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J#10: Twiga Cement, on course for a bumper year and higher dividends.

Twiga Cement (Tanzania Portland Cement Public Limited Company), the company featured in our first free Special Report to you, announced this week its unaudited results for the 6 months ending 30 June 2020. 

Revenues, Operating Profits and Net Profits are all up significantly on a 6-month, year-on-year basis by 13%, 27% and 33% respectively (see table below). You can see clearly the effect of the “operating leverage” in Twiga Cement’s business, whereby a 1% point increase in revenue drives a correspondingly larger increase in the bottom line.  Just beautiful.

Tanzania is undergoing an infrastructure construction boom. Twiga, courtesy of its dominance of the huge Dar es Salaam market, and the strong reputation of its brand, is selling all the cement it can produce. The company is therefore conducting a US$30-million capacity expansion to boost output and sales even more in the coming years.

We checked in with CEO, Alfonso Velez. The company remains debt free and is able to comfortably fund this expansion with the cash it is generating. The company sees no reason that the second half won’t be even stronger than the first half. The market is “strong.”

In short, we are on course to see a strong 2020 financial year.  Without any major surprises, we should see an increase in dividends paid to you.  Dividends are paid annually in June. This year’s payment was TZS 290 per share (approximately US$0.125 per share, with the shares being approximately US$0.93 each).

You will qualify for next year’s dividend payment (for the 2020 year), if you own Twiga shares next May.

At the date of our Special Report’s publication, Twiga Cement was yielding 14.6% and priced at TZS 1,980.  Yesterday’s bid price I received from my broker, Orbit Securities, was TZS 2,140.  It remains a strong buy up to TZS 2,400.

Should you not yet have a copy, our FREE Special Report can be accessed here.

Twiga Cement’s Unaudited results summary for the 6 months ending 30 June 2020 is shown in full below.