Capital Market

11 PLC EPS to decline by 14% in 2018…Analyst

Bonny Amadi

11Plc, of Nigeria’s oil and gas sector will have to contend with earning per share decline by 14 per cent in the prevailing year, even as profit before tax is projected to grow by 6 per cent y/y to N10.3bn.

However the report was hinged n the one availability of the company’s other comprehensive Income (OCI) estimate for the four quarters of the year.

The company was however placed on sound growth trajectory , expected to be driven by its new management team, “ we believe 11’s new core management will take on a more aggressive approach and as such expect the firm to gradually gain market share, especially within the white products category” a report pointed.

11 PLC is projected to hit new price target of N234.0 is up 19 % which implies an upside potential of +8.3%. the price target is driven by market-reflective adjustments to analyst’s risk-free rate and equity risk premium assumptions.

However, the analysts projection on 11 plc, was strengthened by recent report by investment analyst which reinforced the impact of expected deregulation of the petroleum industry and stiffer operating environment.

Analysts noted that though the company’s profit was up by 19 per cent to N234.0, which however reflects lower interest rate environment:

“However, we estimate an EPS decline of -14% y/y to N19.46 during the same period. The central driver behind this forecast is that we do not have an estimate for the OCI line over the next four quarters” noted FBNQuest research report.

However, excluding this income line, earnings growth is reported to be in line with the analyst’s PBT growth expectation. The report however do not anticipate any acquisition-related costs hitting the firm’s P&L this year as in the preceding years

According to the report, the partial deregulation of the downstream sub-sector of the industry is likely to weigh on petroleum marketers’ growth prospects. In order to prevent gasoline shortages in 2017 year, the state oil company, NNPC, was the major petroleum product importer.

Rising petroleum product prices resulted in the expected open market price rising significantly above the price ceiling of N145 per litre, a development , the investment analysts maintained will also have its impacts on earnings projections.

 

 

 

 

 

 

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