Thursday, April 28, 2016 12:28PM/Vetiva Research
· Q1 revenue hits 4-year high
· Quarterly revenue highest since Q2’12
· Annualized EPS tracking ahead of Consensus
· Estimates revised upward
· TP raised to N150.46 (Previous: N108.31)
MOBIL reported strong growth in Q1’16 revenue, up 37% y/y and the strongest quarterly figure reported since Q2’12 - we note though that y/y growth is bolstered by weak comparable period of Q1’15. Just like Petroleum Marketing rivals that have announced Q1 results, MOBIL appear to have fared well against a tough operating background typified by product scarcity and rising costs.
Unlike rivals however, we think MOBIL’s petrol throughput could have been higher y/y to have delivered such strong revenue growth; the contraction in gross margins (Q1’16: 16.8% vs Q1’15: 18.1%) supports our view given the lower margin contribution from petrol in the product mix.
Overall, revenue was 56% above our quite conservative estimate for Q1’16. MOBIL’s secondary business, Property, continues to show stable performance with rental income for the period up 31% y/y to N1.3 billion, ahead of our N1.2 billion estimate. Rental income contributed 33% to bottom line in Q1’16 compared to 32% in Q1’15.
Annualized EPS tracking ahead of Consensus
Reported Q1 EPS (N5.04) when annualized (N20.16), is tracking well ahead of Vetiva (N12.78) and Consensus (N14.20) estimates. Even though MOBIL has kicked off 2016 in good stead, we expect the operating environment to remain challenging albeit with mild improvement from 2015.
We have raised our estimates to reflect the Q1 earnings surprise but continue to exhibit caution in revenue and profit growth. Our FY’16 revenue is raised to N65 billion (Previous: N58 billion) whilst net profit is revised to N5.2 billion (Previous: N4.6 billion).
We expect Consensus EPS estimate to be revised higher following these numbers; we set our FY’16 EPS at N14.34. Our DPS forecast is also raised to N10.00 (Previous: N7.03) and gives a yield of 6%. We have reviewed our Target Price upward
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