ositadima1:


I assume their is a direct relationship between sustainable growth and PE. I also understand that the company doesn't need more than 14% of earnings, hence d high payout ratio.

Yes, it is better when the compounded earning growth rate in the last 5 years is higher than the sustainable growth rate.

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Pls need advice on what to buy from my following stock picks.
Cadbury
Unilever
Dangote sugar
Wapco
Chams

[Or better suggestions
quote author=Payunsin post=119383745]Pls need advice on what to buy from my following stock picks.
Cadbury
Unilever
Dangote sugar
Wapco
Chams

[/quote]

emmasoft:


NAHCO credited already.

Thanks. Yeah McNichols bonus fully received.

Payunsin:
[Or better suggestions
quote author=Payunsin post=119383745]Pls need advice on what to buy from my following stock picks.
Cadbury
Unilever
Dangote sugar
Wapco
Chams

Presently, I want to go for Cadbury and Unilever. Are they okay?

Payunsin:
Pls need advice on what to buy from my following stock picks.
Cadbury
Unilever
Dangote sugar
Wapco
Chams

DANGSUGAR would be my first choice followed by WAPCO. I won't touch the others for now.

sonofElElyon:
Why was I able to sell up 562,000 units out of my universal insurance shares after over a year
Is there good news in the offing for the company?

Maybe someone clicked the buy button instead of sell.

ositadima1:
At current price dividend yield is 5% even with very high payout ratio of 86%(shared 86% of 46 billion to shareholder, i think ).

He too cost, except u bought at discount, then hold.

Value zone for Nestle is sub $700

emmanuelewumi:



With a return on equity of about 113% and a dividend payout ratio of 86%, Nestle should have a sustainable growth of about 16% whereas the earnings are growing at about 20%.


You get the sustainable earning growth by subtracting 86% ie the dividend payout from 100%, which will give you 14%. Then you multiply by the return on equity of 113.

Nestle is appropriately priced at a PE around 16, but nothing bad in getting it cheaper

Expect a drop in pay out. Carrying such debt exposure and yet disregard ploughing back bulk of its profit and liquidity is a disaster in waiting. Thus, It needs to deleverage its balance sheet as the finance cost which keeps increasing might soon erode its bottom line.

Merry Christmas BnSITL

MERRY CHRISTMAS AND A PROSPEROUS NEW YEAR IN ADVANCE.

emmanuelewumi:



With a return on equity of about 113% and a dividend payout ratio of 86%, Nestle should have a sustainable growth of about 16% whereas the earnings are growing at about 20%.


You get the sustainable earning growth by subtracting 86% ie the dividend payout from 100%, which will give you 14%. Then you multiply by the return on equity of 113.

Nestle is appropriately priced at a PE around 16, but nothing bad in getting it cheaper

I quite like the sustainable growth method and I agree I think this definitely falls into the category of great company selling at a fair price

With current Book Value Per Share of N52.7 and 16% sustainable growth rate, after 10 years the book value per share should be N229 at the end of year 10. If nestle maintains their ROE of 113, then that will be N258 in y10 earnings. At the same PE ratio of 16 that is an expected price of N4,128. Dividends have been growing roughly with inflation so you will get at least N1000+ in dividends over 10 years

If you pay N980 then the implied 10 year return is (5128/980)^(1/10)-1 which is a rate of return of 17% and I probably understated the total dividends and Nestle's historical PE is more like 34x over the last 10 years.

Coolcash1:


Expect a drop in pay out. Carrying such debt exposure and yet disregard ploughing back bulk of its profit and liquidity is a disaster in waiting. Thus, It needs to deleverage its balance sheet as the finance cost which keeps increasing might soon erode its bottom line.

According to 2021 annual report they have over N100 billion in cash and cash equivalent. The total debt and free cash flow ratio is about 3:1 which is good enough.


I agree with you that they need to deleverage, I can't buy Nestle at the current price

erwinschro:


I quite like the sustainable growth method and I agree I think this definitely falls into the category of great company selling at a fair price

With current Book Value Per Share of N52.7 and 16% sustainable growth rate, after 10 years the book value per share should be N229 at the end of year 10. If nestle maintains their ROE of 113, then that will be N258 in y10 earnings. At the same PE ratio of 16 that is an expected price of N4,128. Dividends have been growing roughly with inflation so you will get at least N1000+ in dividends over 10 years

If you pay N980 then the implied 10 year return is (5128/980)^(1/10)-1 which is a rate of return of 17% and I probably understated the total dividends and Nestle's historical PE is more like 34x over the last 10 years.

The earning growth of Nestle is slowing down, compare the CAGR in the last 5 years with that of the last 3 years and then with that the last 1 year. It is prudent to make provisions for a discount of 30% of growth projections.

As a matter of fact earnings fell in the last one year, I guess they should do better this year. With a ROIC of about 50% it is still a great business if you can get it at a good price

ositadima1:
At current price dividend yield is 5% even with very high payout ratio of 86%(shared 86% of 46 billion to shareholder, i think ).

He too cost, except u bought at discount, then hold.

This should be a forward looking estimate for 2022.


According to 2021 annual report the ROE was 196%, ROIC was 50% and the book value was N26.

The sustainable growth could not be achieved in 2021, I think they should be able to achieve it in 2022

Coolcash1:


Expect a drop in pay out. Carrying such debt exposure and yet disregard ploughing back bulk of its profit and liquidity is a disaster in waiting. Thus, It needs to deleverage its balance sheet as the finance cost which keeps increasing might soon erode its bottom line.

I thought as much, it is paying off now but it is a very risky game they are playing. The very high ROE indicates that they can handle the recent increase in interest rates, but still, if d economy worsen (interest rates and high inflation) they will surfer more.

One of the potential negative consequences of high debt-to-equity ratio listed by ChatGPT:

"Increased vulnerability to economic downturns: If the company's profits decline or the interest rate on its debt increases, a high debt-to-equity ratio can make it more difficult for the company to meet its financial obligations. This can lead to financial distress."

ositadima1:


I thought as much, it is paying off now but it is a very risky game they are playing. The very high row indicates that they can handle the recent increase in interest rates, but still, if d economy worsen (interest rates and high inflation) they will surfer more.

One of the potential negative consequences of high debt-to-equity ratio listed by ChatGPT:

"Increased vulnerability to economic downturns: If the company's profits decline or the interest rate on its debt increases, a high debt-to-equity ratio can make it more difficult for the company to meet its financial obligations. This can lead to financial distress."

That is how they have been doing for the past 20 years.

I don't know how sustainable it is for they to keep on growing revenue and earnings by increasing the prices of their goods. We have a huge population in Nigeria Sha and they have targeted their own market

Coolcash1:


Expect a drop in pay out. Carrying such debt exposure and yet disregard ploughing back bulk of its profit and liquidity is a disaster in waiting. Thus, It needs to deleverage its balance sheet as the finance cost which keeps increasing might soon erode its bottom line.

There was a drop in payout in 2021.


Nestle paid a total dividend of N60 in 2020, but reduced the dividend to N50 in 2021.


I knew that would happen, the company's EPS was N49 in 2020 but a total dividend of N60 was paid who does that? Dipping hands into the reserves to pay dividends is not sustainable

IHelp:

Maybe someone clicked the buy button instead of sell.

That's total.. was bought piece meal

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emmasoft:


NAHCO credited already.

please send me the cmmf account opening link to israelhope275@gmail.com

ManyThanks:
please send me the cmmf account opening link to israelhope275@gmail.com

Link sent.

Please what is your Recommendation on Champions Breweries?

Should I Buy more, Hold it, or Sell it off?

essentialone:
Please what is your Recommendation on Champions Breweries?

Should I Buy more, Hold it, or Sell it off?

What are they selling

essentialone:
Please what is your Recommendation on Champions Breweries?

Should I Buy more, Hold it, or Sell it off?

I would sell or hold with a trailing stop in place, it is selling at more than 2X its fare value.

emmanuelewumi:



Financial institution don't accept Bua as collateral, those who do discount it by 70%

What could be the reason?

JBERGER fair value should be around 50 naira.

igbizen:

What could be the reason?

They know better, those who accept it will give you N3 million loan for your N10 million worth of BUA shares

ositadima1:
JBERGER fair value should be around 50 naira.

How did you arrive at this?

I did this and the airline referred me back to my bank. My bank says they cant find a decline receipt with which to process the refund. So bank is pushing me to the airline and the airline is pushing me back to the bank. What is the best action to take in this instance?

yeddy99:

I work in aviation sector.
My advice is this: there is the possibility that it declined but the transfer still went through to the airline. We call it timed out tickets. Contact the airline and give the all the details of the transaction and they would then check if the transfer came through. If the transfer came through, they would ticket it for a date of your choice or do a refund.

Agbalowomeri:


What are they selling

They are presently selling at N4.70