Here is FSDH’s Analysis of Q3 results of Nigerian Breweries:

Valuation/Analyst Recommendation
In placing a fair value on the Ordinary Shares of NB, we adjusted our earlier forecast for the FY 2009 and parameters to reflect current market developments and its latest results. We estimated TO, Earning Before Interest Tax Depreciation and Amortization (EBITDA) and PAT for December, 2009. We project a TO of N166.57bn, based on a growth rate of 14.51% over the previous year. We project EBITDA of N42.51bn based on EBITDA margin of 25.52% and a PAT of N28.26bn based on a PAT Margin of 16.97%. We used 7.56bn Ordinary Shares that we expect to be in issue as at December 2009. The Forward Earnings Per Share (FEPS) generates N3.74. We estimated Dividend Per Share (DPS) of N3.36 based on a dividend payout of 90%. We note that the company already paid an interim dividend of N1.30; we therefore expect a final dividend of N2.44 to end the year. Applying Enterprise Value EV/EBITDA multiple of 8.62x, a P/E multiple of 14.50x, we arrived at N48.42 per share using EV/EBITDA multiple and N54.19 per share price using earnings multiple. Applying a weight of 55% on N48.42 and 45% on N54.19, we arrived at N51.02 which is our fair value. The forward earnings yield and dividend yield based on our fair value generate 7.33% and 6.59% respectively. We therefore maintain our HOLD on the share price of NB at the current market price.

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