Economy
Total Nigeria: Whistle Blowing on Solid First Quarter
By ARM Securities
In keeping with the rave in town, we beam our equity strategy searchlight on a leading Oil Marketing Company (OMC), Total Nigeria Plc. (Total), which is scheduled to report 1st quarter earnings in the last week of April.
Despite its striking FY 16 earnings, which was almost four-fold higher YoY with EPS at N43.58, Total’s share price has declined 9.7% YTD (post result release: – 3.7%)—underperforming the broader NSEASI.
In our view, the weak appetite for the stock was underpinned by the company’s disappointing final dividend announcement of only N7.00 which brought total DPS to N17.00, with the implied pay-out ratio of 39% well behind its average of 84% over the last decade.
That said, the stock is typically prone to big moves after earnings releases and can easily gap up if the numbers are as strong as expected.
For full-year ended 2016, revenue grew 39.9% YoY to N290.9billion, largely reflecting a 38% YoY increase in petrol sales. The jump in PMS turnover reflects higher prices (+42% YoY to an average of N123/litre) which neutered volume weakness. Elsewhere, sales of lubricants climbed 53% YoY as the company raised lubes prices even as NGN depreciation at the parallel market pulled back importation of lubes to create scope for market share expansion for domestic players.
Consequently, gross profit was 94% higher relative to prior year with corresponding margin jumping to a decade high of 16.9% (+4.7pps YoY).
The foregoing combined with efficient cost control (OPEX: +1.3% YoY) to drive a four-fold YoY expansion in earnings.
Total reported its highest gross margin on record of 24.2% (+12.2pps QoQ) in Q4 16 in line with those of its close rival (Forte Oil Plc).
In our view, the upsurge reflects price increases in lubes and deregulated product segments (LPG, AGO, DPK) which more than offset weaker petrol sales.
Irrespective, N9 billion in other expenses mainly due to N7.4billion in foreign exchange loss1 moderated the impact of its record gross margin to leave EPS at N9.32 (+17.3% QoQ and +147.9% YoY). Barring the impact of the FX loss, Q4 16 EPS would have printed at N36.00 (FY 16: +489.4% YoY to N70.26).
For Q1 17, we expect petrol volumes to head further south owing to higher prices and supply constraints.
Specifically, we forecast a 10% QoQ decline in petrol volumes to 373million litres. That said, as with Q4 16, higher prices across petrol (67% YoY to N145/litre), diesel (60% YoY to N234.5/litre), kerosene (40% YoY to N311.56/litre), and lubricants (+18% average) as well as resilient volumes in these segments (excluding petrol) guide our Q1 17E sales of N75.7billion (+27% YoY, +7% QoQ).
Consequently, our gross margin expectation for the quarter is 20.2% (+5.3pps YoY, -3.9pps QoQ).
Further down, the flat movement in the interbank market (N305/$) and appreciation at the parallel market (+20% to N390/$2), compared to prior quarter, should dispel foreign exchange losses in the period.
To be clear, we now see scope for FX gains on the Trade creditors line—pegged to the parallel market.
This possibility notwithstanding, we take the cautious approach of discounting potential currency induced gains. Irrespective, we expect strong underlying performance over Q1 17, with an EPS estimate of N17.04 (83% QoQ and 104% YoY) leaving prospect for an interim dividend payment.
Over FY 17, despite expected higher average petrol pump price of N145/litre (2016 average: N123/litre) as well hike in lubes prices, weaker petrol volumes should moderate total sales growth to 8.5% YoY (to N315.6billion).
On cost, notwithstanding recent NGN appreciation at the parallel market which should ordinarily moderate input cost, our average crude oil price (22% YoY to $55/bbl.) and NGN forecasts (18% to N360/$) should leave COGS at elevated levels.
Consequently, gross margin should come in 20bps lower YoY at 16.7%. Furtherdown, amidst the still elevated payables, second order impact of weaker naira underpins our expectation for FX loss of N6.4bilion over 2017.
The foregoing should combine with higher net finance charges (+24% YoY to N717million), reflecting absence of payment of accrued interest on delayed subsidy, to drive our FY 17 EPS to N39.8 (-9% YoY) with total dividend at N19.88 (50% pay-out).
Total has had a good run over the last one year and currently trades at a P/E of 6.2x relative to 12.9x for peers. Net adjustments to our models drive our FVE 8% higher to N384.72, which implies a 43% upside from last closing price. We retain a BUY rating on the stock.
Source: www.armsecurities.com.ng.
All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of ARM Securities Limited
Economy
NASD OTC Exchange Closes in Stalemate at Midweek

By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, April 16, as the market capitalisation remained unchanged at N1.915 trillion as well as the NASD Unlisted Security Index (NSI) at 3,271.02 points.
At the trading session, there was no price gainer or decliner.
The bourse’s data showed a decrease of 95.0 per cent in the volume of securities transacted to 36,757 units from the 736,215 units recorded in the previous trading day, the value of transactions slid by 83.6 per cent to N1.99 million from N12.1 million transacted on Tuesday, and the number of deals fell by 19.2 per cent to 21 deals from the 26 deals recorded a day earlier.
Impresit Bakolori Plc remained the most active stock by volume on a year-to-date basis with 533.9 million units worth N520.9 million, trailed by Okitipupa Plc with 153.6 million units sold for N4.9 billion, and Industrial and General Insurance (IGI) Plc with 71.2 million units valued at N24.2 million.
Also, Okitipupa Plc remained the most active stock by value on a year-to-date basis with 153.6 million units valued at N4.9 billion, followed by FrieslandCampina Wamco Nigeria Plc with the sale of 14.7 million units worth N568.1 million, and Impresit Bakolori Plc with a turnover of 533.9 million units sold for N520.9 million.
Economy
Naira Depreciates to N1,603/$1 at NAFEM, N1,620/$1 at Parallel Market

By Adedapo Adesanya
The Naira witnessed a N1.76 or 0.11 per cent depreciation on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, April 16.
During the trading session, the local currency was exchanged with the greenback at N1,603.16/$1, in contrast to the N1,601.40/$1 it was traded a day earlier, according to data from the Central Bank of Nigeria (CBN).
Also, the Nigerian currency weakened against the British Pound Sterling in the official market yesterday by N6.71 to quote at N2,121.97/£1 compared with the previous day’s value of N2,115.26/£1 and tumbled against the Euro by N9.28 to sell for N1,818.17/€1 versus Tuesday’s exchange rate of N1,808.89/€1.
In the parallel market, the Naira lost N5 against the Dollar to finish at N1,620/$1 compared with the preceding day’s N1,615/$1.
The pressure on the domestic currency came as the central bank sold over $30.00 million at rates between N1,590.00/$ and N1,601.50/$ this week to authorised forex dealers.
At the cryptocurrency market, things turned bullish as the US Federal Reserve Chairman, Mr Jerome Powell, dashed hopes for early rate cuts, citing the need to assess the impact of US tariffs on the global economy.
The Federal Reserve chair also mentioned that the US central bank needed more time to see the effects of tariffs play out in the global economy. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.
Market analysts noted that the remarks disappointed rate cuts optimist by stressing focus on protecting against tariff-driven price hikes from driving a long-term rise in inflation expectations.
Solana (SOL) jumped by 7.2 per cent to trade at $134.28, Cardano (ADA) added 2.8 per cent to close at $0.6209, Dogecoin (DOGE) appreciated by 2.5 per cent to $0.1570, Ethereum (ETH) rose by 2.1 per cent to $1,602.70, Ripple (XRP) gained 1.9 per cent to close at $2.09, Bitcoin (BTC) increased by 1.5 per cent to $84,749.46, and Binance Coin (BNB) went up by 0.7 per cent to $583.08.
But Litecoin (LTC) declined by 0.7 per cent to finish at $75.38, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
Economy
Nigerians Applaud Dangote for Further Reduction of PMS Price to N835

By Aduragbemi Omiyale
The further reduction in the price of Premium Motor Spirit (PMS), commonly known as petrol, from N865 to N835, effective from Wednesday, April 16, 2025, by Dangote Petroleum Refinery has been applauded by Nigerians.
The price slash was the second by the company in a week and it was in reaction to the decline in the price of crude oil in the global market due to the trade war between the United States and China.
In a statement yesterday by the Group Chief Branding and Communications Officer of Dangote Group, Mr Anthony Chiejina, it was stated that key partners, including MRS, AP (Ardova), Heyden, Optima Energy, Hyde and Techno Oil, will sell petrol to customers at N890 per litre, down from N920 in Lagos, while in the other South-West states, the price will be N900 per litre versus the previous N930.
In addition, Nigerians living in the North-West and North-Central will get the high-quality Dangote petrol at N910 per litre compared with the former price of N940, and those in the South-East, South-South, and North-East will buy at N920 per litre, down from N950 per litre.
Dangote expressed hopes that this latest reduction in PMS prices would generate a positive ripple effect throughout various sectors of the economy, providing much-needed relief to consumers and contributing to broader economic growth, particularly during the Easter season.
It stated that the slash in price reaffirmed its “commitment to providing high-quality petrol at affordable rates, benefiting consumers across the nation. In addition, we are working collaboratively with our partners to ensure equitable reflection of this price reduction.”
Dangote Petroleum Refinery has consistently worked to reduce the prices of petrol and other refined petroleum products, ensuring the continued benefit of Nigerian consumers.
For example, in February, the refinery reduced prices twice by N125. In addition, products such as diesel and Liquefied Petroleum Gas (LPG) have also experienced significant price reductions due to the refinery’s sustained efforts.
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