Transcorp Plc is in line to beat its 2017 performance going by its results for the half year ended June 2018, driven by a rebound in revenues and profits from its hotel and power units. Transcorp is our STOCK PICK for the week.
Recent results
Results for the half year ended June 2018 show that revenue increased from N34.1 billion in 2017 to N54 billion in 2018. Profit before tax surged from N4.5 billion in 2017 to N11.9 billion in 2018. Profit after tax also increased from N4.1 billion in 2017 to N10.8 billion in 2018.
Current share price: N1.11
Year high: N2.80
Year low: N1.11
Year to date: -23.97%
One year return: -20.91%
Price to Earnings valuation
Transcorp Plc is currently trading at a price to earnings ratio of 5.71. This is far lower than the average price earnings ratio on the Nigerian Stock Exchange (NSE). Companies operating in the conglomerate subsector are largely moribund or have suffered losses for years, and as such have negative earnings per share.
Chances of the stock going up or down
The stock hit a year low of N1.11 in yesterday’s trading session, and could dip further, due to negative sentiments present in the market. The Nigerian Stock Exchange has been in a bearish mode over the last 7 trading sessions, due to both domestic and emerging market concerns. Year to date, the index is down 7.73%.
Outlook
Results for the period ended June 2018 show a massive improvement over the comparative period in 2017 and could signal a much higher dividend payout. Transcorp paid a dividend of N0.02 per share for the 2017 financial year, from an earnings of N0.11 per share. H1 2018 earnings of N0.11 are thus equal to the company’s full-year earnings.
Approaching elections mean Transcorp Hilton, its flagship hotel could witness increased patronage. Transcorp Power has rebounded and expects to maintain its current output as long as gas supply is regular. The company has also put in place plans to exit Teragro its juice concentrate business.
During its investor presentation following the release of its H1 2018 results, the company disclosed its short, medium and long-term outlook for each unit, each targeting operations across Africa by 2027.
About the company
Transnational Corporation of Nigeria Plc, was incorporated on 16 November, 2004 as a private limited liability company. Following a successful initial public offer (IPO), the company was listed on the Nigerian Stock Exchange in December 2006.
In 2011, billionaire banker, Tony Elumelu, acquired a major stake in the firm through his investment holding vehicle, Heirs Holdings.
The company has portfolio companies in the hospitality, power, agro-allied and oil & gas sectors.
Onome and Nairametrics crew, Transcorp is a pangolo (empty container) company and we all know this.
Terragro: Gone
Transcorp Hotels: Gone
The main revenue generator left in the group is Transcorp Power.
I discount their oil operations as they have not produced a drop of crude since licensing and relicensing.
While Transcorp might be under/appropriately valued presently; unless Uncle T.E and the gang repent, the company will never deliver the expected returns for the ordinary shareholder.