For traders in Nigeria’s client items sector, Honeywell Flour Mills (HONYFLOUR) has been the standout performer over the previous 15 months; at the moment, the best-performing client items sector and the fourth finest on the NGX.
In 2024, Honeywell Flour Mills’s share value jumped by 95%, considerably outperforming the buyer items sector index, which rose by 54.44% over the identical interval.
The sturdy momentum has continued into 2025, with the inventory gaining one other 95% to date this 12 months, reaching a 52-week excessive of N14 on February 14 earlier than pulling again barely.
The broader sector has additionally improved, with 14 gainers, two unchanged stocks, and 4 decliners as of the shut of buying and selling on March 18, 2025; an enchancment from 2024’s 9 gainers, 4 unchanged, and 7 decliners.
For traders, this 95% acquire implies that an preliminary funding at the beginning of the 12 months would have practically doubled in worth.
As an example, a N1 million funding in HONYFLOUR would now be price N1.95 million.
Why is HONYFLOUR surging?
Honeywell Flour Mills’ inventory rally seems to be underpinned by its {financial} turnaround. After recording pre-tax losses of N9.54 billion within the 2023 {financial} 12 months and N8.60 billion within the 2024 {financial} 12 months, the corporate has returned to profitability.
Within the first 9 months of the 2025 {financial} 12 months, which ends in March 2025, it reported a pre-tax revenue of N12.28 billion a pointy reversal from the N8.83 billion loss in the identical interval the prior 12 months
What modified? A steep drop in web finance prices. Within the 2024 {financial} 12 months (ended March 31, 2024), FX losses of N25 billion and curiosity bills of N11 billion worn out working income, leading to one other loss.
Nevertheless, within the first 9 months of the 2025 {financial} 12 months, FX losses narrowed to N8.56 billion, whereas curiosity bills declined additional. This allowed N27 billion in working revenue to stream by means of to the underside line, marking a major turnaround.
Income development has additionally been a catalyst. Gross sales surged 123% YoY to N277.06 billion within the first 9 months of the 2025 {financial} 12 months, already 47% larger than full-year 2024 income of N188 billion, pushed extra by Apapa manufacturing actions.
The Apapa phase manufactures Flour, Semo and Wheat meal, whereas Sagamu phase manufactures Noodles and Pasta respectively.
Areas of concern
Regardless of the {financial} restoration, traders must be aware of dangers, particularly the inventory’s low free float.
Out of seven.93 billion complete shares, Flour Mills of Nigeria Plc (by means of its subsidiaries) controls 85.54% (6.87 billion shares). This leaves just one.15 billion shares accessible for public buying and selling.
Why does this matter?
With fewer shares accessible for buying and selling, even small purchase orders can push costs larger, rising volatility.
The inventory’s low beta of 0.4130 suggests it doesn’t transfer in sync with the broader market, which aligns with the very fact the share value rally could possibly be influenced by different elements just like the comparatively free float.
Moreover, entry and exit could possibly be difficult, significantly for traders buying and selling in massive volumes.
What ought to traders do?
For present shareholders, holding is sensible given the corporate’s turnaround and powerful value momentum.
- For brand new traders, shopping for at present ranges carries danger, because the inventory’s rally seems pushed extra by provide constraints than pure fundamentals.
- Minority shareholders, particularly, must be aware of their place. With Flour Mills of Nigeria Plc controlling 85.54% of the corporate, decision-making energy is extremely concentrated. This implies strategic strikes, corresponding to a possible buyout or delisting, may occur with restricted affect from minority traders.
- Total, if the inventory value stays elevated with out matching earnings development, locking in some income (partial promote) could possibly be a sensible transfer. Nevertheless, if the corporate sustains its restoration, holding long-term should still supply worth.
- Given Nigeria’s dynamic market, momentum can shift rapidly. Buyers ought to rigorously weigh the alternatives towards the dangers and stay ready for sudden adjustments.
