Julius Berger Nigeria Plc – Anticipating an impressive 2020

Julius Berger Nigeria Plc - Anticipating an impressive 2020

Must Read

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...

UNILAG Ranks 1st In Nigeria and 8th In Africa

The University of Lagos has been ranked 1st  in Nigeria and 8th in Africa, by uniRank University Ranking™, the leading...
- Advertisement -
  • Strong Q4 earnings drive FY’19 outperformance
  • Finance costs to moderate on the supportive interest rate environment
  • TP revised higher to ₦38.56, BUY rating reaffirmed
- Advertisement -

Impressive Q4 buoys FY’19 results

In line with the recent rash of unexpected announcements, Julius Berger released an unaudited copy of its FY’19 results, reporting an impressive 70% y/y jump in Net profit to ₦10.3 billion, beating our ₦7.2 billion expectation.

The positive earnings surprise for FY’19 was driven by an impressive Q4’19 result, which showcased a 121% y/y jump in Net profit to ₦5.2 billion (c.50% of FY’19 profit). While the unaudited results contain no dividend announcements,  we expect a  dividend payout of c.38%, amounting to a ₦3.03/share dividend (FY’18: ₦2.00) and a c.14% dividend yield.

While we had anticipated weakened topline in Q4’19, following news reports on civil disturbances slowing down work on the second Niger bridge project, Revenue still rose 20% q/q to ₦72.3 billion in Q4’19 (Q4’18: ₦74.8 billion), taking  FY’19  Revenue  37%  higher  y/y  to  ₦264.6  billion  (Vetiva:  ₦249.1 billion).  Revenue growth  continues to be  driven by the  public and private sectors, with the public sector still accounting for the bulk of revenue  (71% of FY’19 topline).

Read:  #ReasonToSmile: Lipton Brings Smile To Widows, Advocates For Better Living

Furthermore, JBERGER recorded improved efficiency in FY’19, with operating margin improving by 30bps y/y to 7.8%. In absolute terms, EBIT rose 43% y/y to ₦20.6 billion (Vetiva: ₦16.1 billion). Meanwhile, in spite of a  40% moderation on debt obligations in the year and a  more supportive interest rate environment, Net finance charges rose 33% y/y to ₦5.9 billion, taking PBT 48% higher y/y to ₦14.7 billion.

A more optimistic outlook

Building on our improved outlook for public spending in  2020  – following a largely uninspired CAPEX rollout in 2019 – we maintain a positive outlook for the construction sector this year. We are also optimistic about JBERGER’s operations given its strong contract portfolio as well as close relationships with the FG and several state governments. We note that after five years of scaling down operations  (PPE  dropped  40%  between  2014  and  2018), the construction giant resumed investing in PPE (FY’18:  ₦41.3  billion, FY’19: ₦58.1 billion) in 2019, signaling improved confidence in the market. To that end, we forecast a 15% y/y growth in topline to ₦304.2 billion (Previous: ₦274  billion). With no significant change expected in the operating environment,  we maintain our operating margin expectations.  Thus,  we forecast a 16% y/y rise in EBIT to ₦24.0 billion (Previous: ₦21.8 billion). Worthy of note is the improvement in  JBERGER’s cash position in  FY’19.   Supported by an increase in receipts from customers, JBERGER returned to a  positive cashflow in  2019.  Given the improved cash position as well as a supportive interest rate environment, we expect a moderation in Net finance charges to ₦4.3 billion in FY’20 (Previous: 6.8 billion). Overall, after adjusting for tax expenses,  we arrive at an improved  FY’20  PAT  of  ₦13.4  billion (Previous: ₦10.2 billion) and a 12-month Target Price of ₦38.56. We place a BUY rating on the stock.

Read:  Ikeja Electric Marks Valentine’s Day with Kids at Igbobi Orthopaedic Hospital (Pictures)
Read:  Here are the world's most popular city destinations in 2019

Julius Berger Nigeria Plc - Anticipating an impressive 2020

Julius Berger Nigeria Plc - Anticipating an impressive 2020

Julius Berger Nigeria Plc - Anticipating an impressive 2020

VETIVA RESEARCH

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

11 PLC FY’19 – Lower Margins Weaken FY’19 Earnings

Revenue advances 16% y/y FY’19 rental income dips 7% y/y Records a PAT of ₦8.9 billion (-5% y/y) ...

Stanbic IBTC Holdings Plc FY’19 (Unaudited) Earnings – Bank Records Modest y/y Improvements

PAT beats estimate on lower Interest Expense Loan portfolio up 21% y/y, Deposits down 34% Opex declined 1% y/y to ₦71.6 billion (Estimate:...

Total Nigeria PLC – Better Margins, Debt Cut To Buoy FY’20 Earnings

FY’19 fuel sales down 7% y/y Lubricants operations grow 4% y/y Bank overdraft declines to ₦35.9 billion (9M’19: ₦53.9 billion) Target price revised...

Businesses to Flourish in Omishakin Community as Airtel Pledges to Provide Electricity after 13 years

The third episode of the award-winning television programme ‘Airtel Touching Lives’ is scheduled to air on the 16th of February on national and cable TV....
%d bloggers like this: