BUAFOODS | BUA Foods Plc - Initiation of Coverage : Demystifying the food conglomerate

    We initiate coverage on BUA Foods PLC (BUAFOODS) with a 12-month Target Price (TP) and projected market capitalization of N275.76 and N5.0 trillion, respectively. 

    BUAFOODS stands as one of Nigeria's leading indigenous companies in the Food and Fast-Moving Consumer Goods (FMCG) sector, boasting a legacy of over two decades. Our outlook for the company's earnings is biased to the upside and premised on projected improvements in return metrics. Notably, the strategic positioning of the company's sugar refinery within the Bundu Free Trade Zone, Port Harcourt, is poised to reduce production costs, provide tax incentives, and grant access to burgeoning regional markets within the African Continental Free Trade Area (AFCTA). Furthermore, BUAFOODS has 8 plants strategically situated across all the geopolitical zones of the country and ranks in the top 2 by capacity within its industry.

    The company's commitment to technological advancement has significantly bolstered plant efficiency, evident in aggregate capacity utilization of 63.6% in 2023 (vs 60.6% in 2022). Moreover, given Nigeria's status as a net importer of essential commodities such as sugar, rice, and wheat, BUAFOODS' proactive investments in backward integration signal promising prospects for the nation's long-term self-sufficiency objectives. These initiatives are anticipated to not only fortify BUAFOODS' profit margins but also mitigate foreign exchange dependencies, thereby contributing to sustained growth and resilience.


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    CardinalStone is a full service investment banking firm with a vision to build a world class investment banking firm of African origin; operating out of Lagos, Nigeria. The firm was incorporated in April 2008 and began operations in June 2008. CardinalStone is duly registered with the Securities & Exchange Commission in Nigeria to carry on business as an Issuing House, Fund Manager and Broker/Dealer The Firm's activities are carried out across five business units: Asset Management, Investment Banking, Private Equity, Securities Trading and the Business Support Group.
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