Last Update05 Aug 25
Beta Glass Plc delivered an exceptional H1 2025 performance, with PAT surging by 334% YoY and revenue up 63%, driven by market demand recovery, operational efficiency, and strategic pricing. The company’s ability to expand EBITDA margins to 38% in a challenging macroeconomic environment underscores strong execution and cost discipline.
Key catalysts include sustainability investments (solar plant installation), regional market leadership, and continued volume growth in glass packaging driven by the beverage and FMCG sectors. With strong profitability momentum and a robust capital efficiency strategy, Beta Glass offers a compelling growth and income investment case for long-term holders.
Key Highlights
1. Revenue & Profitability Surge
- Net Sales: ₦78.2bn (+63% YoY from ₦47.9bn)
- Operating Profit: ₦26.8bn (+278% YoY)
- EBITDA: ₦30.1bn (+214% YoY), margin expanded to 38%
- Profit After Tax: ₦18.7bn (+334% YoY)
- Earnings per Share: ₦31.18 (from ₦7.18), +334% YoY
2. Margin Expansion
- EBITDA Margin: 38% (from ~22% in 2024)
- Operating Margin: ~34.3% (vs ~13% in prior year) Drivers: ✔ Strategic pricing power to offset inflation ✔ Operational efficiency programs ✔ Energy cost mitigation through solar project
3. Operational & Strategic Strengths
- Regional Market Leadership: Dominant supplier of glass packaging in West & Central Africa, with deep relationships across FMCG and beverage sectors.
- Renewable Energy Investments: Solar plant at Agbara plant to reduce energy costs and enhance ESG credentials.
- Sustainability & Innovation: Focus on reducing carbon footprint and increasing recycled glass use.
Strengths
✔ Strong top-line and bottom-line growth despite macro headwinds
✔ Market leadership and brand strength in glass packaging
✔ Operational efficiency and cost optimization delivering margin expansion
✔ Renewable energy adoption to counter energy cost volatility
✔ Strong cash flow generation potential due to high margins
Weaknesses / Risks
✖ Exposure to energy price volatility until renewable projects fully operational
✖ FX risk on imported raw materials and machinery
✖ Concentration risk in glass packaging – limited product diversification
✖ Inflation and interest rate risk impacting cost structure and financing
Valuation
We apply DCF and EV/EBITDA methodologies:
Assumptions
- WACC: 13%
- Terminal Growth: 3%
- Revenue CAGR (2025–2029): 10%
- EBITDA Margin: Sustain ~35–38%
- Net Debt: Negligible (assumed debt-light structure)
1. Discounted Cash Flow (DCF)
- 2025E Free Cash Flow: ~₦15bn
- 2029E Free Cash Flow: ~₦23bn
- Terminal Value: TV = FCFF₅ × (1+g) / (WACC - g)
- Equity Value Estimate: ~₦400–₦420bn
- Implied Price per Share: ~₦620–₦650
2. EV/EBITDA Valuation
- 2025E EBITDA: ₦60bn (annualized from H1)
- Industry Multiple: 6.5x
- Implied EV: ~₦390bn
- Equity Value: ~₦380–₦400bn → ₦600–₦620/share
✅ Strengths
- Impressive Revenue Growth:
- Revenue surged 63.4% YoY to ₦78.2bn in H1 2025 (vs ₦47.9bn in H1 2024), reflecting strong demand and effective pricing strategies.
- Explosive Profit Growth:
- Profit after tax jumped 334% YoY to ₦18.7bn (H1 2024: ₦4.3bn).
- Operating profit nearly quadrupled, rising to ₦26.8bn from ₦7.1bn, reflecting substantial operating leverage.
- Improved Margins:
- Gross profit margin rose to 37.5% in H1 2025 (vs ~20.7% in H1 2024).
- Net profit margin expanded to ~23.9%, up from ~9%, driven by lower cost ratios and higher other income.
- Strong EPS Growth:
- Basic EPS increased by over 334% to ₦31.18 (H1 2024: ₦7.18), indicating strong shareholder value accretion.
- Asset Base Expansion:
- Total assets rose 26% to ₦169.4bn (FY 2024: ₦134.4bn), showing capacity expansion likely tied to future revenue growth.
- Reduced Financing Costs:
- Despite higher revenues, finance costs only increased 2% YoY, indicating good debt management.
- Net finance income (finance income less finance cost) of over ₦1.16bn in H1 2025 is a positive signal.
⚠️ Risks & Weaknesses
- High Current Borrowings:
- While non-current borrowings surged to ₦29.2bn, current borrowings declined to ₦5.6bn (from ₦26.9bn in FY 2024), possibly indicating refinancing or conversion to longer-term debt.
- Capital-Intensive Operations:
- Significant increase in property, plant, and equipment (to ₦64.3bn from ₦36bn) signals ongoing capital expenditure. This may pressure cash flow and lead to more debt if not carefully managed.
- Inventory & Receivables Build-up:
- Inventories and trade receivables remain high at ₦22.7bn and ₦69.9bn, respectively. This raises concerns about working capital efficiency and potential liquidity constraints.
📊 Key Financial Ratios
Metric H1 2025 H1 2024
Gross Profit Margin 37.5% 20.7%
Operating Profit Margin 34.3% 14.8%
Net Profit Margin 23.9% 9.0%
Return on Assets (ROA) ~11% ~3.2%
EPS (Naira) ₦31.18 ₦7.18
Total Debt to Equity Ratio 0.42x 0.48x
🚀 Strategic Considerations
- Growth Projects: The increase in PP&E implies strategic expansion—possibly linked to new furnaces or plant upgrades.
- Regional Demand Surge: Nigeria's beverage and pharmaceutical industries continue to expand, increasing demand for glass packaging.
- Strong Brand Positioning: As a leading glass container manufacturer, Beta Glass benefits from economies of scale and a solid client base.
🧠 Conclusion and Recommendation
Beta Glass Plc’s H1 2025 performance reflects strong operational execution, profitability improvement, and strategic positioning to capture growth in the packaging and industrial sectors.
How well do narratives help inform your perspective?
Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:BETAGLAS. 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.