Vitafoam. Is it a good buy?

[Apache]

hello Hispy99, Pumping, Newton et al

I need your help on this one. I am considering accumulating shares in this company and would like your views/ analysis on it.
I know they reported a good first quarter result with PAT growing by 35% over last year.
What's your take

[newton]

Originally Posted by Apache

hello Hispy99, Pumping, Newton et al
I need your help on this one. I am considering accumulating shares in this company and would like your views/ analysis on it.
I know they reported a good first quarter result with PAT growing by 35% over last year.
What's your take

As it is i think its a pretty cool buy (u can set entry for N11)

Fundmt:
current eps is 37k and at modest growth could do 55k by sep08 hence a 4ward PE of 20 whc is quite good (current state of the NSE), also they'v bein consistently with div payout and seem to be quite on top of their workin capitl issues.

Sector:
Currently it is in a sector that boast of a N60 stock, whc pays abt same div as VF, also there are quite a number of stocks doing abt N20. I think in this light the stock mite push up goin 4ward to reflect its status in the sector. (somewhr around alum man/boc gases)

[justice bende]

Originally Posted by newton

As it is i think its a pretty cool buy (u can set entry for N11)

Fundmt:
current eps is 37k and at modest growth could do 55k by sep08 hence a 4ward PE of 20 whc is quite good (current state of the NSE), also they'v bein consistently with div payout and seem to be quite on top of their workin capitl issues.

Sector:
Currently it is in a sector that boast of a N60 stock, whc pays abt same div as VF, also there are quite a number of stocks doing abt N20. I think in this light the stock mite push up goin 4ward to reflect its status in the sector. (somewhr around alum man/boc gases)

Although, am not a guru, I agree with Newton.

However Apache you may do more research just to be double sure.

Good Luck.

[hispy99]

Originally Posted by Apache

hello Hispy99, Pumping, Newton et al

I need your help on this one. I am considering accumulating shares in this company and would like your views/ analysis on it.
I know they reported a good first quarter result with PAT growing by 35% over last year.
What's your take

@Apache,

I have a forward PE of around 20 for the company. However, from their 2008 Q1 result, I expect growth to slow down from the 60% YoY PAT growth acheived in FYE 2007. I do not have 2007 Q1 results, but the N121M PAT implies a N484M PAT for FYE 2008 (I looked at their historical results and I do not think their business is seasonal). This means approx 11% PAT growth for 2008, although I think they should be able to do better than this, maybe 25%? If we assume a 25% growth in 2008, then the PE drops to 18x. If we assume that a PEG of 1 assumes fair valuation, then we are looking at a forward price of around N15 for VITA, not much room for appreciation.

However, if they grow PAT at the same level as last year, then my analysis is way off. Also, I must admit that I do not know a lot about their business, so it's possible that they have something cooking somewhere (it is times like this that I miss being a relationship manager at my former bank, you tend to know what is going on in different companies/industries). By the way, I was in naija (lagos) last year November and all I saw on the island was construction, construction and more constrution. If there is so much construction going on, why is VITA's growth slowing down, abi na "eni" (mat) people dey sleep after dem don take N50 million build house?

If I have spare cash, I would most likely buy (my gut feeling tells me that there might be at least a 30-40% appreciation before the year runs out), inspite of all the PEG I quote above .


my 2 kobo

[Apache]

With today's result, This is a buy for me. However, considering that the result didn't push up the price today, means the price might still come down a bit

[solainvest]

Originally Posted by Apache

With today's result, This is a buy for me. However, considering that the result didn't push up the price today, means the price might still come down a bit

Apache,

Though old, it might be useful

http://www.meristem.com.ng/fileuploa...ERIA%20PLC.pdf

[hispy99]

Originally Posted by Apache

With today's result, This is a buy for me. However, considering that the result didn't push up the price today, means the price might still come down a bit

I cannot but agree with ya

[prince dagbolu]

Originally Posted by Apache

With today's result, This is a buy for me. However, considering that the result didn't push up the price today, means the price might still come down a bit

Apache, what result please?

[Apache]

Originally Posted by prince dagbolu

Apache, what result please?

VITAFOAM NIGERIA PLC
UNAUDITED RESULTS FOR HALF YEAR ENDED 31ST MARCH 2008
2008 2007
TURNOVER N4.107b N2.844b
PROFIT BEFORE TAXATION N438.254m N304.492m
TAXATION (N140.241m) (N97.437m)
PROFIT AFTER TAXATION N298.013m N207.055m

[prince dagbolu]

Originally Posted by Apache

VITAFOAM NIGERIA PLC
UNAUDITED RESULTS FOR HALF YEAR ENDED 31ST MARCH 2008
2008 2007
TURNOVER N4.107b N2.844b
PROFIT BEFORE TAXATION N438.254m N304.492m
TAXATION (N140.241m) (N97.437m)
PROFIT AFTER TAXATION N298.013m N207.055m

Thanks Apache. I shall hold on to my Vitaform.

[hispy99]

This story was earlier this year, but the issues discussed are still relevant.

Poor infrastructure bane of Nigeria’s industrial growth – Dr Makanjuola, MD, Vitafoam

The Sun News Online | Money

@Apache/Prince, I was also made to understand at the sister thread that there is an influx of cheap,, better quality matresses from Cameroun.

[hispy99]

Afrinvest's take on VITA

[knightofdelta]

Vitafoam has not been able to manage their costs effectively as there has been no significant change in the operational margin ratio. The profit before tax has grown at the same rate as the turnover; they may run into problems if there is a sudden drop in turnover, which is quite possible as there are many importers of foam in the country, which are cheaper because of the high cost of production here. The only cheery news is that they have been able to grow their turnover at a steady rate of 47% per quarter for the past five quarters.

The question is, can the earnings be sustained? If Vitafoam can manage their costs more effectively, it will be an investor delight.

[kenebobo]

Originally Posted by knightofdelta

The profit before tax has grown at the same rate as the turnover; they may run into problems if there is a sudden drop in turnover, which is quite possible as there are many importers of foam in the country, which are cheaper because of the high cost of production here. The only cheery news is that they have been able to grow their turnover at a steady rate of 47% per quarter for the past five quarters.

The question is, can the earnings be sustained? If Vitafoam can manage their costs more effectively, it will be an investor delight.

In every market there is competition. Vitafoam has been able to grow their Profit despite the many importers of foam. I foresee great prospect in this coy.

[knightofdelta]

Originally Posted by kenebobo

In every market there is competition. Vitafoam has been able to grow their Profit despite the many importers of foam. I foresee great prospect in this coy.

Yes, I know but you are not getting my point. They are presently struggling with rising cost of goods and cost of sales; they have not been able to control costs. That means their bottomline is riding on the coattails of their turnover. It is like riding a bicycle with one tyre.. what do you call it now? Monocycle? The equilibrium can topple at anytime.

It is usually better to grow turnover and at the same time reduce cost of operations. Betting on the fact that they wil continue to increase their turnover is a gamble.

That is my personal opinion. I invest in fundamentally strong companies but at the same time, I prefer those that have everything going for them.

[kenebobo]

Just when I thought this stock would make me proud by going for the bulls, it just decided to go bearish. Anyway this stock is strong fundamentally and I dont mind holding it for 2 years.