Major petroleum marketer, MRS Oil Plc, may be in for another bleak financial year, for the second time in a row. The firm could end up recording its first loss in half a decade.
About the company
MRS was incorporated as Texaco Nigeria Limited on the 12th of August, 1969 and was converted to a public limited liability company quoted on the Nigerian Stock Exchange in 1978, as a result of the 1977 Nigerian Enterprises Promotion Decree.
The company’s name was changed to Texaco Nigeria Plc in 1990, and on the 1st of September 2006, Chevron Oil Nigeria Plc.
In March 2009, Corlay Global SA acquired a controlling stake in the firm, and the company’s name was eventually changed to MRS Oil Nigeria Plc during its AGM held on the 29th of September, 2009.
MRS Africa Holdings owns 60% of the issued share capital of MRS Oil Nigeria Plc. MRS Africa Holdings is a subsidiary of Corlay Global, which is ultimately controlled by Sayyu Dantata.
Recent results
Results for the nine months ended September 30, 2018, show that revenue fell from N81.9 billion in 2017 to N76 billion in 2018. The firm made a loss before tax of N202 million, as against a profit before tax of N1.3 billion in 2017.
Pricing
Current Share Price: N24
Year High: N36.05
Year Low: N21.37
Year to Date: -6.41%
One Year Return: -6.41%
Price Outlook
Possibilities of the stock going much lower are quite high, as it is currently trading close to its year low of N21.37.
Year to date, the stock is down 6.41%, performing much better than the All Share Index which is down 19.47%. This, however, means the stock could go down further if bearish sentiments persist.
Valuation
MRS is trading at a PE ratio of 21.4 times earnings. This is far higher than listed major oil marketers such as Total Nigeria (which is trading at 6.9 times earnings) and 11 Plc (which is trading at 5.8 times earnings) as well as smaller firms such as Eterna Oil which is trading at 2.8 times earnings.
It is also over twice the average PE ratio on the NSE.
Outlook
The company is most likely to record a full year loss for the 2018 financial year, its first in half a decade. MRS would have recorded a loss last year but for an income tax credit of N2.3 billion.
Revenue across its three major segments fell sharply, an indication that the company may have sold fewer products, or brought in lower volumes.
The 2018 full year could be a bleak one for investors, as the firm could either skip a dividend payment or give a much lower one than the N1.73 it paid in 2016. In 2017, it gave a bonus issue of 1 for 5.
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