BUA Foods, Dangote Cement, Seplat Energy lead market gains amid resilience

In 2024, the Nigerian Exchange (NGX) demonstrated remarkable resilience in the face of challenging economic conditions, with the All-Share Index (ASI) achieving a 37.65% Year-to-Date (YtD) gain.

While this figure surpassed the prevailing inflation rate, it fell short of the exceptional 45.90% YtD gain recorded in 2023, reflecting a tempered but steady investor sentiment.

Despite reduced market activity compared to the previous year, with 35 stocks achieving triple-digit gains compared to over 50 in 2023, key players such as BUA Foods, Dangote Cement, Seplat Energy, Geregu Power, and Airtel Africa stood out, driving significant wealth creation.

Collectively, these companies contributed over ₦11.6 trillion to market capitalization, highlighting their dominance and robust performance in 2024.

Leading the market in 2024, BUA Foods added ₦3.988 trillion to its market capitalization, closing the year at ₦7.47 trillion. This places BUA Foods as the third most valuable company on the NGX.

The company’s share price surged 114.58% YtD, ending the year at ₦415. While this marked a moderation from the 197% YtD gain in 2023, strong fundamentals, including a 104% increase in revenue and a 94% rise in profit before tax during the first nine months of 2024, sustained investor confidence.

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A high price-to-earnings ratio (35%) underscores market optimism. However, a modest dividend yield of 1.33% suggests room for improvement in enhancing total returns. Increasing its dividend payout in 2024 could further solidify its appeal to investors.

Nigeria’s largest cement producer added ₦2.708 trillion to its market capitalization, ending the year at ₦8.159 trillion. Despite market adjustments in Q2, which saw its share price decline from a peak of ₦686.70 to ₦478.80, Dangote Cement delivered a solid 50% YtD gain.

The company’s financials revealed a modest pre-tax profit growth of 0.37% due to rising costs. However, its consistent dividend policy, with cumulative payouts reaching ₦2.8 trillion by 2024, continues to support investor confidence. A potential dividend increase for 2024 could further bolster its position in 2025.

Seplat Energy recorded a ₦1.995 trillion YtD gain in market capitalization, closing at ₦3.354 trillion. Its share price surged from ₦2,310 to ₦5,700, representing a 148% YtD increase and outpacing its 110% YtD gain in 2023.

The company’s financial performance was a key driver, with pre-tax profit soaring by 483% YoY to ₦366.711 billion in the first nine months of 2024. Despite a post-tax loss due to increased tax liabilities, Seplat’s low reliance on debt and consistent quarterly dividends make it an attractive option for income-focused investors.

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Geregu Power’s market capitalization soared from ₦997.5 billion to ₦2.875 trillion, achieving an impressive 188% YtD gain. This builds on its 168% YtD gain in 2023.

Strong financial results, including a 102% YoY increase in revenue and a doubling of pre-tax profit to ₦36.2 billion, fueled investor optimism.

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However, a relatively low dividend yield of 0.70% indicates potential for further growth if the company increases payouts to attract income-focused investors.

Airtel Africa added ₦1.014 trillion to its market capitalization, closing the year at ₦8.105 trillion. However, its 14.3% YtD share price gain was modest compared to its peers, reflecting tempered investor sentiment due to financial pressures.

Currency devaluations and inflationary pressures led to a 9.7% drop in reported revenue and a pre-tax loss of $63 million for the financial year ending March 2024. Nevertheless, the company’s commitment to shareholder returns, including a 9% increase in interim dividends, may attract stability-focused investors.

The NGX’s performance in 2024 highlights its resilience and the potential for continued growth. Analysts remain optimistic about the market’s prospects in 2025, citing expected improvements in economic conditions and easing inflationary pressures. Companies are encouraged to maintain robust financial performance, consistent dividend policies, and strategic growth initiatives to sustain investor confidence in the coming year.

The NGX remains a vital platform for wealth creation, with top-performing companies driving significant contributions to Nigeria’s economic development.