By Dipo Olowookere
Analysts at Lagos-based investment firm, Cowry Asset, have placed a ‘moderate buy’ rating on 11 Plc (formerly Mobil Nigeria Plc).
In a report released today, Cowry Asset said the energy company sustained its excellent performance in H1 2018 relative to its industry; judging by key financial ratios.
It explained that the rating is based on its best-in-class performance as well as an upside of 10.65 percent to its target price of N199.17k per share.
Business Post reports that at the close of business today, the shares of Mobil Nigeria were traded at N180 per unit.
In its H1 results, the company recorded growth in both turnover and rental income, of 52.82 percent and 22 percent respectively, to firmly retain its market position via increased sales volume while realizing increased value from its investment property.
Hence, its PAT more than doubled by 120.25 percent to N5.45 trillion – partly due to base effect of non-recurring expenditure of N2.23 billion in H1 2017 being full provision for the accumulated staff benefit following the management takeover by Nipco Plc in April 01, 2017.
However, gross profit margin shrank amid regulatory price cap on product sales despite higher product cost while operating profit margins mellowed amid increased SG&A.
Cowry Asset said to boost future earnings potential from possible deregulation, the downstream major earlier announced the upgrade of its PMS storage capacity with additional tankage of 15,000MT.
This is in addition to a new 20,000MT capacity ATK storage tank under construction, as well as the installation of three additional pipelines each for PMS, ATK and LPG.
Furthermore, the company is leveraging on Nipco’s strong presence in the Liquefied Petroleum Gas market (a fast growing market) to resume its LPG business by initially opening 14 new outlets.
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