As we review the general performance of the year 2021, it is crucial that we also weigh the performance of our equities investment against the average inflation rate of the year to help gauge the worthiness of such investments.
The Nigerian Exchange Limited (NGX) closed the year on a positive note appreciating by 6.07% year to date, in comparison with the average inflation rate of 16.98% in 2021. If you invested in the 7 consumer goods stocks listed below, the effect of the inflation rate would have been eroded.
Interestingly, the list is dominated by millers, breweries and oil palm refinery companies in pairs, while livestock feeds stands alone. The top five (5) of the 7 stocks that attained this feat are listed below:
Honeywell Flour Mills Plc
Honeywell Flour Mills Plc is a flour milling company that is principally engaged in the manufacturing and marketing of wheat-based food products, such as flour, semolina, whole wheat meal, noodles and pasta. The miller’s share price gained a total of 183.33% year to date and outperformed the average inflation rate by 166.35%.
During the year, industry-peer Flourmills Plc announced the acquisition of 71.69% stake in Honeywell Flour Mills Plc for N80 billion, which was a major catalyst for the rallying witnessed in the shares of Honeywell Plc. The announcement triggered a jump in the price of the company’s shares making it the best-performing consumer goods company in 202.
In the 6 months ended September 30 2021, its financial statement revealed a 73.04% growth in profit after tax from N204 million to N353 million and a 19.32% growth in revenue.
Honeywell Flour Mills Plc is trading around N3.37 at the time of writing this report.
Champion Breweries Plc
Champion Breweries is the 4th largest brewery on the Exchange by market capitalization.
Champion Breweries Plc is an established brewery in Nigeria manufacturing Champion Lager Beer and Champ Malta as well as a selection of non-alcoholic beverages. The company also brews and packages products under contract for Nigerian Breweries Plc.
The company’s share price gained a total of 173.26% at the end of 2021, outperforming the average inflation rate by 156.28%.
The brewery recorded revenue growth of 44.72% in the 9-months ended September 2021, from N4.89 billion in the corresponding period of 2020 to N7.08 billion. Net profit for the period appreciated significantly by 969.45%, the highest amongst all four breweries in the same period. This impressive performance could be the motivating factor behind the growth in its share price.
Champion Breweries was trading at N2.43 at the time of writing this report.
Guinness Nigeria Plc
Guinness Nigeria Plc is a beverage manufacturing company. The Company offers beverages under various categories, such as spirits, beers, ready-to-drink and non-alcoholic. The Company is engaged in brewing, packaging, marketing and selling of Guinness diverse brands of drinks.
Guinness Nigeria Plc’s share price gained a total of 105.26% at the end of 2021, outperforming the average inflation rate by 88.28%. The brewer is the third most-capitalized brewery on the Exchange.
The company recorded an impressive growth of 580.47% in profit after tax and revenue growth of 58.10% which contributed to the increase in share price.
Guinness Nigeria Plc share price last closed at N42.20.
Okomu Oil Plc
Okomu Oil Plc is engaged in the cultivation of oil palm, processing of fresh fruit bunches into crude palm oil for resale, rubber plantation and processing of rubber lumps to rubber cake for export.
The company’s share price gained a total of 56.04% from year to date, outperforming the average inflation rate by 39.06%.
In the 9 months ended September 30th, the company grew its net profit by 132.14% from N4.99 billion to N11.60 billion while revenue appreciated by 46.21% in the same period which likely contributed to the share price appreciation.
The company’s shares were trading at N142.00 at the time of writing this report.
Livestock Feeds Plc
Livestock Feeds Plc is engaged in the manufacturing and marketing of animal feeds and concentrates. The Company operates through four segments: Aba, Ikeja, Benin and Northern operations.
The company’s share price gained a total of 54.68% at the end of 2021, outperforming the average inflation rate by 37.70%.
In the 9 months ending September 30, 2021, Livestock Feeds Plc reported a growth of 87.08% in profit after tax, while revenue appreciated by 34.20%.
The company’s shares were trading at N2.15 at the time of writing this report.
Other Stocks that outperformed the average inflation rate are:
Presco Plc – 23.75%
Northern Nig Flour Mills Plc – 18.69%
What you should know
At the end of 2021, the NGX All-Share Index ended with 42,716.44 points, 6.07% higher year-on-year. Similarly, the Consumer goods Index (CGI) ended the year on a positive note, appreciating by 2.78% year-on-year.