Cadbury Nigeria: Waiting for topline growth to pick up

Neutral rating; upside limited
We are initiating coverage on Cadbury Nigeria (Cadbury) with a Neutral rating and a price target of N25.2, implying just a 4.8% upside potential from current levels. The company is a leader in the fast moving consumer goods space. Its main brands, Bournvita and TomTom, are household names and command a significant market share in the beverage and confectionery segments respectively. We forecast flattish sales and mid-single digit PBT growth on average over the 2015-2017E period as we continue to see limited room for unit volume growth. The shares are trading on a 2015E P/E multiple of 44.5x for EPS growth of 23.2% in 2016E (boosted by base effects), compared with 34.3x for 11.9% EPS growth for Nestle Nigeria.


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