Dangote Cement, Nigeria’s preeminent cement producer, has achieved an impressive market valuation of N13 trillion, far surpassing its closest competitor, BUA Cement Plc, which holds a market value of less than half of Dangote’s.
BUA Cement has also seen a surge in market valuation as investors continue to attribute significant value to the company, valuing it at notably high multiples of its earnings.
This substantial lead in market capitalization not only highlights Dangote Cement’s dominance over BUA Cement in terms of market cap but also underscores its substantial size advantage over the third-largest cement producer in the country, Lafarge Africa.
BUA Cement’s market capitalization is approximately 10 times larger than Lafarge Africa’s.
The significant difference in market size is striking, with Dangote Cement being 14 times larger than Lafarge Africa, vividly illustrating the remarkable growth in market valuation that Nigeria’s foremost cement maker has experienced.
Key Catalysts:
1. Market Capitalization Breakdown:
Examining the combined market capitalization of Dangote Cement, BUA Cement, and Lafarge Africa, the total amounts to around N20 trillion. Dangote Cement contributes an impressive 65%, or approximately two-thirds of this total.
2. Revenue Dominance:
The dominance is also reflected in revenue figures, where the three companies collectively post an estimated N3 trillion in annualized revenues for 2023. Dangote Cement contributes a substantial N2.8 trillion or 67% of the total, mirroring its market capitalization share.
3. Share Price Surge:
The recent surge in Dangote Cement’s share price has been a significant factor in the company’s valuation growth. Over the last two weeks, its share price has increased by 100% year to date.
4. Femi Otedola’s Investment:
The news of Femi Otedola acquiring shares in the company has also contributed to the surge in share price. Otedola’s investment decision was based on Dangote Cement’s proven track record of delivering value to shareholders.
Reflecting on Dangote Cement’s performance over the past year, it began 2023 with a market capitalization of N4.4 trillion and closed the year at N5.4 trillion. The rapid growth in its valuation, more than doubling in just a few weeks in December, 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 witnessed 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, solidifying its position as the leading force in the Nigerian cement industry.
The combined market cap of Nigeria’s cement giants, at N20 trillion, constitutes over 35% of the total market capitalization of the NGX.
Credit: NairaMetrics
