HBM Nigeria – A Brick in Construction of Value Investors’ Portfolio -WSTC
HBM Nigeria Plc has been considered a fundamental building block in the construction of value investors’ portfolios by the research subsidiary of the Lagos-headquartered investment firm WSTC Securities Limited.
Equities analysts at WSTC Securities Limited are positive on HMB Nigeria Plc’s earnings, with a fair value estimate of N386.15 per share.
HMB Nigeria Plc’s share price closed at N345, with 2.558 million units of the cement company valued at N894.215 million transacted on the local bourse. The cement company recorded moderate capital appreciation over the last 5 trading sessions, with an opening price of N334.
“We expect HBM Nigeria’s earnings momentum to remain positive, supported by sustained cement demand, improved plant reliability and continued gains in distribution efficiency”, WSTC said in its equity report.
Analysts said the Group’s ability to maintain high plant utilisation and reliable product availability should remain important to volume growth, particularly as infrastructure and construction activity continue to support underlying cement demand.
WSTC said HMB’s energy costs remain a key risk to margins. WSTC Securities noted that a 33% increase in cost of sales during the quarter, driven by higher variable production costs, highlights the business’s sensitivity to energy prices. HBM Nigeria is well poised and positioned to grow revenue.
Analysts price in HBM Nigeria’s ability to pass cost increases to customers or cement users while maintaining its focus on operational efficiency and cost optimisation.
Overall, WSTC said it maintains a positive outlook on HBM Nigeria, citing the Group’s strong market position, improving operational reliability, robust cement demand and ability to manage cost pressures as providing a solid foundation for continued earnings growth.
“HBM Nigeria can be considered as a fundamental brick in the construction of a value investor’s portfolio”, WSTC said in the equity report.
Earnings Scorecard
In the first half of the financial year 2026, HBM Nigeria Plc delivered a 31% year-on-year increase in profit after tax, which settled at ₦110.39 billion, supported by healthy topline performance.
The cement company’s revenue increased by 28% year-on-year from ₦268.63 billion in Q2 2025 to ₦343.53 billion in Q2 2026. The performance was driven primarily by higher sales volumes, improved plant stability and more efficient distribution across the Group’s operations.
Analysts noted that the Cement segment remained the dominant contributor, with revenue increasing from ₦261.70 billion to ₦333.91 billion during the period under review.
WSTC said the continued strength in the core cement business provided the foundation for the improvement in profitability recorded during the quarter.
However, the strong topline performance was accompanied by higher production costs. Cost of sales increased by 33% YoY from ₦95.83 billion to ₦127.20 billion, driven largely by a 36% increase in production variable costs from ₦60.35 billion to ₦81.83 billion.
The surge in production was driven by higher energy costs during the period. Nevertheless, revenue growth remained strong enough to offset higher production costs, resulting in a 25% increase in gross profit from ₦172.79 billion to ₦216.33 billion, according to analysts.
The company’s operating expenses increased by 19% year on year, with selling and marketing expenses rising by 15% and administrative expenses increasing by 28%.
The increase in administrative expenses was in part due to higher staff costs and technical service fees, the latter of which is linked to revenue through a 3% charge on net revenue.
Similarly, higher energy costs contributed to increased transportation expenses within selling and distribution costs. Despite these pressures, the slower growth in operating expenses relative to revenue supported further operating leverage.
Operating profit increased by 24% year on year from ₦120.61 billion to ₦149.68 billion.
WSTC said HBM Nigeria’s non-operating performance provided an additional boost to earnings. Finance income increased significantly from ₦7.33 billion to ₦19.81 billion, driven primarily by higher interest income earned on short-term deposits and current account balances.
Analysts said the increase in finance income reflects the benefit of the Group’s cash position in the prevailing high-interest-rate environment and provided an important supplement to operating earnings. GDP Growth Yet to Translate Into Improved Living Standards
