Friday October 23, 2015 / 08.57AM /FBN Capital Research
Event: Mobil Oil Nigeria reports Q3 2015 results
Implications: Downward revisions to consensus 2015 estimates likely
Positives: Limited; other income grew 88% y/y to N1.1bn
Negatives: Q3 sales declined 27% y/y to N13.5bn; PAT down 37% y/y to N739m
Yesterday, Mobil Oil Nigeria (Mobil) reported Q3 2015 results which showed declines on all key lines on the P&L. While sales were down 27% y/y to N13.5bn, PBT and PAT were both down 35% y/y and 37% y/y to N1.1bn and N739m respectively.
The topline decline and a 28% y/y rise in opex to N2.1bn more than offset any benefits coming from a 121bp y/y expansion in gross margin. Sales for petroleum marketers have been hampered by reduced import volumes following the government’s decision to continue with the partial regulation of the downstream subsector.
Mobil’s real estate business continues to soften the impact of declining revenues from its core operations. Other income was up 88% y/y to N1.1bn. We believe this was due to rental income earned post renovation work on a key property in Victoria Island. Sequentially, sales, PBT and PAT all declined by 12% q/q, 44% q/q and 48% q/q respectively. Other income was down 6% q/q due to the impact of subsidy reimbursements in the previous quarter.
Compared with our estimates, while sales missed our N16.7bn forecast by 19%, PBT missed by around 42%. The variance is primarily down to the negative surprise in sales and opex. Opex was ahead of our N1.9bn estimate by around 9%.
On an annualised basis, Mobil’s Q3 2015 numbers are tracking behind consensus PBT forecast of N7.5bn. As such, on the back of these numbers we expect downward revisions to consensus estimates for 2015E. At current levels, on our published estimates, Mobil shares are trading on a 2015E P/E multiple of 12.0x for 8% EPS growth over the 2016E. Year to date, Mobil shares have declined -2.5% compared with the NSE ASI (-13.5%). We rate the stock Neutral.
Our estimates are under review.
Mobil Oil Nigeria Q3 2015 results: actual vs. FBN Capital Research estimates (N millions)