Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Opinions Blurb

Buy, sell or hold? Analysis of Mobil Nigeria Plc 2014 results

Nairametrics by Nairametrics
March 28, 2015
in Blurb
Share on FacebookShare on TwitterShare on Linkedin

Mobil Oil Nigeria Plc. (12 months ended December 2014)

  • Mobil Oil Nigeria Plc “Mobil” reported 1.1% YoY rise in FY 14 revenues to N79.5 billion. Reflecting impact of property sale in Q1 14, FY 14 PBT jumped 65% YoY to N8.4 billion, with lower effective taxes pushing FY 14 EPS 84% higher YoY to N17.73k.
  • Despite the strong earnings, management proposed a dividend of N6.60k per share (+10% YoY), which implies a 37% payout ratio (FY 13: 62%) and 4.5% dividend yield as at yesterday’s closing price.

Lower gasoline volumes weigh on topline

  • After recording 6% YoY decline in Q3 14, Mobil’s revenue dipped by a similar margin in Q4 14 to N18.9 billion, pressured by weak gasoline throughput over the quarter. We had expected an increase in motorway miles during the dry season to support volumes, but with revenues falling 10% shy of our estimate, it appears management trimmed PMS exposure on concerns of outstanding subsidy payments as well as higher depot prices which crimps the already thin margins.
  • Likely reflecting the relatively higher depot prices for gasoline, input costs fell a slower 4.5% YoY to N16.6 billion resulting in a steep decline (-12% YoY to N2.3 billion) in gross profits, with corresponding margins contracting to 90bps YoY to 12.1% (lowest in 7 quarters) vs. our estimate of 14.3%. Indeed, the level of GM contraction comes as a surprise, particularly on the heels of drop in oil prices over H2 14.

High opex levels amplify GM softness

RelatedPosts

11 Plc (formerly Mobil Oil Nigeria Plc) declares dividend of N8.25 per share

11 Plc to boost revenue with Lagos Continental Hotel’s acquisition

  • Weakness at the gross levels, permeated into operating profits, with a modest 3.8% YoY increase in operating expenses to N2.1 billion driving a 61% decline in operating profit to N584 million and 4.4pts contraction in related margins to a decade low of 3.1%. Pressures reflects Mobil’s relatively higher operating leverage relative to industry, with opex-sales ratio (~10% in the last decade vs. industry average of 7.5%).
  • While “other income” of ~N72 million over Q4 14, moderated net finance charges to N104 million (+26% YoY), weak operating performance permeated to profitability, with PBT and PAT plummeting 59% and 57% YoY to N551 million and N400 million, with similar deviations from our estimates. Respective PBT and PAT margins shrank 380 bps and 250 bps YoY to 2.9% and 2.1%, the lowest since 2012 subsidy saga.

Margin expansion on depressed oil prices to moderate weak topline

  • Notwithstanding the deviations to our estimates, weak Q4 14 performance, affirms the pessimism we had expressed on the sustenance of the robust Q3 14 earnings performance in our last update. Looking ahead, the 10% reduction in PMS price combined with flat to lower volume growth—due to heightened apprehension that weak fiscal position could elongate subsidy reimbursement—should exerts downward pressure on topline. That said, soft input cost for deregulated products, particularly lubricants and AGO increases scope for margin expansion. Specifically, base oil prices (a key ingredient for lubes) is ~30% lower, even as Mobil’s current retail price for AGO remains at a healthy ~13% premium to recommended sell price based on PPPRA’s pricing template, even after adjusting for naira devaluation. By our estimates, the foregoing should drive profitability higher over 2015.

Buy, sell or hold?

News continues after this ad


  • Nevertheless, an increase in risk free rate to capture upswing in sovereign yields offsets impact on valuations and drives our FVE 10% lower to N96.68. Mobil trades at 2015E P/E of 12x a premium to Bloomberg domestic peer average of 7.7x and justified forward P/E of 5.6x. We retain our SELL rating on Mobil.

Source: ARM Research

 

News continues after this ad


Related

Tags: Mobil Oil Nigeria Plc

Leave a Reply Cancel reply

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

inq
avatrade
Stanbic bank
Mega Millions
UBN
Hot forex
Access Bank
Bankers Committee
First bank






    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • Lagos announces partial closure of Third Mainland Bridge
    • Five jobs in Nigeria’s fashion industry that are not design-related
    • Insecurity: N6.5 billion demanded in kidnapping ransoms in Nigeria since July 2021 – SBM

    Follow us on social media:

    Recent News

    Third Mainland Bridge is intact and safe for commuters - FG

    Lagos announces partial closure of Third Mainland Bridge

    August 13, 2022
    Five jobs in Nigeria’s fashion industry that are not design-related

    Five jobs in Nigeria’s fashion industry that are not design-related

    August 13, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Financial Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Metrics
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • Business News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com