Julius Berger Nigeria Plc
Ticker Symbol (NSE: JBERGER)
Share price at the point of publication is N26.50 and P/E is 4.5X
Julius Berger is a Nigerian construction company, thou the company was founded in Germany the year 1950, its presence in Nigeria was not until 1965 when the firm won a tender for the construction of second mainland bridge. The company was incorporated in 1970 during the construction of the second mainland bridge which was to be completed in 1974. Berger also undertook several projects before the completion of the first project in 1974 like the repair of the Onithsa Bridge in 1970, Damn construction in 1971, that is the 500 m long and 25 m high Laminga Dam, with spillway system, water-treatment plant and 48 km pipeline distribution network in Jos,
28 km Itoikin-Epe road in 1972 which included construction of 5 small bridges, construction of Volkswagen assembly plant in 1973 to cut it short, Berger have been busy since their entrance in Nigeria in 1965. Here is a link to all their project from 1965 https://www.julius-berger.com/about-julius-berger/profile-and-history
The company was listed in the Nigeria stock exchange in 1991. According to the 2020 SEC filings Mike Adenuga owned about 1/5th of JBerger, this makes him the heights shareholder in the company, he holds this position through his subsidiary Goldstone Estates Ltd.
Julius Berger has also hit me as an interesting spawner with her capital allocation. The company ventured into the agro industries and reports that her mega cashew nut processing plant will be commissioned in 2022. Other spinoffs that have got my attention is Abumet Nigeria Ltd and Julius Berger Services Nigeria Ltd. Abumet is a Manufacturers and dealers in aluminium, steel, iron or other structural products of such nature while JBerger Services is a Provider of port services, stevedores, cargo superintendents, port management, warehousemen, agents and proprietors of warehouses.
Julius Berger is one of the top if not the top construction company in Nigeria and this reflects in her numbers as the company market cap is 1.3x it's free cash flow in 2021.
Other numbers such as Revenue growth, cash growth, E.P.S growth and Equity growth shows the presence of a moat ( competitive advantage) in the industry they operate. This is as a result of brand recognition and on-time delivery on contracts.
With the moat and diversifications Julius Berger earnings growth rate by my metrics is expected to be 24%. The outcome of the 2023 general election may affect this growth rate if the elected president decides to cut down expenses on infrastructure and allocate money to other sectors of the economy.
Revenue %
| 5yrs | 3yrs | 1yr |
|---|---|---|
| 19 | 20 | 40 |
FreeCashflow %
| 5yrs | 3yrs | 1yr |
|---|---|---|
| 234 | 381 | 969 |
Earnings per share %
| 5yrs | 3yrs | 1yr |
|---|---|---|
| 220 | 17 | 701 |
Equity %
| 5yrs | 3yrs | 1yr |
|---|---|---|
| 24 | 25 | 57 |
ROIC%
| 5yrs | 3yrs | 1yr |
|---|---|---|
| 13 | 17 | 21 |
There have been good insider buying as all the directors with previous holdings increased their direct and indirect holdings between 2019 and 2020. It shows directors hopes for the future is positive.
Government contract made up 81.8 % of the total revenue in 2020 while private contract amounted to 18.2%.
Based on Services, civil works made up 75.2% of 2020 revenue while building works and services made up 15.7% and 9.1% respectively
The company has a total staff of 12,217 as at 2020 whose total cost amounted to N64.8B which is about 26% of 2020 total revenue and 5,306,805 per capita. Although am not quite happy with directors short term benefit of N944M.
Berger's debt is covered by one year of her free cash flow and return of invested capital have been double digit from 2018 excluding the pandemic year 2020. Price to book ratio is 0.82x, however most of their tangible assets are inventories, lands, building, plants and machinery, the conditions of most of the plants and machinery which is the major contributor to the asset can not be determined efficiently this means that assets plays might not be advised
Directors are owner oriented with considerable integrity which is a good thing for an average investor as the aim is investing for the long run.
Based on value Julius Berger is worth N51 per share this indicates that the company is 52% devalued and anyone buying the company at publishing price today is essentially buying N1 for 52Kobo.
This is not a financial advise I would advise you to do your own research and invest wisely.
I buy my shares with AFRINVESTOR.COM and this article is not in anyway sponsored by them.
