• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Opinions Blurb

Okomu Oil Post Flat Pat: Yet, Stock Looks Like A Must Have!!!

Ugodre Obi-chukwu by Ugodre Obi-chukwu
April 5, 2013
in Blurb
Share on FacebookShare on TwitterShare on Linkedin

 

Okomu Oil Plc is currently the toast of the market and the reason for that is not far fetched. They have proposed a dividend per share of N7 and a bonus issue of one for one. People like these sort of freebies and would die to be part of it. But is this justified? Okomu Oil released their 2012 Audited Accounts (IFRS) with revenues dipping 8.8% to N10.1billion. Gross Profit was however better rising slightly by 3% to N8.2billion. Profit After Tax however, dropped slightly to N3.59billion (2011:N3.9billion).

So what’s with this result?

RelatedStories

Middle East crisis: Oil prices could hit $140 in 2024 

Global oil price hits $80 per barrel as traders expect US sanction of Russian oil fleets  

January 10, 2025
What Israeli-Hamas war means for Nigeria’s economy 

Oil prices near $80 over fears of further conflicts in the Middle East 

October 7, 2024

First a little about Okomu Oil. They are a leading oil palm producing company in Nigeria and have been in operation since 1979. They were privatized sometime in 1990 and have consistently delivered on profits over the last 10years. This year too saw robust profit of N3.6billion 8.5% lower than what was achieved in 2011. The reason for this is explainable . Firstly, the company saw a slight dip in revenues from N11billion to N10billion even though in the last five years revenues have grown with a CAGR (Compounded Annual Growth Rate) of 19% growing from N4.7billion in 2008 to N10.1billion in 2012. In fact it jumped from N6billion to N11.1billion in 2011 alone, the highest jump in its history, mainly due to a 144% jump in export earnings from Rubber. So 2012, may just be a slight blip or some correction in revenue expectability. Another reason could be the drop in inventory turnovers, as they only turned inventories1.7X in 2012 compared to 2.85x in 2011. Thus, it took them an estimated 207days to clear inventories as against 127days in 2011.

 

Secondly, profitability however failed to beat 2011’s record of N3.9billion due to rising operational cost. Employee cost rose sharply by 25% to N1.97billion probably as a reward to employees after the magical 2011. Other expenses also jumped to N1.6billion (2011: N1.35billion). So whilst revenue dipped slightly, operating cost rose. Luckily, PAT was still N3.5billion thanks and in no small measure to a huge drop in cost of sale. It could be that they have finally found a way to reduce direct export cost maybe due to various incentives available to export oriented business in the last year or so. Their annual report when published will help explain this.

 

Should Shareholders be worried about this performance?

Despite the drop in revenue and rising cost, this result probably represents the reality of the current business environment they will be operating in. Investors also, should not see this as a bad result but should view the result in a larger context and ask if shareholder value was impaired. So far, that didn’t seem to have happened.  Operating profit margins are high and so is profit margin. In fact, for every N100 in revenue they make a profit after tax of N35.4 (2011: N35.3). Return on Average Equity (ROAE) was 16% and if you deduct accounting entries brought about by IFRS, it rises to 23.6%. The company is also debt free with Equity making up 81% of total assets. The company also sits on a cash machine, generating N5billion in operating cash in 2012 (2011: N4.5billion). It currently sits on N3.9billion of cash enough to pay dividends estimated at about N3.3billion (almost all of the earnings made this year). On the back of this, Investors should be ecstatic. They could have still made shareholders happy without even giving out bonus shares. The Bonus payment may just be a trio objective to  rewarding existing shareholders by distributing part of its  revenue reserves of about N17.6billion whilst also increasing the liquidity of their stock. This will also boost return on equity in the coming years.

 

Is it worth buying?

Now this may depend on your appetite. The share price has risen over 216% in the last year and currently trades at N95. In terms of whether it is expensive it sure isn’t considering the fundamentals I just put out!!! At N95 (April 5 price) the share price is only 12x its current earnings per share and with the planned bonus and dividend payments people who buy now will cherish the stock.  Unfortunately though, only about 476million of their shares is outstanding making it seem illiquid. Out of its average N45billion market cap, only N872million of it was traded in the last month in terms of value.

Nevertheless, if I had the cash, I’d be on the sidelines waiting to buy….NOW!!

Okomu Snapshot

Okomu Oil Plc posted its audited accounts on the website of the NSE

*NOTE: I WILL BE REVIEWING THE COMPANY RESULTS MORE OFTEN IN THE COMING WEEKS AS THEIR ANNUAL REPORTS ARE PUBLISHED AND 2012 FIRST & SECOND QUARTER RESULT IS ANNOUNCED

Tags: Nigerian Company ResultsOil & Gasoil price
Ugodre Obi-chukwu

Ugodre Obi-chukwu

Ugo Obi-Chukwu "Ugodre" is the Founder, Publisher, and Chief Analyst of Nairametrics, a leading business and financial news online platform in Nigeria. Ugo is also the Chief Editor of the Nairametrics “Blurb” Opinion pages. Follow Ugodre on Twitter @ugodre and Instagram @ugodre Email: ugodre@nairametrics.com

Related Posts

Middle East crisis: Oil prices could hit $140 in 2024 
Energy

Global oil price hits $80 per barrel as traders expect US sanction of Russian oil fleets  

January 10, 2025
What Israeli-Hamas war means for Nigeria’s economy 
Energy

Oil prices near $80 over fears of further conflicts in the Middle East 

October 7, 2024
Naira
Currencies

Naira rises 1.69% in I&E Window as global crude prices approach $80 

October 5, 2024
Oil price concept
Energy

Oil price to rise above $90 per barrel if Israel-Iran conflict continues – Report  

April 14, 2024
Crude Oil prices
Energy

Oil prices drop by 2% over rumours of Israel-Hamas truce 

February 2, 2024
Crude oil prices
Energy

Oil price soars above 2024 budget benchmark as U.S and Britain orders airstrikes against Houthi rebels 

January 12, 2024
Next Post

Nigeria's Foreign Trade Statistics 2011

Comments 6

  1. Legend says:
    April 6, 2013 at 9:09 am

    To me it seems the best time to buy the stock is not this time.The stock price is still likely to fall based on this result.

    Reply
  2. wallesmit says:
    April 9, 2013 at 4:42 pm

    I think the reason topline dropped was due to a decline in rubber prices. In 2011, rubber contributed 30% of revenues and from my discussion with the coy MD he’s wary of the near term largely on account of that. Okomu exports all its rubber to Europe which has also been weak economically. In addition global palm oil prices also dipped although Nigerian producers are protected by the 35% tariff nevertheless they come under some pricing pressures. However Okomu talks about expanding their palm oil mill. They’ve obtained a new loan 2bn at 9% thanks to CBN agri-financing initiative. Outlook still strong for Okomu though rubber prices create some softness.

    Reply
    • ugodre says:
      April 12, 2013 at 4:13 pm

      Thanks Wallesmit….your insights are immense as always.

      Reply
  3. wallesmit says:
    April 15, 2013 at 2:13 pm

    Correction: Okomu rubber exports was 40% of revenues in 2011 while average rubber prices in 2012 were 30% than in 2011.

    Here’s a rubber price graph from IndexMundi > https://www.indexmundi.com/commodities/?commodity=rubber

    Reply
  4. Debress says:
    May 5, 2013 at 12:14 pm

    Hi. If I buy this Okomu stock this week, will I receive both the dividend and the bonus?

    Reply
    • Admin says:
      May 6, 2013 at 9:00 am

      Yes, provided the stock is yet to be marked down which I believe is before 13th May 2013

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank








DUNS

Recent News

  • Sterling Bank to raise $400 million via debt and equity instruments to strengthen growth capacity and balance sheet 
  • South-West doctors threaten strike over unfavorable allowances, issue 21-day ultimatum to FG
  • 15 things you don’t need to start a business in Nigeria 

Follow us on social media:

Recent News

Sterling Bank concludes core application migration, leads the way for African Banking

Sterling Bank to raise $400 million via debt and equity instruments to strengthen growth capacity and balance sheet 

July 15, 2025
Doctors

South-West doctors threaten strike over unfavorable allowances, issue 21-day ultimatum to FG

July 15, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics