Post Views:
1,496
Rating: Hold
Current Market Price: N5.50
Latest Dividend: N0.15
Year High: N5.85
Year Low: N3.75
Fair Value: N5.13
Equity Analyst: Tunde Segun Jeariogbe
Key Investment Ratios
- This report observed the half-year financial performance of PZ Cussons Nigeria Plc for the period ended 30th September, 2020, compared same with numbers released in the similar period of 2019 to establish growth.
- Meanwhile, the full-year financials for the year ended 31st December, 2019 along few other years was very instrumental in the valuation and projection of future returns expected from the stock in focus.
- Generally, the result is positive, after recording negative earnings in the corresponding period of last year.
- Nevertheless, the last dividend of 15 kobo had a negative impact on the valuation as it reduced the expected returns ratio used for the analysis.
- See below for detailed numbers and comparisons:
P Z CUSSONS NIGERIA | |
Bourse | Nigerian Stock Exchange |
Code Name | PZ |
Sector | CONSUMER GOODS |
Market Classification | MAIN BOARD |
Nature of Business | Manufacture and Distribution of Personal Care, Home Care and Electricals |
Date of Incorporation | April 12th 1948 |
Date Listed | |
End of Accounting Year | 31st May |
Website | www.pzcussons.com |
Registrar | First Registrar |
Auditor | Deloitte & Touche |
Share Price@Relsd (N) | 5.00 |
Earnings per Share | 0.21 |
Intrinsic Value(N) | 5.13 |
Share Outstanding | 3,970,477,045 |
Market Capitalisation | 19,852,385,225 |
Company figures
- Turnover for the period stood at N37.37 billion, same as 10.11% above the N33.94 billion posted in the corresponding period.
- Direct Cost is estimated at N22.22 billion, slightly below the N28.15 billion reported at the end of similar period in 2019.
- Operating Profit was N1.99 billion, compared to the N1.49 billion operating loss in the corresponding period of last year.
- Operating Cost is estimated at N8.16 billion, same as 11.91% above the N7.29 billion in the comparable quarter.
- Finance Cost used through the six months is estimated at N58.58 million, 80.05% lower than the N293.66 million posted in the prior half-year.
- A total of N1.02 billion was reported as Profit before Tax at the end of the quarter, as against the Loss before tax of N1.58 billion posted in the corresponding quarter.
- After making allowance for Tax Expenses, a total of N820.93 million was posted as Profit for the year, as against the loss after tax of N1.58 billion.
P Z CUSSONS NIGERIA | |||
Statement of Comprehensive Income | |||
2020 | 2019 | %CHG | |
Turnover | 37,379,426,000 | 33,947,133,000 | 10.11 |
Cost of Sales | 27,221,384,000 | 28,153,896,000 | -3.31 |
Operating Profit | 1,996,256,000 | 1,499,704,000 | 233.11 |
OPEX | 8,161,786,000 | 7,292,941,000 | 11.91 |
DEPRECIATION | 1,263,575,000 | 1,187,100,000 | 6.44 |
AMORTISATION | 52,981,000 | 52,980,000 | 0.00 |
FINANCE COST | 58,584,000 | 293,668,000 | -80.05 |
NET FINANCE INCOME | 51,213,000 | 117,630,000 | -143.54 |
PBT | 1,028,318,000 | 1,580,277,000 | 165.07 |
TAX | 207,384,000 | 0 | #DIV/0! |
PAT | 820,934,000 | 1,580,277,000 | 151.95 |
TOTAL COMP INCOME | 820,934,000 | 1,580,277,000 | 151.95 |
Statement of Financial Position | |||
Current Assets | 55,054,466,000 | 48,558,457,000 | 13.38 |
Non Current Assets | 27,831,214,000 | 29,966,023,000 | -7.12 |
Total Assets | 82,885,680,000 | 78,524,480,000 | 5.55 |
Current Liabilities | 41,779,199,000 | 31,446,667,000 | 32.86 |
Non Current Liabilities | 5,725,594,000 | 3,341,249,000 | 71.36 |
Total Liabilities | 47,504,793,000 | 34,787,916,000 | 36.56 |
Net Assets | 35,380,887,000 | 43,736,554,000 | -19.10 |
Retained Earnings | 23,774,112,000 | 31,776,319,000 | -25.18 |
Shares Outstanding | 3,970,477,045 | 3,970,477,045 |
- Current Assets is currently valued at N55.05 billion, compared to N48.55 billion in the corresponding quarter.
- Non-Current Assets stood at N27.83 billion, higher than the N34.78 billion achieved at the end of previous half-year.
- Thus, Total Assets at the end of the period is valued at N82.88 billion, same as 5.55% improvement over the N78.52 billion in the similar period of 2019.
- Current Liabilities is estimated at N41.77 billion, same as 32.86% growth over the N31.44 billion in the same quarter.
- Non-Current Liabilities is valued at N5.72 billion, as against N3.34 billion in the comparable quarter of 2019.
- Thus, Total Liabilities for the period stood at N47.50 billion, higher than the N38.78 billion posted in the comparable quarter.
- Net Assets is estimated at N35.38 billion, versus N43.73 billion in the corresponding quarter.
- Retained Earnings dropped by 25.18% to stand at the current estimate of N23.77 billion against N31.77 billion in 2019.
Financial Strength/Solvency Ratios
- Debt Ratio is currently estimated at 57.31%, same as 29.37% above the 44.30% estimated in the similar period of 2019, implying that Total Liabilities is same as 57.31% of Total Assets.
- Total Debt to Equity was equally estimated at 134.27% as against 79.54% estimated in the comparable quarter, meaning that more debt was used to service the company’s assets through the period.
- It was established that Equity is same as 42.69% of Assets Value estimate from the 2019 six-month performance indices yielded 55.70%.
- Nevertheless, we can conclude that the company’s shares are fairly liquid, even as the estimated Beta stood slightly above industry average, and below market beta.
Financial Strength/Solvency Ratio | |||
TICKERS | 2020 | 2019 | %CHG |
Debt Ratio | 57.31% | 44.30% | 29.37 |
Total Debt to Equity Ratio (MRQ) | 134.27% | 79.54% | 68.80 |
Equity Ratio | 42.69% | 55.70% | -23.36 |
TICKERS | 2020 | Industrial Average | %CHG |
Beta Value | 0.40 | 0.75 | -46.67 |
Profitability Ratios
- EBITDA margin estimated for the period stood at 5.34%, as against the negative 4.42% estimated from 2019 half year earnings numbers.
- Pre-Tax Margin revealed improved profitability at 2.75%, compared to the negative margin estimated from 2019 six months performance indices.
- Cost of Sales is 72.82% of the Turnover Figure; this is 12.19% below the 82.93% estimated in 2019, a confirmation of the management’s effort at controlling direct cost.
- Return on Equity is currently estimated at 0.99%, from the negative return in 2019.
PROFITABILITY RATIOS | |||
TICKERS | 2020 | 2019 | %CHG |
EBITDA MARGIN | 5.34% | -4.42% | 220.89 |
PRE-TAX MARGIN | 2.75% | -4.66% | 159.10 |
EFFECTIVE TAX RATE | 25.26% | 0.00% | #DIV/0! |
CS TO TO | 72.82% | 82.93% | -12.19 |
ROE | 2.32% | -3.61% | 164.22 |
ROA | 0.99% | -2.01% | 149.22 |
Efficiency Ratios
- Operating Expenses to Turnover value is currently measured at 21.83%, a marginal 1.64% drop in efficiency in the compared periods.
- Turnover to Total Assets Ratios stood at 45.10% against 43.23%, a 4.32% improvement in management efficiency when compared to estimate from the 2019 six-month performance indices.
- Working Capital Ratio, which indicates a company’s effectiveness in using working capital was estimated at 2.82x, as against the 1.98x estimated in 2019.
- See below for other efficiency ratios tested:
EFFICIENCY RATIOS | |||
2020 | 2019 | %Chg | |
OPEX TO TO | 21.83% | 21.48% | 1.64 |
TO TO TA | 45.10% | 43.23% | 4.32 |
Working Capital Turnover | 2.82 | 1.98 | 41.93 |
Working Capital Ratio | 1.32 | 1.54 | -14.66 |
Investment/Valuation Ratios
- When put side-by-side the comparable quarter’s earnings, the company earned N0.21 per share, as against the loss per share reported in the corresponding quarter.
- Our six months Adjusted P/E-ratio stood at 24.18x.
- The said earnings per share is a yield of 4.14% of the price of PZ Cussons on the Nigerian Stock Exchange on the day the result was filed.
- The value of PZ Cussons shares in its book is currently estimated at N8.91, representing 19.10% drop from the previous estimated value.
- Thus, Price to Book Value showed a seemingly undervalued state for its shares on the exchange.
- See the table below for details:
Investment/Valuation Ratios | |||
Tickers | 2020 | 2019 | %Chg |
Price at Released | 5.00 | 5.10 | -1.96 |
EPS | 0.21 | -0.40 | 151.95 |
TCIP/SHARE | 0.21 | -0.40 | 151.95 |
P/E-Ratio | 24.18 | -12.81 | 288.72 |
Earnings Yield | 4.14% | -7.80% | 152.99 |
BV/Share | 8.91 | 11.02 | -19.10 |
PBV | 0.56 | 0.46 | 21.19 |
Valuation
As noted above, returns expectation dropped due to the cut in the dividend paid, also, although, the fact that it exited a negative region should build up our valuation approach, we chose a more conservative valuation, thus we valued each unit of the shares at N5.13, and have rated it a Hold.