Unilever Nigeria Plc Target Price : N37.25 BUY Unaudited Q1 2011 Result 24 June, 2011 Revenues Unilever Nigeria Plc released its Q1 March 2011 unaudited results. Revenue for the period was N13.042 billion versus N10.931billion for Q1 March of 2010. This result shows an impressive 19.31% rise in Turnover when compared to the cor- responding period in 2010. We opine that the revenue growth came off the back of the capacity expansion embarked on in 2010 as well as surge in brand loyalty. Profitability Profit before tax soared to N2.353billion from N1.384billion, representing 70.01% increase in PBT during the period under review. Year on Year PBT margin stands at 18.04% as against 12.66%% recorded in the previous year. We suspect that the impressive PBT margin is mostly attributable to the company’s ongoing internal efficiency improvement programme of cost savings. In line with the PBT, Unilever achieved a Profit after Tax of N1.629billion. The PAT recorded an increase of 70.04% from N957. 99million realized in Q1 March 2010. Net profit margin edged up to 12.49% from 8.76% achieved in the preceding period of 2010. Balance Sheet Unilever ended the Q1 March 2011 with a substantially stronger balance sheet as the net assets increased by 19.54% from N8.335billion to N9.964billion. Compared to the Q1 results of 2010, inventory levels were up by 10.69%, trade debtors rose by 4.69% and short-term borrowings declined by 47.75%, cash position increased to N2.45billion from N2.233, while Working Capital stood at N713.296billion. With this result, Unilever achieved a ROE of 16.35% based on a trailing EPS of N1.11, indicating a P/E multiple of 24.71X. We forecast Unilever’s FYE 2011 EPS at N1.51 coming off the back of a projected PAT of N5, 704 billion, pushing trailing PE lower to 18.11X. We hereby place a BUY on Unilever Plc with a target price of N37.25. Technical Analysis Although, · Linear Regression has triggered a BUY signal. · MACD has triggered a BUY signal. · Short term : prices are moving · Intermediate term: prices are trending · The projected upper band is 29.21 · The projected lower band is 25.53 Moving Averages: 10-period 50-period 200-period Close: 27.67 26.59 26.67 Volatility: 39 45 42 Volume: 622,737 871,115 1,392,615 Summary UNILEVER gapped up today (bullish) on light volume. UNILEVER is currently 2.4% above its 200-period moving average and is in a downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of UNILEVER at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on UNILEVER and have had this outlook for the last 5 periods. Analysis of Bollinger Bands for Unilever Nig. Plc On 6/24/2011, UNILEVER closed above the lower band by 34.2%. Bollinger Bands are 45.62% narrower than normal. The narrow width of the bands suggests low volatility as compared to UNILEVER's normal range. Therefore, the probability of volatility increasing with a sharp price move has increased for the near-term. The bands have been in this narrow range for 15 period(s). The probability of a significant price move increases the longer the bands remain in this narrow range. Help Financial Analysis XCSF - Company Snapshot with Financial Analysis Ticker: unilever nl 27.30 0.08 (0.29%) UNILEVER NIGERIA PLC (Lagos: UNILEVER, Currency: NGN) Bloomberg Rating: - Sector: Consumer Staples Industry: Household Products Sub-Industry: Household Products FY End: December 2009 EPS Due: #N/A N/A Depreciation/Amorti Pretax Income Description Business Segments (FY: Dec-09) zation Unilever Nigeria Plc manufactures and markets consumer products primarily in Home and Personal care 395.55 3,185.26 the home, personal care and foods categories. The Company sells products such Food products 293.75 2,475.80 as Omo washing powder, Key soap, Royco bouillon, Lipton tea, Blue Band margarine, Pears baby care goods, Vaseline petroleum jelly, Lux soap, and Close Up toothpaste. Address: 1 Billingsway Oregun PO Box 1063, Apapa Ikeja, Lagos Nigeria Telephone: 234-1-580-3301 Website www.unilevernigeria.com CEO: - CFO: - # Employees as of 12/31/2009: 1,091 Bloomberg Rating: Measure: Estimate Comparable EPS Adjusted Price and Volume (1 Year) Prices/Volume 2008 2009 2010 2011 $35 Volume Price 30.0 M YTD Change 1.49% - - - - - 6 Month Change 8.33% $30 - - - - - 25.0 M 3 Month Change 7.7% - - - - - 1 Year Change 16.9% - - - - - $25 20.0 M Year - - 1.14 1.35 Daily Volume 254,424 $20 Cal Yr - - 1.14 1.35 15.0 M Average Volume 30 Day 671,309 Revision $15 Average Volume 3 Month 719,935 1 Week 4 Weeks 3 Months 6 Months 10.0 M Average Volume 6 Month 763,808 $10 Qtr End #N/A - - - - Qtr End #N/A - - - - 5.0 M Dividend Yld - $5 FY End 12/10 0.0% 0.0% -0.9% -8.0% 52 Week Beta 1.01 FY End 12/11 0.0% 0.0% -2.7% -9.4% $0 .0 M D-08 M-09 M-09 J-09 S-09 N-09 J-10 M-10 M-10 J-10 S-10 N-10 J-11 Measure: Net Debt Performance 2001 2002 2003 2004 2005 2006 2007 2008 2009 5 Yr Avg 2008 2009 2010 2011 Price Change - - 14.6% -16.2% 32.3% -23.8% 74.8% -52.5% 78.2% 21.8% - - - - - NIGERIA STCK EXC ALL SHR 10.7% 65.6% 15.9% 2.7% 38.7% 74.7% -45.8% -33.8% 18.9% 10.6% - - - - - Industry (S5CONS Index) -6.3% 9.2% 6.0% 1.3% 11.8% 11.6% -17.7% 11.2% 10.7% 5.5% - - - - - Div Yield 3.1% 3.3% 4.5% 0.0% 0.0% 1.1% 0.0% 0.0% 0.0% 0.2% - - - - - Financials 12/01 Y 12/02 Y 12/03 Y 12/04 Y 12/05 Y 12/06 Y 12/07 Y 12/08 Y 12/09 Y 5 Yr CAGR Year - - -1827.50 -1893.00 Sales 15,203.5 19,003.4 23,693.9 28,577.0 33,390.9 25,554.4 33,990.8 37,377.5 44,481.3 9.3% Cal Yr - - -1827.50 -1893.00 EBITDA 372.0 2,253.8 3,690.1 4,113.6 3,688.5 363.9 3,411.2 5,242.7 7,750.3 13.5% Revision EBIT 116.1 1,943.8 3,241.1 3,642.7 3,100.3 1,152.8 2,552.8 4,472.3 7,061.0 14.2% 1 Week 4 Weeks 3 Months 6 Months Net Income 2,164.1 1,571.9 1,870.3 2,167.2 1,616.5 1,617.3 1,077.5 2,596.5 4,093.8 13.6% Qtr End #N/A - - - - EPS (Diluted) 0.57 0.42 0.50 - - -0.43 0.28 0.69 1.08 - Qtr End #N/A - - - - Dividends per Share 0.33 0.40 0.49 0.56 0.00 0.00 0.25 - - - FY End 12/10 0.0% 0.0% -13.5% - Shares for Fully Diluted EPS 3,783.3 1,513.3 3,783.3 - - 3,783.3 3,783.3 3,783.3 3,783.3 - FY End 12/11 0.0% 0.0% -15.2% - Book Value per Share 1.09 2.75 1.03 1.05 1.47 1.04 1.33 1.77 2.17 15.7% Cash & Near Cash 3,008.3 1,178.0 1,639.4 2,656.0 2,190.4 1,657.1 1,561.5 2,706.4 1,980.7 -5.7% Growth Rate (CAGR) Summary Total Assets 9,087.4 10,742.1 15,394.6 15,634.1 24,463.8 18,622.5 20,352.9 23,492.7 23,681.7 8.7% 1Yr 3Yr 5Yr 10Yr Working Cap 1,495.9 892.2 795.7 136.0 853.0 1,260.8 1,029.4 638.9 1,301.8 -257.1% Sales 19.0% 20.3% 9.3% 16.9% LT Debt 0.0 0.0 0.0 - 0.0 0.0 - - - - EBIT 57.9% -283.0% 14.2% 34.4% Cash Flow-Oper Activities 2,309.0 184.7 429.7 6,356.5 2,513.6 4,829.8 4,104.4 4,803.2 5,169.8 -4.0% EBITDA 47.8% -377.2% 13.5% 30.1% Capital Expenditures 1,301.8 1,328.3 1,073.0 2,141.6 2,140.8 1,286.3 2,193.8 1,188.7 1,773.2 -3.7% Net Income 57.7% -236.3% 13.6% 25.0% Free Cash Flow 1,007.2 1,143.5 643.3 4,214.9 4,654.4 3,543.5 1,910.5 3,614.4 3,396.6 -4.2% EPS (Diluted) 56.5% -235.9% 25.1% Ratios 12/01 Y 12/02 Y 12/03 Y 12/04 Y 12/05 Y 12/06 Y 12/07 Y 12/08 Y 12/09 Y 5 Yr Avg Dividends -100.0% -100.0% Gross Margin 32.9% 34.3% 38.6% 37.5% 35.2% 27.9% 33.6% 34.8% 39.1% 34.1% BVPS 22.8% 27.5% 15.7% 8.4% EBITDA Margin 2.4% 11.9% 15.6% 14.4% 11.0% -1.4% 10.0% 14.0% 17.4% 10.2% Free Cash Flow -6.0% -1.4% -4.2% 20.2% EBIT Margin 0.8% 10.2% 13.7% 12.7% 9.3% -4.5% 7.5% 12.0% 15.9% 8.0% Valuation Summary Profit Margin 14.2% 8.3% 7.9% 7.6% 4.8% -6.3% 3.2% 6.9% 9.2% 3.6% 5 Year Periodicity: Yearly Return on Assets 27.2 15.9 14.3 14.0 8.1 -7.5 5.5 11.8 17.4 7.1 Latest LatestFQ FQ High Low Avg Return on Com Eqty 57.0 38.0 46.3 55.1 33.9 -34.0 24.0 44.3 55.0 24.7 P/E (LTM) 76.7x 15.0x 30.2x Asset Turnover 1.9 1.9 1.8 1.8 1.7 1.2 1.7 1.7 1.9 1.6 P/E (NTM) 18.1x 18.1x 13.4x 16.5x Assets/Equity 2.2 2.6 3.9 4.0 4.4 4.7 4.0 3.5 2.9 3.9 PEG (NTM) Net Inc per 1000 Employees 1236.6 652.5 812.1 1116.6 798.3 -1057.0 731.0 1976.1 3752.4 1240.1 P/Bk 16.4x 5.9x 11.3x Days Sales Out (DSO) 10.6 10.8 14.8 17.5 49.3 74.4 14.8 21.4 32.3 38.4 P/CF 20.1x 8.2x 15.2x Acc Pay Turn Days (DPO) 51.5 52.6 39.3 31.6 29.7 37.3 11.2 28.4 39.8 29.3 P/Sales 2.4x 1.1x 1.9x Current Ratio 1.4 1.2 1.1 1.0 1.1 0.9 0.9 1.0 1.1 1.0 EV/EBITDA 25.0x 7.5x 13.8x Quick Ratio 0.9 0.3 0.3 0.4 0.6 0.4 0.1 0.5 0.4 0.4 EV/Sales 2.5x 1.0x 1.8x Total Debts/Total Capital 0.1 8.8 41.4 - 60.8 58.3 - - - 59.5 Div Yield 1.1% 0.0% 0.6% Total Debt/Total Equity 0.1 9.7 70.7 48.0 155.0 139.5 80.2 39.1 18.3 86.4 Key Statistics Actual and Estimate Data Holdings By: All 52-Week Range 22.56 - 32.14 LTM 12/2010 12/2011 Holder Name Portfolio Name Source Amt Held % Out Latest Chg File Dt Inst Type Country Metro Area Avg Daily Vol (3 Mo) 719,935 Revenue 44,481.28 51,114.50 57,612.60 UNILEVER OVERSEAS HO n/a Co File 1,893,161,444.00 50.04 - 12/31/2007 n/a n/a n/a Market Value 103,284.0 % change y/y - 12.7% ARTIO GLOBAL MANAGEM Multiple Portfolios MF-AGG 62,502,360.00 1.65 1,250,000.00 1/31/2011 Investment Advisor UNITED STATES New York City/Southern CT/Northern NJ Current Enterprise Value (B) 101,139.00 EBITDA 7,750.35 8,367.75 9,797.80 EATON VANCE MANAGEME Multiple Portfolios MF-AGG 6,507,800.00 0.17 - 4/30/2011 Investment Advisor UNITED STATES Boston Shares Outstanding (B) 3,783.30 M % Margin - 17.1% ABERDEEN ASSET MANAG Multiple Portfolios MF-AGG 1,506,000.00 0.04 - 4/29/2011 Investment Advisor BRITAIN Unclassified Dividend Yield 4.0% EPS 1.231021 1.144 1.347 EATON VANCE ADVISORS Multiple Portfolios