STOCK ANALYSIS: BETA GLASS PLC

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Olori Uwem

Active Member
Mar 18, 2024
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STOCK ANALYSIS: BETA GLASS PLC

Company Overview

Beta Glass Plc, listed on the Nigerian Stock Exchange (NGX) under the ticker symbol BETAGLAS, is the largest manufacturer of glass containers in West and Central Africa. Incorporated in 1974 and listed on the NGX since July 2, 1986, Beta Glass has positioned itself as a key supplier of glass bottles and containers for industries such as beverages, pharmaceuticals, cosmetics, and food.

The company operates two manufacturing plants located in Agbara, Ogun State, and Ughelli, Delta State, with a combined annual production capacity of over 650 million units. Beta Glass is also a major exporter to other African countries, leveraging its quality products and strong market presence.

Financial Highlights:

• Shares Outstanding: 600 million
• Market Capitalization: NGN 34.6 billion (as of the latest trading session).
• Market Value: Ranked as the 58th most valuable stock on the NGX, contributing approximately 0.058% to the Nigerian equity market.
• Earnings Per Share (EPS) (9 months 2024): NGN 13.86
• Dividend per Share (2023): NGN 1.4
• Dividend Yield (2023): ~4.05%
• Payout Ratio (2023): ~15.9%
• Current Stock Price: NGN 57.66

Recent Financial Performance (9 Months 2024):

Revenue:
• Generated NGN 79.76 billion, representing a significant increase from NGN 45.40 billion in the same period of 2023 (+75.7%).

Cost of Sales:
• Increased proportionally to NGN 60.91 billion from NGN 35.51 billion in 2023, reflecting higher production costs.

Gross Profit:
• Stood at NGN 18.85 billion for 9 months in 2024, compared to NGN 9.89 billion in 2023, a growth of 90.6%.

Net Profit (After Tax):
• Achieved NGN 8.32 billion in 2024, up from NGN 5.27 billion in 2023 (+57.8%).

Earnings Per Share (EPS):
• Improved to NGN 13.86 (9 months 2024) from NGN 8.79 (2023).

Dividend Payout:
• Declared a final dividend of NGN 1.4 per share in 2023, a 20% increase from the previous year’s NGN 1.17 per share.

Stock Price Performance:
• Current Price: NGN 57.66
• 52-Week Range: NGN 50.15 – NGN 62.40
• Year-to-Date Performance: Up by approximately 12.5%, outperforming some peers in the industrial sector.
• Price-to-Earnings (P/E) Ratio: ~4.16, which is significantly lower than the sector average, suggesting that the stock is undervalued.

Key Ratios & Insights:
• Gross Profit Margin (2024 YTD): ~23.6%
• Net Profit Margin (2024 YTD): ~10.4%
• Return on Equity (ROE): Beta Glass’s efficient cost management and consistent revenue growth position it as a strong player in the industrial goods sector.

Dividend Details:
Beta Glass Plc maintains a conservative payout policy, retaining significant earnings for reinvestment while still rewarding shareholders with consistent dividends:
• 2023 Dividend: NGN 1.4 per share
• 2022 Dividend: NGN 1.17 per share
• Dividend Growth Rate: ~20% (2023 vs. 2022).

Strengths, Weaknesses, Opportunities, and Threats (SWOT Analysis)

Strengths:
1. Market Leader: Dominates the glass manufacturing industry in West and Central Africa.
2. Diversified Client Base: Supplies products across multiple industries, including beverages, pharmaceuticals, and cosmetics.
3. Export Potential: Significant revenue contribution from exports to neighboring countries.

Weaknesses:
1. High Operating Costs: Rising cost of sales and foreign exchange losses impact profitability.
2. Local Market Dependence: Vulnerable to downturns in the Nigerian economy.

Opportunities:
1. Regional Expansion: Growing demand for glass containers in Africa presents opportunities for expansion.
2. Sustainability: Partnering with recycling initiatives like Wecyclers enhances its eco-friendly image and opens avenues for innovation.

Threats:
1. Economic Instability: Nigerian economic fluctuations could affect domestic sales.
2. Competitive Pressure: From alternative packaging materials and other local manufacturers.

Forecast:
Revenue Outlook:
Beta Glass is expected to close the 2024 fiscal year with revenues exceeding NGN 100 billion, driven by strong demand from the beverage and pharmaceutical sectors.

Profitability:
• Gross Profit: Estimated at ~NGN 25 billion for FY2024, reflecting a gross margin of ~25%.
• Net Profit After Tax (NPAT): Projected to exceed NGN 10 billion, bolstered by improved operational efficiencies and potential cost optimization.

Stock Price Projection:
Based on its historical performance, low P/E ratio, and earnings growth, the stock price could reach NGN 65 – NGN 70 in the next 6–12 months, assuming stable market conditions and no significant economic disruptions.

Dividend Growth:
The company is likely to maintain its dividend growth trajectory, with a potential payout exceeding NGN 1.5 per share for FY2024.

Investment Recommendation:
Beta Glass Plc represents a strong investment opportunity due to its robust fundamentals, market leadership, and consistent financial growth.
• For Income Investors: The company’s sustainable dividends provide a steady income stream.
• For Growth Investors: The undervaluation (P/E of 4.16) and earnings growth make it an attractive long-term hold.

Risk Factors to Watch:
1. Continued pressure from foreign exchange losses.
2. Rising finance costs affecting net margins.

Conclusion:
Beta Glass Plc is a Buy for investors seeking exposure to a resilient industrial goods company with steady returns, market dominance, and significant growth potential.