Last Update17 Jul 25Fair value Increased 45%
WaneInvestmentHouse has decreased revenue growth from 11.9% to 10.6%, increased profit margin from 7.7% to 10.7% and decreased timeframe from 5 years to 3 years.
UPDC Nigeria Plc has released its Q1 2025 earnings, reinforcing its steady turnaround with a blend of financial growth and asset-backed strength. Despite delivering a sharp improvement in revenue and profitability, UPDC’s market valuation remains meaningfully below intrinsic value, presenting a notable opportunity for contrarian, value-focused investors.
Key Financial Highlights:
- Revenue: ₦2.18 billion, +68% YoY (Q1 2024: ₦1.3 billion)
- Profit Before Tax (PBT): ₦704.6 million, +742% YoY (Q1 2024: ₦83.6 million)
- Profit After Tax (PAT): ₦481.7 million, +713% YoY (Q1 2024: ₦59.2 million)
- Earnings Per Share (EPS): 3 kobo (previously 0 kobo)
- Equity Base: ₦10.03 billion, +6% YoY
- Total Assets: ₦30.24 billion
Key Drivers Behind the Performance
- Operational Efficiency: Under CEO Odunayo Ojo, UPDC has restructured towards diversified real estate offerings, shedding non-performing segments while expanding its mid-market footprint.
- Strong Asset Portfolio:
- Residential: Over 1,000 units across Nigeria’s key cities.
- Commercial: Stakes in UPDC REIT properties like Victoria Mall Plaza I & II and Pearl Hostel.
- Hospitality: Festival Hotel Festac, a 471-room landmark now under a rebranding partnership with Premium Swiss Hospitality, which is expected to boost its market valuation significantly.
Valuation Gap: Trading Below Book Value
Despite equity standing at ₦10.03 billion and approximately 1.85 billion shares outstanding, UPDC trades at a market capitalization of around ₦85 billion. This is below its estimated book value per share (₦5.42), and far below the fair market value of its key assets.
Conservatively, just 5 flagship assets could be worth over ₦100 billion — more than its current market cap.
Balance Sheet Stability & Shareholder Strength
- Anchor Shareholders: Custodian Investment Plc (51%) and UAC of Nigeria Plc (42.61%) provide long-term capital backing.
- Liabilities Reduction: Debt has reduced by over ₦1 billion YoY, a sign of prudent financial management.
- Net Cash Outflow: While operating cash outflow was ₦512 million in Q1 2025, this is offset by consistent investment inflows and asset monetization potential.
Equity Analyst View: Hidden Value, Long-Term Unlock Potential
UPDC’s undervaluation is primarily a function of market illiquidity and limited coverage, not fundamental weakness. Its combination of tangible property assets, recurring income streams, and improving financial performance suggests a company positioned for long-term value unlocking.
Investment Case Summary:
- Turnaround Growth: Revenue CAGR of 15.6% (2018–2023), 68% revenue growth in Q1 2025, and a 713% PAT surge.
- Undervalued Asset Base: Properties across Lagos, Abuja, Port Harcourt, and more, including high-value assets like Festival Hotel.
- Strong Shareholder Base: Capital stability and strategic focus from major shareholders.
- Book Value Discount: Trading below book value, rare in Nigeria’s real estate sector.
Recommendation: BUY — Undervalued Real Estate Play
For medium to long-term investors seeking exposure to Nigeria’s real estate market through a listed vehicle, UPDC represents a solid “BUY” opportunity. The combination of strong asset backing, improving profitability, and a visible rebranding strategy with international partners positions the stock for value unlocking through either capital appreciation or structured asset monetization (REIT expansion, asset sales).
Keeping an eye on UPDC over the next 6–12 months may reward patient investors looking beyond short-term market sentiment toward tangible, asset-driven growth potential.
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Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:UPDC. 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.