In a remarkable feat, Dangote Cement, Nigeria’s foremost cement producer, has achieved an extraordinary market valuation of N13 trillion, overshadowing its closest rival, BUA Cement Plc, whose market value falls short of half of Dangote’s.
Investors continue to show confidence in BUA Cement, leading to a surge in its market valuation and positioning the company at a considerable multiple to its earnings. Despite this, Dangote Cement’s dominance is not only evident in market capitalization but also in its significant size advantage over Lafarge Africa, the third-largest cement producer in the country.
BUA Cement, with a market capitalization about 10 times that of Lafarge Africa, pales in comparison to Dangote Cement, which is a staggering 14 times larger than Lafarge Africa. This stark contrast underscores the immense growth in market valuation that Dangote Cement, Nigeria’s leading cement manufacturer, has experienced.
Catalysts Behind Dangote Cement’s Success
When examining the combined market capitalization of Dangote Cement, BUA Cement, and Lafarge Africa, it totals approximately N20 trillion, with Dangote Cement contributing an impressive 65%, or about two-thirds, to this figure. This dominance extends to annualized revenues for 2023, where the three companies collectively post an estimated N3 trillion, with Dangote Cement accounting for 67% of the total.
The recent surge in Dangote Cement’s share price, witnessing a 100% increase year to date over the last two weeks, has been a significant factor in the company’s valuation growth. This surge has notably influenced the overall market capitalization of the NGX, standing at around N57.8 trillion.
Another catalyst behind this surge is Femi Otedola’s acquisition of shares in the company, as reported by Nairametrics and later confirmed by the billionaire himself. Otedola’s investment decision was driven by Dangote Cement’s proven track record of delivering value to its shareholders, although the exact number of shares acquired remains undisclosed.
Dangote Cement’s Impressive Performance
Reflecting on the past year, Dangote Cement started 2023 with a market capitalization of N4.4 trillion and closed the year at N5.4 trillion, showcasing rapid growth that more than doubled in a few weeks in December. This remarkable performance underscores the company’s robust market presence and investor confidence.
In contrast, BUA Cement, despite an 80% surge in its share price year to date, had a relatively flat performance in 2023, starting with a market cap of N3.3 trillion and closing slightly lower at N3.2 trillion. However, the company has experienced a significant rebound, with its market valuation currently at N6.2 trillion.
Both Dangote Cement and BUA Cement are part of the exclusive group of Stocks Worth Over One Trillion Naira (SWOOTs), with Dangote Cement standing out as the only stock in Nigeria valued at over N10 trillion. At N20 trillion, the market cap of Nigeria’s cement giants constitutes over 35% of the total market capitalization of the NGX, solidifying their dominance in the industry.
By: Delino Gayweh
Serrari Financial Analyst
February 2, 2024
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