Following the release of the FY’21 and Q1’22 results and investor conference calls, we adjust our forecasts for UAC of Nigeria Plc. These adjustments result in an upgraded target price of N14.88. We retain a HOLD recommendation on the ticker.

We expect UACN’s revenue to grow by 25.0% YoY in FY’22 to N126.7 billion, driven by double-digit growth in volumes and higher prices. This new revenue estimate is 24.5% higher than our previous projection. According to management, a few of its businesses responded with 75.0%-100.0% price adjustments over the last 12-18 months following a cumulative 125.0%-130.0% increase in the cost of select raw materials. Further disclosures revealed that these price adjustments were more evident in Animal Feeds & Edible Oils, Packaged Food & Beverages, and Paints segments.

We expect the price-induced revenue momentum to combine with initiatives like the increase in corporate-owned restaurants and rollout in colour centers to continue to drive revenue performance in the near to medium term (Forecast CAGR of +11.5% vs last five-year CAGR of +5.4%).