DANGSUGAR's H1'22 results revealed sturdy revenue growth and operating efficiency. The robust top-line primarily reflected the impact of higher-than-expected volume outturn and pricing. Specifically, the company recorded a 40.5% and 60.6% surge in revenue PAT to N91.0 billion and N11.3 billion, outpacing our projections. Following adjustments to our model and assumptions, we revise our FY'22 topline and PAT forecast to N365.2 billion and N33.8 billion, respectively (vs N358.9 billion and N26.5 billion previously). We revise our gross margin expectations 3.5 ppts higher to 18.5ppts on a back of a pacier growth in revenue and improved production efficiency. Our revised revenue projection primarily reflects higher price assumptions, cued by the outcome of our retail price survey, which indicates that 50kg sugar prices have risen by 25.1% YoY in July 2022. In our view, this higher pricing dynamic underscores DANGSUGAR's ability to transfer costs to its customers. On costs, while we expect commodity prices to remain elevated year-on-year, the observed Q2 moderation in raw sugar prices (-5.7% QoQ) suggests that these pressures are likely to be relatively tamer in H2'22 (vs H1'22). ...
