Naija Lo Wa

Here are the analyses of the Q2 results for PZ Cussons and Guinness Nigeria PLC by FSDH Securities and Afrinvest respectively:

FSDH – PZ Cussons:

In arriving at a fair value for PZ, we estimated TO, Earning Before Interest Tax Depreciation and Amortization (EBITDA) and PAT for the FY ending May 31, 2010. We project a TO of N69.76bn, based on our view that the TO will contract by 13.85%, over the previous year. We project EBITDA of N9.50bn based on EBITDA margin of 13.61% and a PAT of N6.37bn based on a PAT margin of 9.13%. We used 3.18bn Ordinary Shares currently in issue. The Forward Earnings Per Share (FEPS) generates N2.01. We estimated the Dividend Per Share (DPS) of N1.04 based on a dividend payout of 51.91%. Applying Enterprise Value (EV)/EBITDA multiple of 9.88x, a P/E multiple of 12.50x, we arrived at N29.54 per share using EV/EBITDA multiple and N25.07 per share using price earnings multiple. Applying a weight of 55% on N29.54 and 45% on N25.07, we arrived at N27.53 per share, which is our fair value. The forward earnings yield and dividend yield based, on our fair value generate 7.29% and 3.78% respectively. We therefore place a HOLD on PZ stock at the current market price of N26.

Afrinvest – Guinness Nigeria

* Guinness Q2′10 results saw turnover up by 23.8% while both PBT and PAT were down by 10.0% by 10.8% respectively.
* Operating expenses saw further increases on the back of an extensive marketing drive and on-going capacity additions
* Going forward, we expect to see top and bottom line growth resulting from the marketing initiative as well as capacity expansion
* Our recommendation is NEUTRAL with a FY’10 (June 30) price target of N139.23