Nigeria | NGX

Flour Mills Nigeria Plc. (FLOURMILL) released its Q1 2024 (3M ending 30-June- 2023) earnings result wherein its Revenue advanced by 34.4% y/y to N456.38bn from N339.60bn in Q1 2023 (3M ended 30-June-2022). This was supported by the growth in its revenue segments of food, agro allied, sugar and support services to N303.65bn, N79.86bn, N66.49bn and N6.37bn respectively in Q1 2024. In comparison to the performance in the previous quarter, Flourmill’s Revenue was up 7.2% q/q to N456.38bn in Q1 2023 from N425.69bn in the preceding quarter.

Stanbic’s H1 2023 audited numbers showed a 61.6%y/y increase in Interest Income to N110.3bn driven by improved yields on risk assets. Q/q (Q2 2023 compared with Q1 2023), Interest Income was up 18.7%. Net Loans to customers was up 37.4% in H1 2023 from December 2022 (inclusive of the impact of the devluation on foreign currency loans). Interest Expense also grew strongly, up 110% y/y to N37.6bn. Q/q, Interest Expense was up 67.7%. Customers Deposits were up 31.5% in H1 2023 (also inclusive of the impact of devaluation) compared with December 2022. Overall, Net Interest Income grew 44.3% y/y to N72.7bn in H1 2023.

Lafarge Africa reported a 5.9% y/y Revenue growth to N197.6bn in H1 2023 from N186.5bn in the prior period (H1 2022). Similarly, on a q/q basis, Revenue was up 15.3% to N105.8bn in Q2 2023 from N91.8bn in Q1 2023. The broad-based growth in cement sales (up 10% to N102.4bn) and aggregate and concrete sales (up 23.2% to N3.3bn) contributed to the marginal increase in topline growth in H1 2023, despite a decrease in sales of other products (down 51.9% to N85.4bn).

2023 has underscored the importance of ETI's geographically diverse model. The group navigated major currency devaluation and macroeconomic frailties in some regions of operations to report strong H1'23 earnings. Despite the political situation in Niger and other legacy issues like the weak debt profile in some markets, we expect the bank's earnings to remain resilient, buoyed by higher yields and a strong ability to reprice credit assets, 50.0% of which matures in less than a year.

Economic traction was capped in the second quarter of the year, as sustained headwinds in the oil and gas sector led to a GDP growth of 2.5% YoY, defying analyst expectations of 2.8% YoY. The print was the lowest Q2 GDP growth since the exit from the pandemic. The oil sector (-13.4% YoY) shaved off about 80bps from growth, as average crude oil production (1.22mb/d) in the review quarter touched the second lowest point since 2013. We attribute the uninspiring oil outturn to the leakages in the Forcados terminals, ageing infrastructure and strike action by oil workers.

We initiate coverage on Airtel Africa Plc (AIRTELAFRI) with a 12-month Target Price (TP) and projected market capitalization of N1,559.44 and N5.9 trillion, respectively. Our TP implies a total return of 27.8% (comprising expected capital appreciation of 24.8% and a dividend yield of 3.1%) and a BUY recommendation on the stock.