The Management of the most capitalized company on the Nigerian Exchange announced a 170 million unit of share buyback starting this Wednesday, January 19 through to Thursday, January 20.
In a press statement issued from its Victoria Island Office in Lagos, where the announcement was made to the effect of the second tranche of its share buyback program, this move will see the company buy back one percent of its stake for N39.1 billion ($112.75 million) on the open market which is up to 10% of the company’s paid-up ordinary shares (17,040,507,404 units) and this to be executed in tranches as approved by the company’s shareholders on 26th May 2021.
WHAT TO KNOW:
Dangote Cement Plc is a Nigerian multinational publicly traded cement manufacturer headquartered in Lagos.
The company is engaged in the manufacture, preparation, import, packaging, and distribution of cement and related products in Nigeria and has plants or import terminals in 9 other African countries.
BACKCHECK:
Dangote Cement Plc ran its first share buyback programme called Tranche 1 in December of 2020 which lasted two days(commenced Wednesday, December 30, 2020, and was completed on Thursday, December 31, 2020) where the company reclaimed a total of 40,200,000 units of shares representing 0.24% of the company’s issued and fully paid ordinary shares, at an average price of N243.0218 per share, valued at N9.77 billion.
MARKET IMPLICATION:
Buyback of the Second tranche which is 1.0% of all outstanding shares will have a negligible impact on their ’22E EPS ( Dec. 22 Equity trailing earnings per share forecast).
It was also believed that a potential trading opportunity does exist for investors with a relatively shorter time horizon yet the price target for DangCem shares of N299.7 represents a potential upside of 15.6% from current levels.
Interestingly, Dangote Cement is still one of the top picks in the just concluded year and promised to remain bullish on the counter, as a stock that is believed to be a leading indicator of the direction of the economy and that can prove defensive in investment portfolios over the near to medium term.
