NESTLE's strong brand loyalty, export expansion, and easing cost pressures support a return to profitability in 2025, with our projected PAT at N92.7 billion. Potential asset revaluation could also strengthen the company's books, with positive passthrough to valuation. Hence, we maintain a BUY rating on NESTLE with a 12-month Target Price ("TP") of N1,518.20 (vs N1,099.89 previously), reflecting a 51.8% upside.
In the last few years, the Fast Moving Consumer Goods (FMCG) sector hasbeen saddled with a plethora of issues, including foreign exchangevolatility, insecurity in food-producing states that pressured domestic inputprices, and unfavourable government policies.
MTN Nigeria Communications Plc (NGX: MTNN) appears to be on track to recovery, evinced by its positive bottom-line print of N114.5 billion for Q4'24 (vs loss of N514.9 billion in 9M'24). We attribute this positive result to 1.) the successful renegotiation of tower lease contracts that resulted in N113.8 billion in OPEX savings; 2.) the focus on expense efficiency, which has yielded OPEX savings of N41.9 billion; and 3.) the continued increases in both usage and subscriber base in its voice and data businesses.
The oil palm market in 2025 is expected to maintain elevated CPO prices, particularly in the first half, driven by robust demand from biodiesel mandates, festive seasons and geopolitical factors affecting some substitute oils. However, supply-side improvements, particularly from favourable weather conditions, may temper prices in the latter half of the year. Locally, we expect prices to remain elevated on account of rising demand and elevated FX rates, which bodes well for the local players.
Although sector installed capacity was mostly flat year over year in 2024, average energy generated improved by a marginal 2.2% to 4,280 MW in Q3'24 from 4,189 MW in 2023. This improvement was in spite of the challenges of grid collapses, infrastructure vandalism, liquidity constraints, and gas supply shortages in the period.
We maintain a favorable outlook for Total Energies Marketing Nigeria PLC (TOTAL). The company has successfully grown its topline to over a trillion Naira, driven by its leadership position within Nigeria’s downstream oil and gas sector as demonstrated in its robust FY’24 financial performance.
