Vetiva says Unilever Nigeria Road to Redemption has Many Bumps

Vetiva says Unilever Nigeria Road to Redemption has Many Bumps

Vetiva Capital analyst, Chinma Ukadike downgrades Unilever Nigeria Plc to sell, having noted many bumpy road to redemption for the consumer goods company.

The investment firm forecasts ₦8.55 price target for Unilever Plc, though the company share traded at ₦12.45 on Thursday.

Its market capitalisation closed the trading session at ₦71.425 billion on 5,745,005,417 outstanding shares.

Explaining the sell advice, Vetiva said coming from a loss making position in the past year, Unilever kicked off 2020 on a much stronger foot.

The Nigerian Stock Exchange chart reading revealed however that Unilever share price had peaked at ₦33 in 52 week, hit 52 weeks low at ₦9.90.

The company reported a 45.9% quarter on quarter growth in top line in the financial year 2020.Vetiva says Unilever Nigeria Road to Redemption has Many Bumps


Vetiva’s analyst explained that while the competitive landscape of its largest revenue segment has not slowed, Unilever made a slow return to profit in the part quarter.

The breakdown of the results show that 26.1% of its revenue coming from the segment as against 16.4% reported in the fourth quarter of 2019.

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“Going forward, we believe that FMCG giant is approaching a new sales baseline after abandoning the problematic receivables policy”, Vetiva said.

Vetiva said it expects the company to conservatively maintain the run rate for the rest of the financial year 2020.

That said, the investment firm’s analyst stated that the super –premium position of its flagship seasoning brand, Knorr, place Unilever in an awkward position.

This is as a result of expected reduction in consumers wallets could lead to broad-base down-tiering of consumers’ purchases across FMCG spectrum.

However, Vetiva said it expects Unilever’s home and personal care segment to thrive this period, given the increasing need or awareness for personal and environmental hygiene.

“Given our expectation for a more stable outlook on revenue in line with its Q1 run rate and normalise credit stance, we expect revenue from its seasoning segment to decline 11% year to ₦28.4 billion”, Vetiva said.

Vetiva also forecast a 9.6% decline in revenue to ₦54.7 billion as against ₦60.5 billion in the comparable period.

“We expect operating margins to come in greatly improved at 19%”, the investment firm stated.

Vetiva says Unilever Nigeria Road to Redemption has Many Bumps

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