Sell Down: Dangote Sugar Trades at 64% Discount to 52-Week
Despite the Santa Claus rally in the local bourse, sell pressures on Dangote Sugar Refinery Plc intensified last week in the equities market as investors maintained their bearish mood.
This plunged the market value of Dangote Sugar to N394.773 billion, about a 64% decline from its 62-week high as a result of investors exiting their positions. According to data from the Nigerian Exchange, Dangote Sugar Refinery Plc opened the week at N35 but closed at N32.50 on Friday in the equities market on the back of persistent sell pressure.
The sugar refinery became a selloff target after its earnings bumped as huge exposure to foreign exchange liabilities dampened performance. Sell pressures persisted as investors appeared not to be convinced about Dangote Sugar Refinery profitability after its significant earnings bump.
In its nine months of financial year 2024 earnings release, Dangote Sugar Refinery Plc net loss expanded by more than 582% year on year to N184.4 billion from N27.07 billion in the comparable period in 2023. The company, however, grew revenue by 56.4% year on year to N484.4 billion, following increased sales across its product segments from N309.713 billion.
However, its costs of goods sold surged by 89.6% to N464.6 billion from N245.057 billion, reflecting higher raw material costs, which spiked by 100%, as well as growth in direct overheads.
The company reported that its operating profit plunged by about 86% year on year while operating expenses climbed 28.5%. The sugar refinery’s net finance cost expanded to N293.2 billion from N101.5 billion in the comparable period, driven by a 176.1% increase in finance costs.
In the period, the sugar company’s finance cost was bloated by about 157% year on year, surged in foreign exchange losses, and there was higher interest on commercial papers. This happened when the company’s financial income nosedived. As a result, pretax loss expanded by 556.9% to N275.6 billion.
But pressure on the bottom line eased on account of a N91 billion tax credit, which reduced net loss to N184.4 billion at the end of nine months of the financial year 2024. #Sell Down: Dangote Sugar Trades at 64% Discount to 52-Week AfDB Advocates Structural Solutions to Tackle Africa’s Economic Challenges
