Last Update29 Jul 25
WaneInvestmentHouse made no meaningful changes to valuation assumptions.
Vitafoam Nigeria Plc has demonstrated strong financial resilience in the first 9 months of FY 2025, with a notable turnaround from losses in FY 2024 to robust profitability. The company’s strategic positioning in Nigeria’s growing consumer durables sector, alongside improved margins, cost efficiency, and a strengthened balance sheet, supports a positive investment outlook.
Financial Highlights (9M 2025 vs 9M 2024)
Metric 9M 2025 9M 2024 % Change
Revenue ₦84.87bn ₦60.49bn +40.3%
Gross Profit ₦28.84bn ₦21.24bn +35.8%
Operating Profit ₦18.48bn ₦807m +2,190%
Profit After Tax ₦9.37bn (₦2.88bn)
Turnaround EPS (Basic) 697.14 kobo (263.17) kobo
Turnaround Total Assets ₦57.77bn ₦51.35bn +12.5%
Shareholders' Equity ₦32.5bn ₦25.0bn +30.0%
Strengths
- Turnaround to Profitability: PAT of ₦9.37bn (vs. ₦2.88bn loss in 9M 2024) indicates significant operational recovery and strategic effectiveness.
- Revenue Growth: 40.3% YoY increase reflects strong demand, likely driven by product diversification and market expansion.
- Improved Cost Efficiency: Gross profit and operating profit margins rose, showing effective cost control and operating leverage.
- Stronger Equity Position: Shareholders' equity rose by 30%, improving the company’s financial stability and investor confidence.
- Reduced Borrowings: Interest-bearing debt reduced from ₦13.99bn to ₦7.88bn (combined current and non-current), reducing financial risk and interest burden.
- Operational Gains: Finance income remained stable despite declining cash balances, and there were positive contributions from non-core activities (₦924.6m in other gains).
Weaknesses / Risks
- High Finance Cost: Despite debt reduction, finance costs rose to ₦4.87bn, potentially linked to higher interest rates or legacy debt servicing.
- Volatile Exchange Gains/Losses: A ₦246.2m loss from FX translation signals vulnerability to currency volatility.
- Significant Working Capital Requirements: High trade payables (₦9.68bn) and inventory (₦24.96bn) suggest a capital-intensive operation with slower cash conversion.
- Decline in Cash Reserves: Cash and bank balances decreased to ₦5.88bn from ₦7.11bn, indicating tighter liquidity.
- Still Recovering from FY 2024 Losses: Although current performance is impressive, the turnaround is recent and must be sustained.
Valuation & Recommendation
- Current Performance Trajectory: With EPS at ₦6.97 for 9M alone, the company could achieve ₦9+ EPS annualized for FY 2025, assuming Q4 performance aligns.
- Relative Valuation: With improving profitability and a leaner balance sheet, Vitafoam may currently be undervalued if market price does not reflect this turnaround.
- Dividend Potential: With ₦9.37bn PAT and improved reserves, the company is well-positioned to resume or increase dividends in FY 2025.
Rationale:
- Strong revenue and profit recovery.
- Improved operational efficiency and capital structure.
- Undervalued relative to earnings momentum.
- Exposure to Nigeria’s resilient consumer goods sector.
Risk Caveat: Investors should monitor FX exposure, finance costs, and working capital pressure as potential drags on free cash flow and net margin.
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Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:VITAFOAM. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.