Despite its impressive financial rebound, Honeywell Flour Mills Plc (HONYFLOUR) is facing concerns over liquidity and volatility due to its low free float. Flour Mills of Nigeria Plc, through its subsidiaries, holds 85.54% of the company’s 7.93 billion shares, leaving only 1.15 billion shares available for public trading.
With such a limited supply of tradable shares, even small buy orders can push prices higher, leading to increased volatility. Additionally, the stock’s low beta of 0.4130 suggests it does not move in sync with the broader market, making it more susceptible to price swings driven by supply constraints rather than fundamentals.
Yet, despite these concerns, Honeywell Flour Mills has been one of the best-performing stocks on the Nigerian Exchange (NGX) over the past 15 months. In 2024, the stock surged by 95%, outperforming the consumer goods sector index, which rose by 54.44%. The momentum has continued in 2025, with another 95% gain, pushing the stock to a 52-week high of N14 on February 14 before pulling back slightly.
The stock’s rally has been largely fueled by the company’s financial turnaround. After recording pre-tax losses of N9.54 billion in 2023 and N8.60 billion in 2024, Honeywell Flour Mills returned to profitability in its 2025 financial year (April–March). It posted a pre-tax profit of N12.28 billion in the first nine months of 2025, a sharp contrast to the N8.83 billion loss recorded in the same period the previous year.
A key factor behind this turnaround is the reduction in net finance costs. In 2024, FX losses of N25 billion and interest expenses of N11 billion wiped out operating profits. However, in the first nine months of 2025, FX losses narrowed to N8.56 billion, while interest expenses declined, allowing an operating profit of N27 billion to translate into net earnings.
Revenue growth has also been a major driver, with sales surging 123% year-on-year (YoY) to N277.06 billion in the first nine months of 2025—already 47% higher than full-year 2024 revenue of N188 billion. The company’s Apapa manufacturing facility, which produces flour, semolina, and wheat meal, has been a key contributor to this growth, alongside its Sagamu facility, which manufactures noodles and pasta.
While the company’s financial recovery is encouraging, its stock’s limited availability and the dominance of Flour Mills of Nigeria Plc raise critical considerations for investors. With such a concentrated ownership structure, minority investors have limited influence over strategic decisions, including the possibility of a buyout or delisting.
For existing shareholders, holding onto the stock may still be attractive given the company’s strong earnings momentum. However, for new investors, the current price rally could pose risks, especially if it is driven more by supply constraints than fundamental growth.
If the stock price remains elevated without matching earnings expansion, taking partial profits may be a prudent move. However, if the company sustains its financial recovery, a long-term hold could still offer value. Given the fast-moving nature of Nigeria’s stock market, investors should weigh both opportunities and risks, staying prepared for sudden market shifts.
