A good demand for Dangote Sugar’s stock is being generated by the company’s good earnings, which will cause a 36.21 percent increase in value in the first half of 2023.
With a 48.85 percent capital gain between 2020 and June 30, 2023, investors were wealthier in 42 months. The full year 2022 and Q1-23 outcomes are what Kasimu Garba Kurfi, the managing director of APT Securities and Funds Limited, credits this to.
The corporation reported a 46.02 percent rise in sales from N276.05 billion to N403.24 billion in its fiscal year 2022. Profit before taxes increased by 137.22%, from N34.02 billion to N82.30 billion. Profit after tax rose from N22.05 billion to N54.74 billion, a 148.25 percent rise. The firm increased their massive tax payment from N11.96 billion to N27.56 billion.
Dangote Sugar also delivers good dividends which compels investors, including bargain hunters to take positions. Months before dividend payment in anticipation of cash reward, and exit later to take advantage of price appreciation. In 2022, the company announced N12, 146, 874 to its shareholders.
The uptrend in profit came amid rising costs as the cost of sales rose from N225.85 billion in 2021 to N311.28 billion in 2022. The increase in cost is due to currency depreciation, a rise in the cost of raw material importation, an uptick in distribution cost, a rise in diesel price and tax expenses.
The company, however, deployed efficient cost management strategies to tame spiralling costs. It successfully cut down selling and distribution expenses to N741 billion from N906 billion in 2021. Finance cost fell to N3.42 billion from N5.21 billion.
Fund managers expect Dangote Sugar to maintain its stellar performance for the rest of 2023. The optimism is on the back of the impressive Q1-23 result and price gain in H1-23. In Q1-23, revenue rose 8.23 per cent from N94.44 billion in Q1- 22 to N102.22 billion.
Profit before tax grew to N18.33 billion from N13.60 billion. This is in spite of an increase in finance cost to N8.05 billion from N3.50 billion. The result confirmed the effectiveness of the company’s cost containment strategies as selling and distribution expense declined to N174.56 billion from N260.81 billion in Q1-22. The cost of sale rose only marginally from N74.98 billion in Q1- 22 to N76.47 billion in Q1- 23.
Dangote Sugar’s backward integration policy is building further investor confidence in the company’s ability to successfully contain cost of raw sugar importation, and grow bottomline and returns. The company pursues its 10-year sugar development plan tenaciously. By the sugar development policy, Dangote Sugar aims to produce 1.5 million metric tonnes per annum from locally grown sugarcane.
In pursuant of the plan, the company has committed enormous resources to its Dangote Sugar Taraba Limited, Dangote Sugar Nassarawa Limited and Dangote Sugar Adamawa Limited in which it targets expanding sugar refining capacity from 3,000 tonnes per annum to 9,000 metric tonnes.
As part of the backward integration project, Dangote Sugar is poised to grow its sugar plantation from a land area of 8,700 hectares in 2022 to about 24, 200 hectares in 2030.
In the face of global economic uncertainty, the company has put in place sound risk management strategies and sustainability plans to shield investors’ capital from the vagaries of the business environment.
To assure shareholders of its culture of transparency, the company’s Board of Directors has put in place corporate governance culture that is topnotch.