Earnings Update: NASCON Q3 2024 – Escalating Cost Pressures Bottom-line.

Event

In Q3 2024, Nascon Allied Industries Plc (“the Group”) maintained the strong revenue growth trend established earlier in the year, posting a 41% year-on-year increase to N29.46 billion, up from N20.95 billion in Q3 2023. This growth is attributed primarily to price increases, with some contribution from volume growth. Revenue expansion was recorded across all regions: the Eastern segment grew by 41%, representing 6.33% of total revenue; the Western segment achieved a 42% increase, contributing 22.01% to overall revenue; and the Northern region, the largest contributor, accounted for 71.66% of revenue with a 40% growth rate.

Outlook

Following the impressive revenue growth in Q3 2024, we revised our FY revenue projection to N111.60 billion (previously: N101.91 billion). However, we are cautious about the bottom-line performance, as rising input and operating costs, driven by persistent inflationary pressures, are expected to result in a 3% decline in net profit for FY 2024.

Consequent to this, we revised our fair value for the stock to N32.90 (previously: N37.23). At the current price of N30.60, our fair value offers a total return of +15% (inclusive of a dividend yield of 6.99%), hence, we retain our HOLD recommendation for the stock.

Please follow the link “NASCON Q3 2024 – Escalating Cost Pressures Bottom-line” to view the whole report. 

Thank you.