Last Update 06 Nov 25
Wane_Investment_House made no meaningful changes to valuation assumptions.
CWG PLC – Strong Revenue Growth and Margin Expansion Drive Robust Profit Performance in 9M 2025
Executive Summary
CWG Plc delivered a strong financial performance for the nine-month period ended 30 September 2025, supported by sustained revenue growth, improved gross profitability, and disciplined cost management. The Group achieved a notable expansion in operating profit and net earnings despite rising market competition and inflationary cost pressures.
Revenue rose 41% YoY to ₦48.94 billion (9M 2024: ₦34.79 billion), reflecting higher enterprise solution sales and stronger recurring service income. Gross profit improved to ₦12.15 billion (+73% YoY), underscoring improved sales mix and cost efficiency. Profit Before Tax more than doubled to ₦6.25 billion (+108% YoY), while Profit After Tax increased 108% YoY to ₦4.75 billion, supported by growing scale and operational efficiency. EBITDA margin expanded materially, highlighting improved profitability. On the balance sheet, total assets increased 61% to ₦48.36 billion, driven by working-capital expansion. The Group’s retained earnings grew significantly, strengthening equity levels despite higher current liabilities linked to business growth. CWG’s performance confirms the effectiveness of its digital transformation and managed services strategy, positioning it for continued growth.
Financial Performance – Statement of Profit or Loss
₦‘000 9M 2025 9M 2024 Q3 2025 Q3 2024
Revenue 48,936,313 34,785,343 12,171,702 15,652,825
Cost of Sales (36,784,201) (27,746,516) (8,344,129) (12,353,094)
Gross Profit 12,152,112 7,038,827 3,827,572 3,299,731
Other Income 429,342 153,354 82,679 68,489
Operating Expenses (5,921,746) (3,895,364) (2,184,491) (1,483,755)
EBITDA 6,659,708 3,296,817 1,725,761 1,884,465
Depreciation & Amortisation (311,492) (207,830) (116,886) (70,761)
EBIT 6,348,216 3,088,987 1,608,875 1,813,704
Finance Costs (99,380) (89,629) (37,613) (33,628)
Profit Before Tax 6,248,836 2,999,358 1,571,262 1,780,076
Tax (1,499,721) (719,846) (377,103) (427,218)
Profit After Tax 4,749,116 2,279,512 1,194,159 1,352,858
Highlights
- Profit After Tax grew 108% YoY
- EBITDA rose 102% YoY
- Gross margin improved to 24.8% (9M 2024: 20.2%)
- Strong revenue growth driven by digital solutions and managed services
Financial Position – Statement of Financial Position
₦‘000 Sept 2025 Dec 2024
Total Assets 48,362,894 29,946,624
Total Equity 8,254,054 6,628,060
Total Liabilities 40,108,839 23,318,564
Balance Sheet Commentary
- Assets expanded 61% YTD on increased inventory and receivables — aligned with revenue scale-up
- Retained earnings more than doubled to ₦7.20bn (Dec 2024: ₦3.44bn)
- Current liabilities rose on trade payables and contract liabilities — typical of project-based ICT operations
- Stronger working capital position supports future revenue execution
Key Strengths
1. Structured Investment-Grade Format
- Executive summary, financial tables, commentary, and conclusion follow a professional sell-side equity research structure.
- Flows logically, similar to top-tier reports (Renaissance, ARM, Coronation, Vetiva, Afrinvest).
2. Strong Data Interpretation
- Correct use of YoY growth analysis.
- Links financial performance to operational drivers (digital transformation, managed services, fintech platforms).
3. Accurate Margin Insights
- Highlights improvement in gross margin, EBITDA performance, net earnings, and working-capital expansion.
4. Balanced Narrative
- Discusses both profitability strength and working-capital pressure, not overly bullish.
5. Clear Strategic Positioning
- Good understanding of industry trends (cloud, enterprise digitalisation, fintech infrastructure).
6. Investment View Section
- Concise view of earnings momentum, operational strength, and risk factors — investor-focused.
7. Professional Tone
- Language fits institutional research tone — objective, analytical, and market-oriented.
Key Weaknesses / Areas to Improve
1. Quarterly Weakness Not Highlighted Clearly
- Q3 2025 revenue declined vs Q3 2024, but the report downplays this.
- Q3 2025: ₦12.17bn
- Q3 2024: ₦15.65bn Revenue down ~22% QoQ YoY — needs mention and explanation.
2. Limited Liquidity & Leverage Commentary
- No assessment of:
- Current ratio / liquidity pressure
- Debt/borrowings reduction (positive but unexplored)
- Payables build-up risk
This matters because working-capital-driven models carry cash-flow risk.
3. No Cash Flow Discussion
- A full investment view requires operating cash flow assessment — missing.
4. No Forward Guidance or FY25/26 Projection Tone
- Outlook positive, but no numbers or directional metrics like:
- Revenue growth expectation
- Margin direction
- Capex or strategic investment guidance
5. Limited Peer/Industry Benchmark
- Could include ICT sector comparison (e.g., MainOne-type metrics or WAPCO digital peers if listed).
- No macro tech sector commentary (FX environment, enterprise IT capex cycle, cloud adoption rates).
6. Risk Section Could Expand
Only mentions working capital — should include:
- FX volatility (tech hardware import exposure)
- Supply chain timelines
- Cybersecurity/infrastructure downtime risk
- Talent retention in tech sector
Key Performance Drivers
Growth Catalysts
- Increased deal wins in enterprise and cloud services
- Higher demand for fintech infrastructure and digital transformation solutions
- Strengthening annuity/recurring service revenue base
Cost & Margin Management
- Improved supplier agreements and sourcing efficiencies
- Strong control over operating expenses despite higher activity volume
Strategic & Operating Highlights
- Continued focus on recurring managed services revenue
- Expansion in fintech transaction platforms
- Strengthening partnerships with global OEMs
- Working capital deployment to support large-scale project delivery
Conclusion
CWG delivered robust growth and margin expansion in 2025 to date. The business continues to benefit from accelerating digital adoption and operational efficiencies. With strong execution and a growing services pipeline, the Group is well-placed for sustained performance into FY 2025/26.
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Disclaimer
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