Geregu Power Valuation Jumps by 5% to N763 billion
Geregu Power Plc has solidified its gaining streaks as the company’s share price inched upward by about 5% last week. The utilities company listed at N100 per share last year has pooped to N305 as investors continue to take positions.
The stock opened at N290.7 and closed the week at N305 per share despite seesaw price movements in the local bourse. The company came to the stock market at a N250 billion valuation and has since then more than doubled down even when profit is drooling.
In the first quarter of 2023, its profit declined to N3.548 billion year on year from N5.593 billion in the comparable period in 2022. This was caused by the revenue decline experience in the period, which was not commensurate with the rate of decline in costs of sales.
Its higher costs profile and overhead spending put pressure on the margin, which then was exacerbated by higher net finance costs. Equities investors however appear to be confident given increased demand.
The power company also brought into play a strategic investor who took 5% of its shares outstanding to support capital structure while the utilities take advantage of its relatively high leverage position.
At the end of the first quarter, Geregu Plc has more than N34 billion in loan exposure to third parties, and its report showed that about N28 billion of the sum is not maturing in the next 12 months.
In April, the Chairman of Geregu Power Plc, Mr. Femi Otedola, reiterated the company’s commitment to continue to uphold the tenets of good corporate governance.
While speaking at t the “Closing Gong ceremony” and commemoration of the company’s first Annual General Meeting (AGM) at NGX in Lagos called on the incoming administration to do all it could to tackle power sector challenges.
He identified transmission as the major problem facing the power sector, saying that if the problem is fixed, the manufacturing sector and the entire economy would be better for it.
“I believe we are now at the stage where the power sector will get a lot of attention. We have new plants; our problem is transmission. There is a need to look in this direction.
“We are at a stage where the new government can come in and tackle the challenges in the power sector and, hopefully, there will be positive results. So, what is needed is to seek investors from the private sector to work on these challenges,” Otedola told Nigerian Exchange.
In June 2022 Geregu issued N40.085 billion in unsecured corporate bonds for 7 years at a coupon and effective interest rate of 14.5% and 14.70% respectively.
The company said it would use the proceed to finance the acquisition of one of the power generation companies which the Bureau of Public Enterprises opened a bid for.
As borrowed funds alter its capital structure, Geregu Power’s shareholder equity totaled N49.1 billion and total debt of N75.6 billion in December 2022, which brings its debt-to-equity ratio to 153.9%.
In its 2022 audited statement, Geregu Power’s earnings before interest and tax (EBIT) is N14.9 billion making its interest coverage ratio -42.8. It has cash and short-term investments of N51.6 billion.
Geregu Power Plc engages in the generation and sale of electric power in Nigeria. It generates electricity through its natural gas-fired power plant. The company was incorporated in 2006 and is headquartered in Victoria Island, Nigeria. #Geregu Power Valuation Jumps by 5% to N763 billion#
