NB will likely remain in a loss position in FY'23, primarily due to the significant impact of naira devaluation on its huge FX-denominated payables. However, we like the company's aggressive expansion of market footprint, and current drags are likely to create long-term entry opportunities for patient capital. We retain our HOLD recommendation on the ticker with an unchanged 12-month TP of N43.10.
We expect NB to stage an H2'23 earnings rebound after the FX-induced pullback in H1'23. This recovery will likely reflect higher prices and volumes, especially in the seasonally strong Q4. Additional factors likely to support sales include the company's intensified digital initiatives and unique customer engagements. In H1'23, sales channels linked to the initiatives – B2B platform (+29.0% YoY), front-line sales (+38.0% YoY), and customer service/telesales (+32.0% YoY) – accounted for c.52.0% of revenue. Aided by a strong H2, we project FY'23 revenue to increase by 7.1% to 589.7 billion.