Positive sentiment witnessed in three listed cement companies on the floor of the Nigerian Exchange Group Plc (NGX) resulted in a combined gain of N175.727 billion at the close of trading in January 2023.
This was contained in the trading statistical report of these companies which include Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc tracked by Nairametrics.
Despite the build-up to the 2023 general elections and interest rate hikes, shares of these cement firms continued to enjoy positive sentiment as investors maintained buying pressure on the stocks to reap high returns on investments.
Market analysts have tipped industrial goods stocks to be potential this election season as it is expected that more infrastructural projects are likely to be awarded by the government which would help boost revenues and return on investments.
According to them, industrial goods sectors which included these cement sectors are good to buy and hold for future capital gains.
Breakdown of performances: Checks by Nairametrics revealed that terms, Dangote Cement Plc one of the major Cement manufacturers listed on the industrial goods sub-sector of the Nigerian Exchange Group Plc (NGX) recorded a gain of about N100.539 billion during the month’s trading sessions.
The cement stock grew by 2.26% to close at N266.90 per share and N4.548 trillion in market capitalization during the review period from N261 and market capitalization of N4.447 trillion it opened for trading at the beginning of trading in January, hence has earned a gain of N100.539 trillion.
BUA Cement Plc also listed in the industrial goods sub-sector of the NGX gained about N57.570 billion during the period.
Its stock price grew by 1.74% to N99.45 per share and N3.367 trillion in market capitalization as against N97.75 and N3.310 trillion in market capitalisation which was the opening figure before trading activities commenced on January 4, 2022.
Lafarge Africa recorded a gain of 4.58% growth to N25.10 per share and N404.305 billion in market capitalisation from N24.00 per share and N386.687 billion in market capitalisation at the beginning of the trading year, hence achieving a gain of N17.618 billion in market value.
Incoming government: The Chief Executive Officer of APT Securities and Funds Limited, Kasimu Garba Kurfi, told Nairametrics that industrial goods stocks like cement companies are good to buy and hold. He explained that it is expected that Nigeria’s incoming president will address many infrastructural challenges which will lead to the high demand for cement.
- “More infrastructural constructions are likely to be awarded by the government and this will help shore up revenue of cement companies quoted on the Exchange.
- “Also about 26 Governors who will be coming for the first time to form a government in their respective states are expected to do the same and come up with new projects that will lift the activities of industrial good companies,” he said.
Campaign strategy: The Managing Director of Cowry Asset Management Limited, Johnson Chukwu, said there will be some rush to complete roads and infrastructure projects as a campaign strategy to return to power by the political office holders.
- “This will increase demand for industrial materials and boost their earnings.
- “So industrial goods companies are areas that will perform well during election hence investors should look out for them for investment this period,” he said.
Price increases: Analysts at Cordros at Securities Limited said their expectations for revenue growth of cement firms in 2023 are skewed towards further price increases amid another volume decline.
- “We believe the rising energy costs amid the increased difficulties with acquiring raw materials will influence intermittent price increases from industry players as they move to protect margins.
- “Notwithstanding, we expect that after a smooth transition to the new government by the end of H1-23, public-private sector investment in housing and construction should improve, which will support cement demand.
- “Overall, we expect average revenue for players in the industry to grow by c. 53.3% in 2023E,” they said.