Bearish Performance: Distress Hits BUA Cement

OpenLife Nigeria reports that as the equities market continues bearish performance, shareholders of BUA Cement Plc lost a whopping N111.752 billion in Thursday’s trading session.

This is in spite of the fact that the company witnessed an improved performance in half year 2022 on various parameters like credit growth, asset quality, and profitability.

Checks by Nairametrics showed that at the close of trading, BUA Cement Plc’s share price dropped by 6.18% to N50.10 per share and N1.697 trillion in market capitalisation as of the close of trading yesterday (September 22nd) from N53.40 and N1.808 trillion, which were the share price and market capitalisation recorded the previous day (September 21st ).

Build up to 2023 elections: Why investors should embrace low price stocks with strong fundamentals
Uncertainty over the 2023 elections and heightened insecurity, lingering ASUU strike has increased market apathy and negative sentiments, which has also resulted in the exit of some foreign investors and left the few domestic ones hanging on the sideline.

Market experts believe that domestic Investors’ sentiment is usually weak as they seek to reduce their market exposure when elections draw closer. The intensity of the impact is usually a function of the degree of political tension and uncertainty generated by political activities.

The total transactions done by domestic investors on the floor of the Nigerian Exchange Limited (NGX) grew by N1.490 trillion, as against N273.16 billion recorded by foreign investors in the first seven months of 2022.

According to a statement from the NGX, the domestic and foreign portfolio investments (FPI) July 2022 report, which captured these transactions as well as trading figures from market operators, domestic transactions stood at N1.465 trillion in the first seven months of 2021, while foreign transactions stood at N435 billion in the same period.

This meant that total domestic transactions on the NGX grew by 1.70% while foreign transactions dropped by 37.24%. Although the July report revealed that total transactions at the nation’s bourse decreased by 35.36% from N156.52billion (about $371.53million) in June 2022 to N101.18 billion (about $236.86 million) in July 2022, the performance of the current month, however, when compared to the performance in July 2021 (N89.77 billion), total transactions increased by 12.71%.

However, according to information obtained from the company’s website, BUA Cement was incorporated in 2008 and commenced operations in the same year through its floating cement terminals, ‘BUA Cement 1’, designed specifically for bulk and bag cement unloading.

In 2009 BUA Group acquired the Cement Company of Northern Nigeria, CCNN (Sokoto Cement) and the Edo Cement Company to boost and increase the metric tonnes of annual cement production in the country.
In 2018, BUA Obu Cement completed a 3million mtpa plant resulting in a combined capacity at Okpella of 6million mtpa.

At the second quarters of 2015, BUA signed a contract with FLSmidth for a 3 million mtpa new production line in Edo Cement to be sited at Obu, Edo state.

The $600 million Cement Plant in Okpella, Edo State was opened in 2015 with a capacity of 3 million mtpa resulting in a 3.5 million mtpa combined installed capacity at both Edo and Obu plants.

Asides from the initial costs, over $100 million was invested in gas turbines to power a 50-megawatt plant for 24-hour electricity generation as well as the construction of a 30km gas supply pipeline.
The world-class plant would give a much needed boost to Nigeria’s cement industry as well as enhance the development of related sectors, including housing and construction.

Same year, the CCNN commenced 1.5 million mtpa plant expansion project to further boost the capacity of cement in Nigeria.

In 2020, BUA Group consolidated its cement operations and listed BUA Cement Plc on the Nigerian Stock Exchange with a total combined installed capacity of 8million mtpa and a market capitalization of N1.18trillon (US$3.3bn), making it the second largest cement producer in the Nigerian market and the largest cement producer in the North Western region of the country.

Source: Nairametrics