By Chioma Obinagwam
Lafarge Africa Plc has staged a remarkable recovery over the past year, delivering a stellar +152.9% stock return, fueled by robust earnings, enhanced operational efficiency, generous dividends, and excitement over Huaxin’s proposed acquisition.
Confiance News gathered from a Cordros Research report on Monday.
Cordros Research said: “Despite this surge, we see Lafarge Africa as undervalued, with significant upside potential. Our confidence stems from its operational excellence, top-tier return metrics, and valuations lagging behind peers. We maintain our “BUY” recommendation, targeting a price of ₦104.71 per share, implying a 21.8% upside from current levels.”
Is Lafarge Africa’s Rally Just the Beginning?
For years, Lafarge Africa’s stock lingered below its October 2014 peak of ₦127.00, weighed down by legacy issues that dampened investor sentiment. The past 12 months have marked a turning point, with the stock soaring 152.9%, outpacing the Nigerian Stock Exchange All-Share Index’s modest 15.5% gain. In 2025 alone, Lafarge Africa’s 22.9% rise has doubled the Nigerian Stock Exchange All-Share Index’s 11.3% return, signaling a structural shift in market perception. While the Huaxin acquisition buzz has contributed, sustained price momentum reflects growing recognition of Lafarge Africa’s strong fundamentals—earnings recovery, operational efficiency, and a solid balance sheet. After years of trading below its true value, the market appears to be catching up.
How Lafarge Africa stacks up against rivals
The analysis of Nigeria’s cement sector, Cordros said, shows WAPCO not only competes but often excels across key metrics like profitability, efficiency, and stock performance.
Stock Performance: Before its recent surge, Lafarge Africa’s total return from June 2020 to June 2024 was 2.7 times, trailing Dangote Cement (5.0 times) but aligning with BUA Cement (2.8 times). Over the last 12 months, however, Lafarge Africa’s 1.8 times gain outshone peers (Dangote Cement: -0.3 times; BUA Cement: -0.4 times), driven by strong fundamentals and acquisition optimism. Its 5-year performance now stands at an impressive 10.0 times, surpassing Dangote Cement (4.1 times) and BUA Cement (2.2 times).
Revenue and Profitability: Despite a smaller production capacity (10.5 million tonnes per annum vs. Dangote Cement’s 52 million tonnes per annum and BUA Cement’s 17 million tonnes per annum), Lafarge Africa’s 2024 revenue surged 71.8% year-on-year to ₦ 696.76 billion, outpacing Dangote Cement (62.2%, ₦3.58 trillion) and trailing BUA Cement (90.6%, ₦876.47 billion).
In the first quarter of 2025, Lafarge Africa’s revenue grew 80.3% year-on-year to ₦248.35 billion, nearly matching BUA Cement (80.5%) and far exceeding Dangote Cement (21.7%). We project 2025 revenue growth of 40.7% to ₦980.21 billion, ahead of Dangote Cement (21.4%) and slightly above BUA Cement (40.6%).
Confiance News learnt that Lafarge Africa’s 2024 Earnings Before Interest, Taxes, Depreciation, and Amortization ( EBITDA) margin of 31.9% aligns with peers (Dangote Cement: 38.6%; BUA Cement: 31.0%), but its Profit Before Tax margin of 21.9% tops Dangote Cement (20.5%) and doubles BUA Cement (11.4%), reflecting lower financing costs.
“We expect this efficiency to persist in 2025, with a projected Profit Before Tax margin gap of just 3.25 percentage points vs. peers’ 10.98 percentage points. Lafarge Africa’s 2024 Return on Invested Capital of 47.2% dwarfs Dangote Cement (18.0%) and BUA Cement (19.7%), with a Return on Invested Capital/Weighted Average Cost of Capital ratio of 3.9 times, highlighting superior capital efficiency,” It forecast.
Efficiency and Balance Sheet Strength: Lafarge Africa’s operational efficiency shines, with a 2024 inventory turnover of 4.4 times (vs. Dangote Cement: 3.1 times; BUA Cement: 4.7 times), projected to hit 4.8 times in 2025. Its asset turnover of 0.8 times in 2024 (rising to 1.1 times in 2025) outpaces peers. With a debt-to-equity ratio of 0.0 times and a net cash position, Lafarge Africa’s financial leverage (2.0 times) is far lower than Dangote Cement (2.9 times) and BUA Cement (4.0 times). Its 2024 current ratio of 1.0 times (projected at 1.6 times in 2025) and cash ratio of 0.6 times underscore robust liquidity compared to peers.
Valuation Gap Persists
Despite its strong performance, Lafarge Africa trades at a trailing Price-to-Earnings (P/E) multiple of 9.6 times, well below the local peer average (25.4 times) and peers like Dangote Cement (12.4 times) and BUA Cement (38.4 times). Its Enterprise Value/Trailing Twelve Months Earnings Before Interest, Taxes, Depreciation, and Amortization of 4.5 times also lags the peer average (7.3 times). Applying peer Price-to-Earnings multiples (12.4 times–18.1 times) to Lafarge Africa’s Trailing Twelve Months Earnings Per Share of ₦8.91 suggests a fair value of ₦110.36–₦161.09 per share. Similarly, peer Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization multiples (6.2 times–7.8 times) imply a range of ₦122.70–₦148.99, indicating a 30.0%–89.0% upside from the current ₦86.00 (as of June 16, 2025).
Recommendation
Cordros Research, the analytical arm of Cordros Capital Limited, offered key insights to assist investor decision-making.
It said: “WAPCO’s undervaluation, robust fundamentals, and strategic catalysts make it a standout investment. Despite its impressive rally, the stock’s valuation metrics remain attractive, supported by strong earnings, capital efficiency, and a lean balance sheet. We expect continued market re-rating driven by these factors and investor enthusiasm. We reaffirm our BUY rating with a target price of NGN104.71, offering a 21.8% upside”
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