MOBIL: Opex up by 17% in Q4'15 Results; Shares Rated Neutral


Wednesday, March 30, 2016 9:00AM /FBNQuest Research

Event: Mobil Oil Nigeria reports Q4 2015 results

Implications: Moderate downward revisions to consensus 2016 estimates likely

Positives: Q4 gross margin expanded by 265bps y/y to 14.7%; PBT and PAT both up by around 200% y/y

Negatives: Opex up by 17% y/y; other comprehensive loss of N679m  

Yesterday, Mobil Oil Nigeria (Mobil) reported Q4 2015 results which showed that while sales came in flattish y/y, PBT and PAT both grew by around 200% y/y to N1.7bn and N544m respectively. The y/y growth rates on both lines were flattered by easy comparables.

In Q4 2014, PBT and PAT declined by 60% y/y and 92% y/y to N551m and N180m respectively due to topline weakness and subdued rental income. Back to Q4 2015, a gross margin expansion of 265bps y/y, a 185% y/y growth in other income and a positive result in net finance charges offset a flattish topline and a double-digit y/y rise in opex to lead to the strong PBT growth.

Mobil’s other income was boosted by rental income from its real estate business which grew by around 130% y/y following the completion of renovation works on a major investment property in 2015. Sequentially, while sales and PBT were up 40% q/q and 46% q/q respectively, PAT declined by 26% q/q due to a loss of N679m on the OCI line.

Compared with our estimates, while sales were ahead of our N15.3bn forecast by 24%, PBT came in only 5% ahead primarily due to a negative surprise (49%) on the opex line. PAT was 45% behind our forecast due to the loss of N679m on the OCI line. We had zero for this line.

Mobil’s full year 2015 sales and PBT both came in slightly behind consensus forecasts of N62.4bn and N6.6bn respectively. However, we do not expect the market to be swayed by these numbers given that base effects boosted the y/y growth figures.

Additionally, we anticipate that persistent nationwide fuel shortages could materially hurt earnings in 2016 and would be a major concern to investors. As such, we expect moderate downward revisions to consensus estimates for 2016E.

At current levels, on our published estimates, Mobil shares are trading on a 2016E P/E multiple of 11.0x for an EPS decline of 1% in 2017E. Year to date, Mobil shares have declined -2.5%, outperforming the NSE ASI by 8.3%. We rate the stock Neutral.  

Our estimates are under review.  

Mobil Oil Nigeria Q4 2015 results: actual vs. FBNQuest Research estimates (N millions)

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