Chapel Hill Denham Securities Limited Turnover now expected at N163.44bn in FY-19E (previously N158.68bn) due to the impressive 22.1% YoY growth in Q3-19, which puts 9M-19 revenue growth at 9.9% YoY to N121.80bn. Broadly, FrieslandCampina Wamco Plc\u2019s (Wamco)\u00a0 products have enjoyed stable and growing demand, post-2016, due to consumer perception of their superior quality, gained through the company\u2019s first-mover status in Nigeria. While we suspect that the company remains the market leader in milk and dairy-based products, the recent stiffening competition from Arla (producer of Dano) represents a threat to Wamco\u2019s market share. As our open market price survey suggests, the prices of Wamco\u2019s\u00a0 Peak sachet, pouch and tin SKUs have been unchanged over the last quarter, although Peak\u2019s sachet SKU retails at an average of 15% premium to Dano (Arla)\u00a0 and Cowbell (Promisador). The outlook for higher raw milk input prices suggests a slowdown in margin improvement in FY-19E. Already, global raw milk prices have rallied by 6.2% since Q2-19 due to rising global demand (especially from developing countries),\u00a0 indicating renewed input cost pressure from Q4-19E into FY-20E. Consequently,\u00a0 we forecast FY-19E cost of sales at N124.59bn, rising by 5.2% YoY, indicating a\u00a0 gross margin of 21.5%, an improvement from 21.1% in 9M-19 and 20.6% in FY-18. Similarly, we expect FY-19E EBITDA at N34.09bn, increasing by 10.9% YoY, largely supported by our expected growth in revenue, implying an EBITDA margin of 14.8% (marginally unchanged from 14.1% recorded in FY-18). Likewise,\u00a0 given the company\u2019s low debt profile, FY-19E\u2019s PBT and PAT are estimated at\u00a0 N19.59bn and N14.18bn respectively. Free Cash Flow to Equity (FCFE) to remain positive at N28.80bn in FY-19E, albeit down 14.8% YoY. We expect net cash to firm at N18.72bn in FY-19E, up 6.0% YoY driven by a net operating cash flow (NOCF) of N26.01bn while net investing cash flow is expected to be negative at N7.29bn (dragged by ongoing capex spending)\u00a0 at a capex intensity of 4.8% (compared to 4.2% in FY-18). Our positive NOCF\u00a0 expectation is based on expected improvement in earnings in FY-19E, despite noted working capital pressures in 9M-19. In addition, net debt proceeds is expected at N13.64bn in FY-19E, unchanged from 9M-19. BUY rating maintained, while our 12 month TP is lowered to N145.82 (previously N173.19) due to the company\u2019s sustained earnings growth in 9M-19 which we expect to continue in Q4-19. Notably, Wamco\u2019s quoted price on the\u00a0 NASD OCT market has declined by 27.1% ytd, which we suspect to be due to illiquidity in the OTC market. Our new TP implies an expected total return of\u00a0 29.8% (capital gain of 21.5% and a dividend yield of 8.3%). We expect Wamco to trade at an FY-20E EV\/EBITDA of 4.0x, which is at 81.4% and 80.2% discounts to peers in emerging and global markets. The risks to our outlook on Wamco\u00a0 include; 1.) Full restriction on the imports of milk & dairy-based products, 2.)\u00a0 Significant increase in global raw milk prices. and 3.) Fierce competition from peer milk and dairy-based product manufacturers.