Cordros Raises Lafarge Africa Plc’s 2025 Target Price to N104.71 After Stellar Q1 2025 Performance
Lagos, Nigeria – May 11, 2025
Cordros Capital Limited has increased its 2025 target price for Lafarge Africa Plc (NGSE: WAPCO) to N104.71 per share, up from previous estimates, following the cement giant’s robust first-quarter results for 2025. The upward revision, reported by Nairametrics, reflects strong investor confidence in Lafarge’s ability to navigate Nigeria’s economic challenges and capitalize on sustained demand in the cement sector. The new target price suggests a potential upside of approximately 32% from the share price of N79.20 as of April 24, 2025.
Lafarge Africa’s Q1 2025 Performance Highlights
Lafarge Africa Plc reported exceptional financial results for the first quarter ending March 31, 2025, as detailed in its filing with the Nigerian Exchange Limited (NGX):
- Revenue: Surged 80% year-on-year to N248.35 billion from N137.77 billion in Q1 2024, driven by an 18.3% increase in cement sales volume (1.62 million metric tons vs. 1.37 million in Q1 2024) and an 80.3% rise in average cement price to N153,019 per ton.
- Gross Profit: Climbed 87% to N122.98 billion, with a gross margin of 52.6%, up slightly from 52% in Q1 2024, despite an 80% increase in ex-depreciation cost of sales due to elevated energy and raw material costs.
- Operating Profit: Grew 137% to N71.66 billion from N30.24 billion, reflecting improved operational efficiency, with the OPEX-to-sales ratio dropping to 20.8% from 25.6%.
- Profit Before Tax: Soared 739.5% to N73.11 billion from N8.71 billion, bolstered by a net finance income of N1.45 billion (vs. a N21.53 billion finance cost in Q1 2024) due to reduced FX losses.
- Profit After Tax (PAT): Jumped 837% to N48.64 billion from N5.19 billion, with earnings per share rising to N3.02 from N0.32.
- Interim Dividend: Declared N4 per share, payable on May 20, 2025, to shareholders registered by May 9, 2025.
Cordros’ Rationale for Target Price Increase
Cordros analysts attributed the revised target price to Lafarge’s strong Q1 performance, driven by:
- Sustained Demand: Increased cement sales reflect robust construction activity in both public and private sectors, supported by Nigeria’s N27.5 trillion 2025 infrastructure budget, including projects like the Lagos-Calabar Coastal Highway.
- Pricing Power: The 80.3% price hike demonstrates Lafarge’s ability to pass on costs in a near-monopoly market, despite inflationary pressures and naira volatility.
- Operational Efficiency: A lower OPEX-to-sales ratio and reduced finance costs, following the clearance of FX obligations, signal improved cost management.
- Sustainability Initiatives: Investments in low-carbon products like Ground Calcium Carbonate (GCC) and calcined clay align with global ESG trends, enhancing Lafarge’s appeal to investors.
Cordros projects 2025 revenue of N811.9 billion, with revenue per ton at N136,983, reflecting moderate price increases. The firm’s bullish outlook mirrors Lafarge’s 122% stock return in 2024, positioning it among the NGX’s top performers.
Market and Strategic Context
Lafarge’s Q1 success stands out amid Nigeria’s economic headwinds, including high inflation and currency volatility. CEO Lolu Alade-Akinyemi credited the results to “strategic innovation, cost discipline, and sustainable production practices,” noting the launch of eco-friendly products like GCC and the upcoming Elephant ECOPlanet. The company’s 10.5 million metric tons per annum capacity and operations across Nigeria (Ewekoro, Sagamu, Ashaka, Mfamosing) bolster its market dominance.
The cement sector’s resilience, mirrored by BUA Cement’s 368.58% pre-tax profit growth, highlights its strategic importance. Analysts suggest Lafarge’s investments in energy efficiency and dollarized construction contracts buffer against naira fluctuations. Additionally, a $1 billion deal with China’s Xuaxin to acquire Holcim’s stake in Lafarge, with a mandatory takeover offer expected in 2025, has driven a 28% share price increase in December 2024, further fueling investor interest.
Sentiment and Broader Implications
Posts on X, such as @Nairametrics, celebrate Lafarge’s Q1 results and Cordros’ target price hike as evidence of the cement sector’s strength, with users like @StocksWatch noting the N4 interim dividend as a shareholder win. However, some express caution about potential cost pressures from energy prices and currency risks, echoing Cordros’ concerns about variable production costs.
Lafarge’s performance aligns with global economic shifts, including Bitcoin’s surge past $104,000 amid US-China trade optimism, Saudi Aramco’s 5% profit dip, and India-Pakistan ceasefire tensions, reflecting a dynamic investment landscape. Locally, Nigeria’s cement industry could become a regional export hub under the AfCFTA, with Lafarge’s green initiatives positioning it as a geopolitical asset.web:Aramco
Investment Outlook
At N79.20 per share, Lafarge’s price-to-earnings ratio is 26.23x, with a 3.81% earnings yield and a 2.71% dividend yield. Cordros’ N104.71 target price, implying a “Buy” recommendation, suggests strong upside potential. Investors should monitor Lafarge’s ability to sustain pricing power and manage costs, especially with Xuaxin’s planned delisting from the NGX in 2025.
For further details, visit lafarge.com.ng or nairametrics.com. If you need a deeper analysis of Lafarge’s financials or investment strategies, let me know!