Stock & Analyst Updates | |
Stock & Analyst Updates | |
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Wednesday, January 29,
2020 / 07:30 PM / CardinalStone
Research / Header Image Credit: Mineria-pa
Total
Nigeria Plc (TOTAL) released a FY'19 unaudited result that revealed a 69.6% YoY
plunge in profit after tax to N2.4 billion despite a one-off asset disposal
gain of N2.8 billion. Ex the disposal gain, TOTAL would have reported a c.
N341.4 million loss (FY'19E: PAT of N184.9 million) in its unaudited FY'19
numbers.
Falling petroleum products revenue continues to offset gains in
lubricant
In
line with the pattern in the prior three reported quarters, a 7.4% YoY decline
in petroleum products (fuels') revenue masked growth in lubricant sales (+4.1%
YoY) in FY'19. This translated to a 5.6% YoY contraction in revenue to N290.9
billion (2.9% shy of our forecast). We view the revenue setback as a fallout of
growing competition in the downstream sector. As noted in our FY'2020 outlook
titled 'Treading uncharted Waters', TOTAL
may have been less aggressive on the expansion of retail presence compared to
peers such as MOBIL and FO. For FY'20E, mild resurgence in the fuels business
and sustained growth in lubricant sales are likely to drive a recovery in
revenue (+2.0% YoY).
PAT weakness defies
one-off gain
The
company managed to turnaround its 9M'19 loss position of N204.8 million by carrying
out an asset disposal in Q4'19[1]. Reflecting the associated N2.7 billion
disposal gain, TOTAL reported Q4'19 and FY'19 PAT of N2.6 billion (over 8 folds
YoY) and N2.4 billion respectively. For FY'20, we expect earnings to decline by
28.6% to N1.7 billion despite opportunities for cheaper borrowings opened up by
yield moderation. For us, earnings decline is likely to stem from revenue and
operating expense pressures, with the latter likely to mirror expected increase
in inflation.
Valuation
The stock is trading on a FY'20E PE of 21.0x relative to 8.3x for peers.
We have a 12-month TP of N96.55 and a SELL recommendation on the
stock.
Related News
1.
TOTAL
declares N2.4bn PAT in Q4 2019 results, (SP:N107.0k)
2.
TOTAL declares N204.84m Loss in Q3
2019 results,(SP:N123.20k)
3.
Total Nigeria Plc Q1 2019 Results Review: Downgrading to
Underperform from Neutral
4.
TOTAL declares N474.089 million loss PAT in Q1 2019
result,(SP:N182.00k)
5.
Total Nigeria Q4 2018 Results Review: High Business Costs
Weighed on Q4 2018 Results
6.
TOTAL declares N7.96billion PAT in 2018 Audited result;
Proposes N14.00K Final Dividend
7.
Total Nigeria Plc Q2 2018 Results Review: Neutral Rating
Maintained Despite Upside Potential
8.
Total Nigeria Plc Q2 2018 Results - Reduced Input Cost And
Tax Charges Propel Earnings
9.
Total Nigeria Records Relatively Weak YoY Trend Across Key
P and L Lines in Q1 2018 Results