Earnings ReportFeatured

Okomu Oil: Stable Share Price, Despite Earnings, BV Decline At Half-Year

Coy: OKOMU OIL PALM PLC. (OKOMUOIL)
Rating: Hold

Current Market Price: N54.95

Latest Dividend: N3.00
Year High: N85.00
Year Low: N40.15
Fair Value: N57.43
By: Jeariogbe Tunde Segun (Equity Analyst)

Introduction/ Key Financials

  • In this report, we have carefully observed the half year financial performance indices of Okomu Oil Palm Plc, for the half year ended 30th June, 2018, compared same with figures released in the corresponding period of 2018 for the purpose of establishing growth.
  • Nevertheless, we have carefully chosen our valuation approach, while using the full year financials for projections and other valuation processes
  • Please understand that the current half year numbers is a lower performance when place side by side the half year figures representing similar period in 2018.
  • A careful look at the released numbers shows that total revenue for the period largely stood below corresponding period, while other expenses remained fairly controlled.
OKOMU OIL
Bourse Nigerian Stock Exchange
Code Name OKOMUOIL
Sector AGRICULTURE
Market Classification MAIN BOARD
Nature of Business Development of Oil and Rubber Plantations. Palm oil Milling, Palm Kernel Processing and Sale of Wet Cup Lumps
Date of Incorporation December 3rd 1979
Date Listed March 11th 1991
End of Accounting Year 31st December
Website www.okomunigeria.com
Registrar CardinalStone Registrar
Auditor Horwath Dafinone
Share Price@Relsd (N) 52.00
Earnings per Share 2.65
Intrinsic Value(N) 57.43
Share Outstanding 953,910,000
Market Capitalisation 49,603,320,000

Company figures

  • As noted above, the Turnover figure reported for the period stood at 33.80% below the comparable year, in other words, Turnover figure for the quarter was N8.56 billion against N12.93 billion
  • Operating Expenses is currently values at N1.69 billion lower than the N1.79 billion estimated at the end of 2018 half year business session
  • Due to lower revenue reported, Operating Profit is 58.20% below the comparable quarter of 2018
  • Operating Expenses value reported at the end of the period is same as N3.96 billion, this is only 5.09% below the N4.17 used through the comparable quarter
  • Finance Cost used through the period is valued at N101.10 million, this is 60.15% below the N253.72 million reported in its 2018 half year numbers
  • Profit before Tax is currently valued at N2.83 billion as against N6.94 billion achieved at the end of 2018 half year
  • Having made allowance for Tax Expense, the management of Okomu Oil reported a profit for the period of N2.52 billion as against N5.94 billion last year
OKOMU OIL
Statement of Comprehensive Income
  2019(000) 2018(000) %CHG
Turnover                     8,565,460               12,938,639 -33.80
Cost of Sales                     1,691,683                 1,797,775 -5.90
Operating Profit                     2,911,469                 6,965,961 -58.20
OPEX                     3,962,308                 4,174,903 -5.09
DEPRECIATION                  10,381,695                 8,999,531 15.36
FINANCE COST                        101,105                     253,722 -60.15
NET FINANCE INCOME                           76,318                       21,303 258.25
PBT                     2,835,151                 6,944,658 -59.18
TAX                        306,200                 1,001,748 -69.43
PAT                     2,528,951                 5,942,910 -57.45
TOTAL COMP INCOME                     2,528,951                 5,942,910 -57.45
Statement of Financial Position
Current Assets                     8,943,471                 9,115,139 -1.88
Non-Current Assets                  30,152,325               27,070,171 11.39
Total Assets                  39,095,796               36,185,310 8.04
Current Liabilities                     3,786,499                 3,284,239 15.29
Non-Current Liabilities                     1,651,512                 1,651,512 0.00
Total Liabilities                     5,438,011                 4,935,751 10.18
Net Assets                  28,181,375               27,588,070 2.15
Retained Earnings                  25,837,324               25,244,019 2.35
Shares Outstanding                        953,910,000                     953,910,000  
  • Current Assets at the end of the period is valued at NN8.94 billion same as 1.88% below the N9.11 billion assets valuation at the end of 2018 half year financial
  • Non-Current Assets on the other hand stood at 11.39% above the corresponding period valuation at N30.15 billion against N27.07 billion
  • Current Liabilities equally builds by 15.29% over corresponding period, as it is currentl valued at N3.78 billion versus N3.28 billion
  • The only item on the Non-Current Liabilities for the two period compared is the Deferred Tax Liabilities and it was stable at N1.651 billion through the periods
  • Net Assets at the end of the period was estimated to worth N28.18 billion, this is only 2.15% above the N27.58 billion stated in its k2018 half year result
  • Retain Earnings also inched marginally above 2018’s at the currently stated N25.83 billion versus N25.24 billion

Financial Strength/Solvency Ratios

  • Okomu Oil Debt Ratio was stable at 0.14x through the two periods compared in this report
  • Total Debt to Equity Ratio was also fairly stable through the periods; we have estimated that Okomu’s total debt is same as 19% of the Equity value at the end of the period
  • We also estimated Equity Ratio at 0.72x up from the 0.76x in 2018 half year. This implies that the company’s equity is currently 72% of the Asset. In other words, more equity is used in the running and servicing of the bussiness
  • Patronage in the share price of Okomu Oil seems low at the current beta value of 0.62x, this could be linked to the low shares outstanding of the equity
Financial Strength/Solvency Ratio
TICKERS 2019 2018 %CHG
Debt Ratio                                        0.14                                    0.14 1.97
Total Debt to Equity Ratio (MRQ)                                        0.19                                    0.18 7.86
Equity Ratio                                        0.72                                    0.76 -5.45
TICKERS 2019 Industrial Average %CHG
Beta Value                                        0.62                                    0.87 -28.74

Profitability Ratios

  • EBITDA margin estimated for the period stood at 33.99%, this is same as 36.87% below the 53.84% estimated in 2018
  • In the same trend Pre-tax Margin dropped by 38.33% to stand at the current estimate of 33.10% against 53.67%, this is a confirmation of a drop in profitability within the compared period
  • Cost of Sales stood at 19.75% of the company’s Turnover figure this is a 42.14% drop in profitability when compared to the 13.89% estimated at end of 2018 half year earnings
  • Return on Equity is currently estimated at 8.97% lower than the 21.54% in 2018
  • See below for detailed profitability ratios
PROFITABILITY RATIOS
TICKERS 2019 2018 %CHG
EBITDA MARGIN 33.99% 53.84% -36.87
PRE-TAX MARGIN 33.10% 53.67% -38.33
EFFECTIVE TAX RATE 12.11% 16.86% -28.17
CS TO TO 19.75% 13.89% 42.14
ROE 8.97% 21.54% -58.34
ROA 6.47% 16.42% -60.61

Efficiency Ratios

  • Measuring management efficiency we have tested few efficiency ratios,
  • Operating Expenses to Turnover Ratio was confirmed to stand at 46.26% a 43.36%% efficiency drop from the previous estimate of 32.27%
  • Turnover to Total Assets was also considered. Thus, the company achieved a 38.73% drop in efficiency having moved from 35.76% to N21.91%
  • The Working Capital Turnover of Okomu Oil could be considered low when compared to estimate from industrial peers numbers. Please note that, the ratio dropped from 2.22x to 1.66x
  • Based on general standard, Okomu Oil Working Capital Ratio is Good at 2.36x, a drop from 2.78x estimated in the last half year earnings. This is a confirmation that it will not face difficulty in settling its current liabilities, although the ratio should be watched since its dropping
EFFICIENCY RATIOS
  2019 2018  
OPEX TO TO 46.26% 32.27% 43.36
TO TO TA 21.91% 35.76% -38.73
Working Capital Turnover                                        1.66                                    2.22 -25.15
Working Capital Ratio                                        2.36                                    2.78 -14.90

Investment/Valuation Ratios

  • Compared to last half year, the management of Okomu Oil earned N2.65 per unit shares, this is 57.54% drop from the N6.23 half year earnings achieved in 2018
  • Since the share price of Okomu Oil on the exchange floor was stable during the two released dates, half year adjusted PE-Ratio increased to 19.61x from 8.35x, due to the large difference in earnings
  • Similarly, the half year earnings is estimated to have yielded 5.10% of the price of Okomu Oil on the floor of the exchange as at the time the result was made available to the investing public
  • Presently, the estimated half year Book Value of Okomu Oil per share of the company stood at N29.54, same as 2.15% growth from the N28.92 of last year. Please note that the Book Value stood far below both the current market price and our fair value for Okomu Oil
  • Confirming the above is the estimated Price to Book Value that stood above unity.
  • See below table for details
Investment/Valuation Ratios
Tickers 2019 2018 %Chg
Price at Released 52.00 52.00 0.00
EPS 2.65 6.23 -57.45
TCIP/SHARE 2.65 6.23 -57.45
P/E-Ratio 19.61 8.35 135.00
Earnings Yield 5.10% 11.98% -57.45
BV/Share 29.54 28.92 2.15
PBV 1.76 1.80 -2.11

Valuation

As noted above, having considered the financial stand of Okomu Oil Plc, with conservative projections and good consideration of visible risk elements, we have fairly price each units of Okomu Oil share price at N57.43 and have rated it a Hold.

Comment here

Earnings ReportFeatured

Okomu Oil: Stable Share Price, Despite Earnings, BV Decline At Half-Year

Coy: OKOMU OIL PALM PLC. (OKOMUOIL)
Rating: Hold

Current Market Price: N54.95

Latest Dividend: N3.00
Year High: N85.00
Year Low: N40.15
Fair Value: N57.43
By: Jeariogbe Tunde Segun (Equity Analyst)

Introduction/ Key Financials

  • In this report, we have carefully observed the half year financial performance indices of Okomu Oil Palm Plc, for the half year ended 30th June, 2018, compared same with figures released in the corresponding period of 2018 for the purpose of establishing growth.
  • Nevertheless, we have carefully chosen our valuation approach, while using the full year financials for projections and other valuation processes
  • Please understand that the current half year numbers is a lower performance when place side by side the half year figures representing similar period in 2018.
  • A careful look at the released numbers shows that total revenue for the period largely stood below corresponding period, while other expenses remained fairly controlled.
OKOMU OIL
Bourse Nigerian Stock Exchange
Code Name OKOMUOIL
Sector AGRICULTURE
Market Classification MAIN BOARD
Nature of Business Development of Oil and Rubber Plantations. Palm oil Milling, Palm Kernel Processing and Sale of Wet Cup Lumps
Date of Incorporation December 3rd 1979
Date Listed March 11th 1991
End of Accounting Year 31st December
Website www.okomunigeria.com
Registrar CardinalStone Registrar
Auditor Horwath Dafinone
Share Price@Relsd (N) 52.00
Earnings per Share 2.65
Intrinsic Value(N) 57.43
Share Outstanding 953,910,000
Market Capitalisation 49,603,320,000

Company figures

  • As noted above, the Turnover figure reported for the period stood at 33.80% below the comparable year, in other words, Turnover figure for the quarter was N8.56 billion against N12.93 billion
  • Operating Expenses is currently values at N1.69 billion lower than the N1.79 billion estimated at the end of 2018 half year business session
  • Due to lower revenue reported, Operating Profit is 58.20% below the comparable quarter of 2018
  • Operating Expenses value reported at the end of the period is same as N3.96 billion, this is only 5.09% below the N4.17 used through the comparable quarter
  • Finance Cost used through the period is valued at N101.10 million, this is 60.15% below the N253.72 million reported in its 2018 half year numbers
  • Profit before Tax is currently valued at N2.83 billion as against N6.94 billion achieved at the end of 2018 half year
  • Having made allowance for Tax Expense, the management of Okomu Oil reported a profit for the period of N2.52 billion as against N5.94 billion last year
OKOMU OIL
Statement of Comprehensive Income
  2019(000) 2018(000) %CHG
Turnover                     8,565,460               12,938,639 -33.80
Cost of Sales                     1,691,683                 1,797,775 -5.90
Operating Profit                     2,911,469                 6,965,961 -58.20
OPEX                     3,962,308                 4,174,903 -5.09
DEPRECIATION                  10,381,695                 8,999,531 15.36
FINANCE COST                        101,105                     253,722 -60.15
NET FINANCE INCOME                           76,318                       21,303 258.25
PBT                     2,835,151                 6,944,658 -59.18
TAX                        306,200                 1,001,748 -69.43
PAT                     2,528,951                 5,942,910 -57.45
TOTAL COMP INCOME                     2,528,951                 5,942,910 -57.45
Statement of Financial Position
Current Assets                     8,943,471                 9,115,139 -1.88
Non-Current Assets                  30,152,325               27,070,171 11.39
Total Assets                  39,095,796               36,185,310 8.04
Current Liabilities                     3,786,499                 3,284,239 15.29
Non-Current Liabilities                     1,651,512                 1,651,512 0.00
Total Liabilities                     5,438,011                 4,935,751 10.18
Net Assets                  28,181,375               27,588,070 2.15
Retained Earnings                  25,837,324               25,244,019 2.35
Shares Outstanding                        953,910,000                     953,910,000  
  • Current Assets at the end of the period is valued at NN8.94 billion same as 1.88% below the N9.11 billion assets valuation at the end of 2018 half year financial
  • Non-Current Assets on the other hand stood at 11.39% above the corresponding period valuation at N30.15 billion against N27.07 billion
  • Current Liabilities equally builds by 15.29% over corresponding period, as it is currentl valued at N3.78 billion versus N3.28 billion
  • The only item on the Non-Current Liabilities for the two period compared is the Deferred Tax Liabilities and it was stable at N1.651 billion through the periods
  • Net Assets at the end of the period was estimated to worth N28.18 billion, this is only 2.15% above the N27.58 billion stated in its k2018 half year result
  • Retain Earnings also inched marginally above 2018’s at the currently stated N25.83 billion versus N25.24 billion

Financial Strength/Solvency Ratios

  • Okomu Oil Debt Ratio was stable at 0.14x through the two periods compared in this report
  • Total Debt to Equity Ratio was also fairly stable through the periods; we have estimated that Okomu’s total debt is same as 19% of the Equity value at the end of the period
  • We also estimated Equity Ratio at 0.72x up from the 0.76x in 2018 half year. This implies that the company’s equity is currently 72% of the Asset. In other words, more equity is used in the running and servicing of the bussiness
  • Patronage in the share price of Okomu Oil seems low at the current beta value of 0.62x, this could be linked to the low shares outstanding of the equity
Financial Strength/Solvency Ratio
TICKERS 2019 2018 %CHG
Debt Ratio                                        0.14                                    0.14 1.97
Total Debt to Equity Ratio (MRQ)                                        0.19                                    0.18 7.86
Equity Ratio                                        0.72                                    0.76 -5.45
TICKERS 2019 Industrial Average %CHG
Beta Value                                        0.62                                    0.87 -28.74

Profitability Ratios

  • EBITDA margin estimated for the period stood at 33.99%, this is same as 36.87% below the 53.84% estimated in 2018
  • In the same trend Pre-tax Margin dropped by 38.33% to stand at the current estimate of 33.10% against 53.67%, this is a confirmation of a drop in profitability within the compared period
  • Cost of Sales stood at 19.75% of the company’s Turnover figure this is a 42.14% drop in profitability when compared to the 13.89% estimated at end of 2018 half year earnings
  • Return on Equity is currently estimated at 8.97% lower than the 21.54% in 2018
  • See below for detailed profitability ratios
PROFITABILITY RATIOS
TICKERS 2019 2018 %CHG
EBITDA MARGIN 33.99% 53.84% -36.87
PRE-TAX MARGIN 33.10% 53.67% -38.33
EFFECTIVE TAX RATE 12.11% 16.86% -28.17
CS TO TO 19.75% 13.89% 42.14
ROE 8.97% 21.54% -58.34
ROA 6.47% 16.42% -60.61

Efficiency Ratios

  • Measuring management efficiency we have tested few efficiency ratios,
  • Operating Expenses to Turnover Ratio was confirmed to stand at 46.26% a 43.36%% efficiency drop from the previous estimate of 32.27%
  • Turnover to Total Assets was also considered. Thus, the company achieved a 38.73% drop in efficiency having moved from 35.76% to N21.91%
  • The Working Capital Turnover of Okomu Oil could be considered low when compared to estimate from industrial peers numbers. Please note that, the ratio dropped from 2.22x to 1.66x
  • Based on general standard, Okomu Oil Working Capital Ratio is Good at 2.36x, a drop from 2.78x estimated in the last half year earnings. This is a confirmation that it will not face difficulty in settling its current liabilities, although the ratio should be watched since its dropping
EFFICIENCY RATIOS
  2019 2018  
OPEX TO TO 46.26% 32.27% 43.36
TO TO TA 21.91% 35.76% -38.73
Working Capital Turnover                                        1.66                                    2.22 -25.15
Working Capital Ratio                                        2.36                                    2.78 -14.90

Investment/Valuation Ratios

  • Compared to last half year, the management of Okomu Oil earned N2.65 per unit shares, this is 57.54% drop from the N6.23 half year earnings achieved in 2018
  • Since the share price of Okomu Oil on the exchange floor was stable during the two released dates, half year adjusted PE-Ratio increased to 19.61x from 8.35x, due to the large difference in earnings
  • Similarly, the half year earnings is estimated to have yielded 5.10% of the price of Okomu Oil on the floor of the exchange as at the time the result was made available to the investing public
  • Presently, the estimated half year Book Value of Okomu Oil per share of the company stood at N29.54, same as 2.15% growth from the N28.92 of last year. Please note that the Book Value stood far below both the current market price and our fair value for Okomu Oil
  • Confirming the above is the estimated Price to Book Value that stood above unity.
  • See below table for details
Investment/Valuation Ratios
Tickers 2019 2018 %Chg
Price at Released 52.00 52.00 0.00
EPS 2.65 6.23 -57.45
TCIP/SHARE 2.65 6.23 -57.45
P/E-Ratio 19.61 8.35 135.00
Earnings Yield 5.10% 11.98% -57.45
BV/Share 29.54 28.92 2.15
PBV 1.76 1.80 -2.11

Valuation

As noted above, having considered the financial stand of Okomu Oil Plc, with conservative projections and good consideration of visible risk elements, we have fairly price each units of Okomu Oil share price at N57.43 and have rated it a Hold.

Comment here