Global raw sugar prices skyrocketed in 2023 due to reduced market supply, driven by unfavourable climate conditions and irregular rainfall. However, the average global raw sugar price (YTD average: $21.29/lb) is now 10.8% lower than the mean of 2023.
In FY'24, we expect FIDELITYBK to post a PBT of N171.5 billion, representing a possible c.38.0% expansion from its FY'23 print. This earnings projection is in line with the bank's guidance of N170.0 billion and consistent with potential benefits from the high-interest rate environment.
In FY’24, we expect a stellar performance from UACN, supported by strong topline growth prospects, insusceptibility to FX volatility, and resilience in the face of difficult macroeconomic conditions through its various strategies. Hence, we have upgraded our 12-month target price (TP) to N21.68 (vs 16.04 previously) with a BUY recommendation (HOLD previously).
In FY’24, we expect FCMB’s gross earnings to improve, as the uptick in interest income (+55.4%) will likely mask the 17.8% decline in non-interest revenue (NIR).
UBA’s PBT reached a record high of N818.8 billion (+259.2% YoY) in FY’23. The performance was driven by the impact of FX movements on the bank’s derivative assets, which resulted in a 62.9x surge in fair value gains on derivatives to N457.2 billion.
In light of the Q1'24 earnings release, we raise our 12-month target price (TP) for DANGCEM to N552.42 (vs N375.58 previously); however adjusting our recommendation to a HOLD (BUY previously). Our revision hinges on better FY'24E volume sales expectations, driven primarily by a recovery in Nigerian operations and steady growth in Pan-African markets. We also expect still-high prices in Nigeria and the sustained positive FX translation from Pan-African operations to be supportive of the top line. However, we anticipate compression in margins from elevated operating and finance costs in in line with the broader inflationary environment and FX volatility. In addition, following the expiration of the pioneer tax incentive on Obajana Line V in December 2023, we expect a higher tax charge in the period to pressure the bottom line.
