Stock & Analyst Updates | |
Stock & Analyst Updates | |
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Wednesday, April 10, 2019 9:45AM /
FBNQuest Research
Neutral rating maintained
11 Plc’s FY earnings of N9.3bn missed our estimate by
around 10% due to negative surprises on the opex and other income lines.
Although 11’s petroleum products marketing business grew y/y with sales up 31%,
driven by white product sales which grew up 33% y/y, the business segment was
less profitable with PBT margin contracting slightly by –21bps to 3.5%. As a
standalone, this business segment remains challenging. 11’s FY 2018 sales were
supported once again by rising rental income. As such, we have cut our EPS
forecasts over the 2019-2021E period by around -6% on average.
According to management notes, resumed participation
in aviation fuel sales at the Lagos Airport in Q4 boosted the firm’s topline.
As such, as a read-across, we expect aviation fuel sales to have a more
meaningful impact on topline growth in 2019 as the firm intends to expand
operations to other cities. We therefore forecast sales growth of 3% y/y to
N169.6bn in 2019E. Last week, the finance minister stated that in the near
term, the FG intends to raise capital to offset its existing debts to
contractors and subsidy arrears. According to official estimates, fx
differentials and accrued interest on fuel subsidies is around N514bn. A
partial repayment of this sum will provide a tremendous boost to the sector.
Its absence, combined with a continued regulation of gasoline prices, we
continue to see limited growth for 11 and other industry participants.
We forecast flattish EPS growth for 2019E. Our new
price target of N194.0 is down by around-21% because we have lowered our long
term growth expectation for Mobil by -200bps to 3%. At current levels, our
price target implies an upside potential of +13.5%; therefore we retain our
Neutral rating on the stock. Year-to-date, 11 shares have declined by -7.8%,
broadly in line with the NSE ASI’s performance. The shares are trading on a
2019E P/E multiple of 6.5x for an average EPS growth of 2% y/y over the 2019-2021E
period.
Q4 2018 PAT of N1.5bn declined -50 % y/y
In Q4 2018, while sales improved by 7% y/y to
N39.6bn, PBT and PAT both declined by -53% y/y and -50% y/y to N2.1bn and
N1.5bn respectively. A double-digit y/y rise in operating expenses to N3.4bn, a
-24% y/y decline in other income and a gross margin contraction of -314bps y/y
to 9.6% more than offset the topline growth delivered within the period and led
to the y/y decline in profitability.
Sequentially, the trend was broadly similar. While
sales came in flattish q/q (+1.1%), PBT and PAT both fell by -43% q/q and -40%
q/q respectively. 11 Plc proposed a final dividend of N8.25 which implies a
dividend yield of around 5%.
Related News
1.
MOBIL Declares N9.33bln PAT in 2018 Audited Result,
Proposes N8.25K Final Dividend
2.
MOBIL Notifies of the Board Approval of the Company’s
2018 Audited AFS
3.
MOBIL Declares N2.42bn PAT in Q3 2018
Results,(SP:N151.00k)
4.
Mobil Oil
Nigeria Plc Changes Name to 11 Plc
5.
Mobil Oil
Nigeria Q1 2017 Results Review - Acquisition-related Charges Weigh on
6.
Address by
the GMD of NIPCO Plc on the Occasion of the Closing Gong Ceremony at
7.
Mobil Oil
Nigeria Plc - Another IOC Exits Downstream
8.
11 PLC Q2 2018 Results Review: Neutral Rating Maintained
9.
11 Plc Q2 2018 Results Reviews - PAT grew by 126% YoY to
N2.7bn
10. MOBIL Declares N5.50bn PAT in Q2 2018
Results,(SP:N180.00k)