Event: Dangote Cement (DangCem) begins share buyback programme Tranche II
Implications: Buyback of tranche II – 1.0% (170,003,074) of all outstanding shares – will have negligible impact on our ’22E EPS forecast. We assume management will complete this transaction on or before proposed completion date.
This morning, DangCem announced the resumption of its share buyback scheme. According to the firm, tranche II will commence on January 19th and close a day later or when the tranche size is complete, whichever is earlier.
The market had anticipated an announcement through much of last year.
We do not expect excitement from long-term investors given the strong mid-to-long term prospect for the business.
However, we believe a potential trading opportunity does exist for investors with a relatively shorter time horizon. We have a price target for DangCem shares of N299.7 which represents a potential upside of 15.6% from current levels.
According to our estimates, the tranche II buyback programme will have a negligible impact on our ’22E EPS forecast. See below.
On a relative basis, DangCem’s shares are trading on a ’22f EV/EBITDA multiple of 7.7x for 2.5% EPS growth in ’23f. We have an Outperform rating on the stock.