Geregu Power Grows Shareholders' Wealth by 8 Fold

In 2024, few listed stocks have seen a fast and furious increase in market valuation. Geregu Power Plc is among one of the few lucky ones, now lurking around N2.5 trillion in market capitalisation.

As of Friday’s close, those who purchased Geregu Power Plc when it listed at N100 per share would have seen their wealth increase more than 8 folds. Its latest valuation surge precedes its February 28 closure data for 2023 final dividend that triggered a rush for the stock.

The share price of Geregu Power Plc surged by 9.3% to close at N901, according to data obtained from the Nigerian Exchange. In the last seven days, the stock has moved by about 10% from N819.80 at the beginning of the week.

The power generating company has seen strong market re-rating since it was listed in October 2022. It is the first power generation company in Nigeria that become a public company. The share surge following the company’s earnings growth in 2023.

A slew of analysts thinks there will be a stock market correction on the power generating company’s stock, saying its share is already overvalued above its earnings capability. Last week though, the stock market nosedived, losing about N2 trillion.

Geregu Plc, on the other hand, climbed due to buying interest from local investors who spotted growth potential ahead of its Q1 earnings release. Market demand for the stock has been strong after the board of directors of Geregu Power Plc announced N8 the final dividend for 2023.

Geregu Plc expects to declare N5.56 billion as a profit in the first quarter of 2024. The company said it expects operating cash flow before working capital changes to settle at N9.79 billion in Q1-2024.

Details from the forecast document showed that the company expects a profit of less than N6 billion (about 18% of turnover) amidst an expectation that revenue would be over N31 billion in the same period.

The company forecasts its revenue to hit N31.242 billion, out of which it expects to offset N16.759 billion as costs of sales. This would leave the power generating company with N14.482 billion as gross profit. The company’s administrative expenses is expected to gulp N5.4 billion.

Net finance costs of about N800 million is expected to stand between the company’s operation profit of about N9.1 billion in the period and its pretax profit of N8.3 billion.

The company estimated about N2.4 billion as tax provision for the period, reducing its profit for the period to N5.56 billion.

Geregu Power Plc engages in the power generation business. It handles electric power sales through The Nigerian Bulk Electricity Trading Plc to the distribution companies in Nigeria. #Geregu Power Grows Shareholders’ Wealth by 8 Fold

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