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 30^th 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 31^st 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.