation. Unilever Nigeria trades on a FY18f P/E and EV/EBITDA of 39.2x and 18.6x respectively, a premium to GEM consumer peers trading on a FY18f P/E and EV/EBITDA of 23.6x and 13.3x respectively.