The management of 11 Plc formerly Mobil has reported its nine (9) Months or Q3 in 2018 showing significant growth in revenue which is stood at 41.7% y/y to N125.04billion. The Profit After Tax (PAT) stood at 71.2% y/y to N7.87 billion. However, on quarter to quarter analysis basis showed revenue dropped by 4.2% to N39.13 billion flows with PAT declined by 10.0% to N2.42 billion.
The reported also shown an increase in sales attributable to sustained product availability amongst major marketers over Q3. However, with a moderation in petroleum products supply by the NNPC (NNPC remains the sole importer of PMS) in Q3, compared to Q2, likely dragged revenue quarter to quarter.
Gross margin remained pressured, contracting 189 bps y/y (183 bps q/q), following faster growth in cost of sales (+44.8% y/y) — compared to revenue (+41.7% y/y) — which was pushed by increase in PMS landing cost amidst higher global crude oil prices (+39.3% on average inQ3 2018 compare with Q3 2017).
OPEX grew 21.7% year in year out in Q3 in 2018, with the ratio-to-revenue coming in at 6.9% to 8.0% at Nine months in 2018, implying increased operational efficiency. The increase in OPEX was however offset by (1) gross profit growth, (2) increase in other income (+23.9% y/y) following a 17.1% y/y increase in rental income (N6.14 billion) from the company’s investment properties and service stations, and (3) a N499 million profit from disposal of PP&E, resulting in EBIT growing by 26.4% y/y.
11 plc recorded net finance income of N398 million (from N162 million the previous year), reflecting a 70.1% y/y increase in interest income and an 81.6% decline in finance costs.
Consequently, in the absence of any exceptional charges, as in 9M-17, PBT came in at N11.65 billion (+70.5% vs. y/y). A tax charge of N3.78 billion yielded an effective tax rate of 32.4%, compared to 32.7% in the prior year, and led to PAT of NGN7.87 billion (+71.2% y/y) being reported.
Year-to-Date, MOBIL’s stock (-10.07%), though declining, has outperformed both the Oil & Gas index (-10.22%) and the broader All Share Index (-13.20%).
Comment: At first glance, with think 11 Plc’s performance is positive. Annualized, the company’s 9M-18 EPS is above 2017FY (+41%) and 2018 consensus estimates (+2%). We however expect neutral market reaction.
Income Statement (NGN’bn) |
30-Sep-18 |
30-Sep-17 |
y/y % ∆ |
q/q % ∆ |
Q3-2018 |
Q2-2018 |
Q1-2018 |
Revenue |
125.04 |
88.25 |
41.7% |
-4.2% |
39.13 |
40.83 |
45.08 |
Cost of Sales |
-112.26 |
-77.56 |
44.8% |
-2.2% |
-35.70 |
-36.50 |
-40.06 |
Gross Profit |
12.78 |
10.69 |
19.5% |
-20.7% |
3.43 |
4.33 |
5.02 |
Other Income |
6.58 |
5.31 |
23.9% |
-8.9% |
2.14 |
2.35 |
2.08 |
OPEX |
-5.99 |
-4.61 |
29.9% |
-9.5% |
-2.84 |
-3.14 |
-2.57 |
Other non-operating expense/income |
0.50 |
-0.02 |
2166.8% |
-1960.5% |
0.53 |
-0.03 |
0.00 |
EBIT |
11.25 |
8.90 |
26.4% |
-8.7% |
3.48 |
3.81 |
3.96 |
Finance Income |
0.41 |
0.24 |
70.1% |
-32.5% |
0.12 |
0.17 |
0.12 |
Finance Cost |
-0.01 |
-0.08 |
-81.6% |
633.6% |
-0.01 |
0.00 |
0.00 |
Net Finance Cost/Income |
0.40 |
0.16 |
145.7% |
-38.6% |
0.11 |
0.17 |
0.12 |
Exceptional Item |
0.00 |
-2.23 |
0.00 |
0.00 |
0.00 |
||
Profit before tax |
11.65 |
6.83 |
70.5% |
-9.9% |
3.59 |
3.98 |
4.08 |
Taxation |
-3.78 |
-2.23 |
69.1% |
-9.8% |
-1.16 |
-1.29 |
-1.32 |
Profit after tax |
7.87 |
4.60 |
71.2% |
-10.0% |
2.42 |
2.69 |
2.76 |
|
|||||||
Ratios |
30-Sep-18 |
30-Sep-17 |
|
|
Q3-2018 |
Q2-2018 |
Q1-2018 |
Gross margin |
10.2% |
12.1% |
|
8.8% |
10.6% |
11.1% |
|
OPEX margin |
6.9% |
8.0% |
|
6.7% |
7.0% |
7.0% |
|
EBIT margin |
9.0% |
10.1% |
|
|
8.9% |
9.3% |
8.8% |
PBT margin |
9.3% |
7.7% |
|
9.2% |
9.8% |
9.0% |
|
PAT margin |
6.3% |
5.2% |
|
6.2% |
6.6% |
6.1% |
|
Cost of sales margin |
89.8% |
87.9% |
|
|
91.2% |
89.4% |
88.9% |
Interest cover |
759.13x |
110.33x |
301.73x |
2423.15x |
2318.55x |
||
Tax rate |
32.4% |
32.7% |
32.5% |
32.4% |
32.4% |