Market Valuation of Dangote Cement Rises After Shares Buyback Notice
Stock market valuation of the largest Cement Company in Nigeria, Dangote Cement Plc, inches higher to N4.6 trillion last week after the company announced second tranches of its share buyback plan.
Accounting for about 20% of Nigeria’s equity market capitalisation, the cement company share price closed at N270 on Friday, a slowdown from N275 seen in the five trading sessions.
Recall that Wednesday, the company announced the second tranche of its 10% share buyback programme on the Nigerian Exchange when the price opened at N259.
Document submitted to regulator shows that the second tranche is pegged at about 170,003,074 fully paid-up ordinary shares of 50 Kobo each, representing 1% of the currently issued shares, excluding treasury shares, will be open from January 19 and end on 20.
Some analysts think the cement company is repurchasing its share to stem volatility despite the fact that 85% of the 17 billion outstanding shares belongs to the group Chair, Aliko Dangote.
The company, according to some analysts that speak with MarketForces Africa on the share buyback, is more likely to be seeking a listing on a foreign stock exchange – London or New York, thus need to obtain the right price from the local market.
In 2021, Dangote Cement sales crossed a trillion naira mark, holding 60% of the market share with strong market per cement sales.
Higher capital expenditure by the Nigerian Government and increase investment in the real estate sector continue to drive sales growth with competing brands –BUA and Lafarge- sharing 40% of the entire market share.
In its outlook for 2022, an investment bank, Cardinalstone Limited is projecting another solid year for cement manufacturers, with private and public demand set to be major fulcrums.
The firm said in its outlook note that this prognosis on cement consumption is likely to reflect the knock-on effect of increased government spending and greater Public-Private Projects (PPPs) by institutions like RITC and INFRACO.
Analysts are expecting the equities market index to further this week as investors buy more of Dangote Cement shares as the company rounds up the shares buy-back programme on January 20.
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