In our view, Flour Mills of Nigeria Plc (FMN) looks set to record strong traction in operating performance in the current financial year. The company has already surprised market watchers with a 4.3ppts YoY increase in gross margin to 16.5%1 and a c.3.0x surge in operating cash flow to N16.7 billion in the peak of COVID-19 restrictions (April to June or Q1'20/21). While panic buying/stockpiling (one-off support for top-line growth in Q1'20/21, by our assessment) has stopped, lingering border closures and gravitation to value brands are likely to remain supportive for the rest of the year (revenue: FY'20/21E: +5.5% YoY N605 billion; previous forecast: N524.8 billion).
