April 23 (Lagos) - Unilever Nigeria Plc (
UNILEVER ) last week released its Q1’18 results recently, reporting Revenue of N 26 billion (+16% y/y) and PAT of N 3 billion (+81% y/y).
The results exceeded analyst expectations at Vetiva Capital Management Ltd in Victoria Island by 4% and 23% respectively.
The stock shed 3.64% on Friday to close at N 53.00, higher than their target price of N 34.15.
UNILEVER has gained 29% year-to-date.
In our opinion, which slightly disagrees with the above analyst, the stock should be bought on any dips. In terms of P/E ratios, BVPS and dividend yield metrics the stock is highly overvalued.
But we feel so because of the shareholding structure of the Company. This is a tightly held blue chip stock where the majority of chips are held by the parent Company overseas and another big institutional investor.
Also that N 3 billion PAT of Q1 is 40% of last year's PAT. people want to buy this kind of growth Companies which are foreign owned and offer excellent corporate governance culture.
So
UNILEVER stock falls in the league of Nigerian subsidiaries of some of the biggest Multi-National Companies of the world. That basket of stocks also include
NESTLE ,
GLAXOSMITH ,
CADBURY ,
TOTAL &
MOBIL (till last year) . If you did valuation of these Companies on P/E, dividend or Book values, they will be found to be highly overvalued yet everyone wants to own them (most of them anyways). We feel UNILVER is the best in that category presently.
It comes down to supply and demand of shares ultimately.
reporting for easykobo.com on Monday, April 23 2018 from Lagos, Nigeria
Source - This article presents Opinion of analysts at Vetiva Capital Management Ltd in Victoria Island and of Easykobo. This article is for information purposes only and not meant to be used in any investment decisions.
Note - stock market investing involves risk of losing some or all of your investment. You should always consult your financial adviser before making any stock market investments.