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Total Nigeria Plc emerged the NSE30 stock of the week ended July 16, 2021.  Share price and market capitalization appreciated by 6.06%; gaining N3.2bn in market capitalization W-o-W, closing at market cap of N57.04bn from N53.78bn (9/7/21)

On the other hand, the NSE 30 Index nosedived by 0.17% from its previous week’s appreciation of 1.74%.  Total market capitalization then went down by N29.01bn to close at N16,617.40bn.

For the week under review, there was mixed sentiment in the equity market, as the NGXASI gained twice (2), lost twice (2) and remained flat (1) in the five days trading days.  W-o-W, the NGXASI and market capitalization both depreciated b -0.12% to close the week at 37,947.18 and N19.77 trillion respectively.  A total turnover of 1.01 billion shares worth N10.92 billion in 17,297 deals were traded in the week as against a total of 1.33 billion shares valued at n12.14 billion that exchanged hands previous week in 21,581 deals. – Arthur Steven Asset Management.

Market analysts were unanimous that more than N5.81 billion traded on the shares of Guaranty Trust Holding Company, UBA and Zenith Bank, representing more than 53.22% of this total transaction value at the NGX during the week, were due to expectations on interim dividends.

NASD OTC Securities Exchange Index closed the week on a positive return on NSI.  The NSI return increased by 1.31% to close the week at 754.11 points against 744.39 on Friday July 9, 2021.  On July 14, 2021, Nigerian Exchange Group Plc, 11 Plc and Capital Bancorp Plc were added to the NASD OTC Market Capitalization increasing it by N120.17 Billion.

S/N WEEK – 16/7/21WEEK – 9/7/21
  % +/(-)AMT IN BN% +/(-)AMT IN BN
1Okomu Oil0.
2Presco Plc0.000.00-8.72%-6.50
3Guinness Nig Plc0.00%0.000.00%0.00
4International Breweries0.94%1.340.00%0.00
5NB Plc-3.33%-15.990.00%0.00
6Dangote Sugar-2.24%-4.86-2.99%-6.68
7Flour Mills0.00%0.000.17%0.21
8NASCON Allied Ind.0.00%0.00-4.76%-1.99
9Nestle Plc0.00%0.000.00%0.00
10Unilever Nig Plc0.38%0.290.00%0.00
11Transcorp Plc-1.08%-0.413.33%1.22
12Access Bank1.10%3.555.81%17.77
16Fidelity Bank3.90%2.61-0.43%-0.29
17GTB Plc-0.17%-1.470.00%0.00
19Sterling Bank-0.64%-0.290.64%-1.73
20UBA Plc3.33%8.552.04%0.29
22Zenith Plc-2.00%15.703.96%29.83
23Custodian Investment-6.15%-2.357.44%2.65
25BUA Cement-0.70%-16.930.70%16.93
26Dangote Cement Plc0.00%0.004.07%153.36
27Lafarge (WAPCO)-0.69%-2.422.59%8.86
28Seplat Petroleum0.00%0.0010.00%41.19
2911 Mobil Plc0.00%0.000.00%0.00
30Total Plc6.06%3.269.24%4.55
 NSE-30 INDEX-0.17%-29.011.74%285.06

Key Statistics:

Metrics                                                             TOTAL       SEPLAT

Share Price                                                        168           770

1 YR returns (19/7/21)                                         80.02%      +120.08% 

Current P/E Ratio (TTM)                                        27.61        45.13

Estimated P/E (2021-12)                                       9.86          7.74 

Relative P/E VS NGSEINDX IND                             2.16          3.54 

Earnings per share (TTM)                                      6.08          0.04         

Est EPS (2021-12)                                               17.03         0.24            

Market CAP (M) – (19/7/21)                                  56,835.96  453,102.31

Shares outstanding (M)                                        339.52       588.44

Price/Book (MRQ)                                                        2.03          0.63         

Price/Sales (TTM)                                                        0.28          1.97         

Dividend indicated gross yield                                3.62%       5.34%      

Next earnings announcement                                        23/7/2021  29/7/21    

Last dividend reported (2021-04-19)                       6.08          0.03-27/5/2

5Y Net dividend growth                                        -15.36%    20.88%

Average volume (30-day)                                     179,172     195.842

Revenue – FY 2020 (Millions NGN/USD)                   204,721     530.47

Net Income – FY 2020 (Millions NGN/USD)               2,063.39    -74.75

Profit Margin – FY 2020                                                1.01%       -14.09%

Total assets – FY 2020 (Millions NGN/USD)               143,612     3,449.57

Total Liabilities – FY 2020 (Millions NGN/USD)           115,461     1,785.53

Debt to assets – FY 2020                                      23.42%      20.42%

Operating cash flow – FY 2020 (Millions NGN/USD)    41,949       245.62

Investing cash flow – FY 2020 (Millions NGN/USD)    -8,383.10   -205.19

Financing cash flow – FY 2020 (Millions NGN/USD)    9,717.18    -141.63

(Source – Bloomberg)

Total Nigeria Plc distributes and markets refined petroleum products and fuels.  The company further sells LPG and operates lubricant blending plants in Nigeria.

Earning being an important factor that affects the value of a company was greatly affected by the coronavirus pandemic.  The company’s revenue continued to decline; -9.27% (Q1-2020/Q1-2019); -50.33% (Q2-2020/Q2-2019) and -48.09% (Q2-2020/Q1-2020). Consequently, net margin was negative in Q1-2019, Q1-2020 and Q2-2020. The continuous dip in net income in these periods and in Q1 and Q2 2020, led to H1 2020 loss after profit and thus negative ROE of -0.58% (Q1 2020) and -1.47% (2020); a decrease of -65.37% (Q1-2020/Q1-2019) and -168.74% (Q2-2020/Q2-2019). 

For Q3, 2020, the company recorded a profit after tax of N500.116 million compared to a loss of N204.844 million recorded in Q3, 2019, though this was caused by the whopping increase in finance cost. From the time, Q3-2020 results were released, the company’s share price has moved by as much as 46.69%, from N96.80/share on 2/10/20 to N142.00/share on 26/3/21.

For FY 2020, the company declared a net income of N2,063.39 million with diluted normalized EPS of N6.02 against N0.67 recorded in FY 2019.  Consequently, ROE stood at 16.7%, though still considered low, regardless of its high level of debt. Debt to equity ratio stood at 111.7%, though the debt is well covered by operating cash flow and interest payment on debt well covered by EBIT.

By the end of first quarter 2021, Net income and EPS stood at N2,970.46 Million and N8.75 respectively against negative net income and EPS of –N163.22 million and -N0.51 respectively for the same period in 2020. Q1 2021 performance was better than Q1 2020 basically because of lower cost of revenue, operating expense and lower interest income expense.

On valuation, the stock is considered overvalued by 250.5% considering its fair value (N47.94) vis-à-vis its current price of N168.00.  Also using the price earnings ratio (P/E), it is considered overvalued because its P/E at 11x is higher than the Oil and Gas Industry average P/E (7.5x) and NG Market (8x).

Also its price to book ratio shows that the stock is overvalued. Its P/B ratio (1.8x) is higher than the Industry average ratio of 0.7x

But if we look at forecasts, the stock is good value. With better ratings from Bloomberg; 1-year returns at +80.02% (19/7/21) against its previous rating of -15.94% on 2/10/20; EPS at N8.75 from N4.37 on 2/10/20;Price Earnings Growth (PEG) of 0.6x, which is lower than 1;  Earnings growth of 17.2%/year, which is above the savings rate of 13.4%/year and NG market of 13.3%/year and future ROE forecast to be high in 3 years at 20.5%.

Idika Aja, ACS, writes from Lagos and can be reached on 08034003768

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