Initiating coverage with a long term positive outlook
We initiate coverage on the Nigerian consumer goods sector with a positive long term view, albeit in the near term we see some temporary headwinds. Our universe comprises two of the largest flour millers in Nigeria (DFM, FMN), a sugar refiner (DSR), subsidiaries of three multinationals (Nestle, PZ Cussons, Unilever) and a diversified consumer name (UAC). The sector is in an expansionary phase, thanks to robust demand, and the leading players are adding capacity. We believe the sector has been the third largest recipient of FDI flows into Nigeria in recent years, after the oil & gas and telecoms sectors.
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