Shares of Dangote Cement have soared over 20% in February 2025, rising from N395 to N480 as the company stages a notable recovery from a dip in 2024.
In a bid to strengthen growth, Dangote recently announced a substantial $400 million investment to expand its Mugher cement plant in Ethiopia, with plans to double its annual capacity to 5 million tons within 30 months.
Before embarking on this expansion, Dangote Cement’s Board of Directors approved a proposal to seek medium- to long-term debt funding in the domestic capital markets in mid-November 2024.
According to the company, the funding will come from new bonds issued under a N300 billion program that the company launched in 2021, which is registered with the Securities and Exchange Commission (SEC).
So far in February 2025, especially in the second week, the company has experienced a correction in the Nigerian stock market, climbing over 20%.
Market trend
In 2024, Dangote Cement recorded a year-to-date performance of 49.7%, with most of this increase happening in January when the stock rose from an opening price of N319 to N763.
- However, this growth was followed by a steady decline starting in February, and by December 2024, the stock had dropped to N478.80.
- January 2025 saw the stock decline further to N394, with a market volume of 16.8 million shares.
Nevertheless, there was a modest recovery in the second week of February, as the stock climbed over 20% month-to-date.
Possible drivers of bullish price action
In mid-November 2024, Dangote Cement PLC announced that its Board of Directors approved plans to raise medium- to long-term debt funding from the domestic capital markets.
- This initiative aims to enhance its financial structure and support ongoing operations under a N300 billion issuance program.
By February 2025, Dangote Cement disclosed a plan to invest $400 million (approximately N603.2 billion) to upscale a second production line at its Mugher cement plant in Ethiopia.
- According to the company, this expansion aims to double the facility’s annual production capacity to 5 million tons, with operations expected to commence within 30 months, as detailed in a disclosure released on February 18, 2025.
- Additionally, the company plans to establish a new greenfield cement grinding unit with
an annual capacity of 3 million tons.
Although the full-year results have yet to be released, a Board meeting is scheduled for February 28, 2025, to discuss several key matters, including the Audited Financial Statements (AFS) for the entirety of 2024.
- However, examining its nine-month results for 2024 reveals that despite rising finance and production costs, Dangote Cement achieved a modest increase in pre-tax profit, reaching N406.38 billion—a 0.36% year-over-year growth.
While the precise drivers of the company’s share price in 2024 may remain uncertain, recent positive fundamentals—particularly the plans for a $400 million investment in a second production line and the opportunity to buy shares around the N400 level—are likely influencing investor sentiment.