Dangote Sugar – Stable Revenue growth to maintain PAT momentum

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We expect Dangote Sugar to maintain its Revenue growth momentum in the third quarter and forecast a 23.7% y/y jump in 9M’20 topline to ₦145 billion.

Although Dangote Sugar’s gross margin dropped 10ppts in Q2 to 16.1% from Q1’20, we believe that the reduction of the 10% import duties on Sugar to 5% would prop up margins in Q3. However, given forex liquidity constraints, we do not expect a return to the 26.1% gross margin performance in Q1.

Dangote Sugar - Stable Revenue growth to maintain PAT momentum

Having recognized the previously outstanding long-term debt of ₦1.2 billion as a current debt obligation, we expect to see interest expense stable for the quarter and maintain our full-year interest income expectation at ₦0.5 billion.

Thus, we expect Dangote Sugar to report PBT and PAT of ₦23.3 billion and ₦16.4 billion respectively for the nine-month period.

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Dangote Sugar - Stable Revenue growth to maintain PAT momentum Brandspurng
Source: Company Fillings, Vetiva Research

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