In addition to its significant cement industry and fertilizer plant, the BUA Group is making big waves in the food sector. BUA Foods Plc has become a member of the SWOOTs after passing the N1 trillion threshold required to join the group.
BUA’s Food value jumped 24.10% during the week, rising from N53.2 per share to N66.oo per share, gaining N230.40 billion that saw the company’s market capitalization hit N1.19 trillion capitalization, a milestone for a company listed on the Nigerian Exchange Limited (NGX) on January 4, 2022.
The gain is building on BUA Food’s 1.41% year-to-date run that started at N1,415 to trade currently at N1,435, displacing Nestle Nig. Plc as the most capitalized and only consumer goods stock member of SWOOTs.
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The recent gain buoyed the company at the end of trading session on Friday, to the rank of the most capitalized consumer goods stock on the Nigerian Exchange Limited (NGX). At its current position, BUA Foods is N50 billion richer than Nestle that has lost N96.31 billion owing to N121.5 share loss that places its market value at N1.14 trillion, on the NGX.
BUA Foods was the first company to get listed this year at N40.00 per a share and got admitted on the NGX by introduction. With its 18 billion shares, the company has risen to the top of the stocks chain, delivering high margin returns to investors, especially those who bought at the early price.
BUA Foods stock has become one of the most attractive stocks in the Nigerian capital market for what analysts attribute to the company’s style of operation in the Nigerian food market. They said the company is operating in critical areas that are capable delivering good performance and reward investors handsomely.
A global market analyst, Opeyemi Dapo-Thomas, said BUA Foods is witnessing immense rally as a result of its consolidation in the consumer goods market.
The food businesses that were merged into BUA Foods are: BUA Sugar Refinery Limited; BUA Rice Limited; BUA Oil Mills Limited; IRS Flour and IRS Pasta.
The consolidation has seen the company’s revenue taking the first place in the market. In its 11 months that ended November 30, 2021, BUA Foods posted N303.876 billion profit, ending the period with profit after tax (PAT) of N78.809 billion – a 25.93% profit margin.
Other players in the food processing industry posted lower profit margins. Flour Mills of Nigeria Plc posted N522.821 billion revenue for the six months ended September 30, 2021 and 10.528 billion PAT, yielding a 2.01% profit margin.
Dangote Sugar Refinery Plc also came short with a N195.499 billion revenue for the nine months ended September 30, 2021, and a N15.513 billion PAT. It ended the period with a profit margin of 7.94%.
Similarly, Nestle Nigeria Plc recorded a revenue of N261.591 billion for nine months ended September 30, 2021 and PAT of N33.584 billion, translating to a 12.84% profit margin.
The BUA group said consolidation is part of efforts to maintain its leadership in the food processing and agribusiness sector, especially in the wake African Continental Free Trade Area (AfCFTA) that presents opportunities for growth through export.
“We have perhaps the largest food business in Nigeria and the West African sub-region. To realize our full potential as a business as we drive the food security needs of the country, we recently consolidated our food businesses under a single entity to be known as BUA Foods,” said Chairman of BUA Group, who doubles as Chairman of BUA Foods, Alhaji Abdul Samad Rabiu,
To meet its growth target, the company is expanding its factories across Nigeria. Rabiu said the group has eight ultra-modern factories across the country where sugar, flour, pasta products, edible oils, and rice are refined and processed. Its Lagos and Port Harcourt two refineries share a refining capacity of 1.5 million metric tonnes of sugar yearly.
“Our destination refinery in Port Harcourt is mostly export-based and can produce the highest grade of sugar there, that could serve the West African sub-region and the Nigerian markets,” he said.
However, while the group’s factory expansion and the BUA Foods shares’ rally support the optimism for higher growth for the company, analysts said some factors, including drawdowns, could get in the way of the company’s future growth.
“We are expecting drawdowns at the end of Q1, we are going to see a lot, for the fact that we are entering into the election year and the fact that foreign investment in that sector is already drying up, and at some point, investors will have to sell,” a financial analyst, Olumide Adesina said.