TotalEnergies Hits 52-Week High after Earnings Beat
TotalEnergies Plc saw a strong valuation surge in the equities market as investors ramped up oil stock last week. The company’s market value grew by about 20% week on week as the oil stock bucked the equities market trend.
According to data from the Nigerian Exchange, Total Energies Plc’s market price advanced to N511.90 per share on Friday, up by 19.69% from N427.70 at the beginning of the week.
The oil stock is now trading at fresh peak price in the last 52 weeks, the lowest it had hit was N346.50 in the last one year in the market.
The move to buy the company’s shares followed its recorded earnings per share (EPS) growth in the first half of the year. TotalEnergies EPS grew by 134.1% year on year to settle at N60.6.
Analysis of the company’s number showed that the price push up has also lifted the market valuation of its 339.521 million shares outstanding to N173.801 billion.
In the first half of 2024, TotalEnergies marketing Nigeria reported a strong revenue growth amidst stability in the global commodity market and intermittent fuel scarcity in the country. Its revenue climbed due to elevated energy prices
Total Energies Marketing Nigeria Plc reported a net income of N20.6 billion, up by 53.2% year on year, according to its unaudited financials for the first half of 2024.
The company reported a substantial 93.0% year on year growth in revenue to N529.9 billion, from N274.602 billion in the comparable period in 2023.
Analysts said the company’s significant revenue growth was primarily driven by strong demand across its business segments.
Specific details showed that revenue from petroleum products rose by 100.8% year on year, and the amount accounted for 80.0% of the total revenue.
Also, revenue from the lubricants & other segments saw a 66.9% year-on-year increase, contributing 20.0% to total revenue. The overall increase in revenue was supported by the higher prices of petroleum products.
The company’s cost pressures remained significant, according to analysts’ notes. As with revenue, TotalEnergies recorded a 94.3% year on year increase in its cost of sales.
This was attributed to net changes in inventory of lubricants, greases, and refined product, as well as higher logistics costs for supply transportation. Consequently, the gross margin contracted slightly to 12.2% from 12.8% 12 months earlier.
In the period, operating expenses grew by 80.1%, driven by higher administrative and transportation expenses due to the higher energy prices.
However, a 253.0% YoY surge in other income helped mitigate the impact of higher operating expense on the earnings before interest and tax (EBIT margin) which improved to 6.6% from 5.6% in one year interval.
Analysts said the major contributor to the other income line was a net foreign exchange gain of N4.2 billion as against a loss of N1.5 billion in H1-2023, along with a 37.6% increase in network income.
Despite a 74.3% reduction in import loans, net finance costs surged by 122.9% year on year as the finance cost was impacted by interest on bank overdrafts amounting to N5.1 billion, reflecting the high interest rate environment during the period, according to CardinalStone Partners Limited.
Even with that, the company’s pretax profit margin rose to 5.8% from 4.8%. TotalEnergies benefited from a lower effective tax rate of 32.7%, resulting in a net income of N20.6 billion.
MarketForces Africa reported that TotalEnergies EP Nigeria has recently signed a sale and purchase agreement (SPA) with Chappal Energies for the sale of its 10% interest in the SPDC JV Licences in Nigeria, according to official statement.
The company explained that SPDC JV is an unincorporated joint venture between Nigerian National Petroleum Corporation Ltd (55%), Shell Petroleum Development Company of Nigeria (30%, operator), TotalEnergies EP Nigeria (10%) and NAOC (5%), which holds 18 licenses in the Niger Delta.
Under the SPA signed with Chappal Energies, TotalEnergies EP Nigeria will sell to Chappal Energies its 10% participating interest and all its rights and obligations in 15 licenses of SPDC JV, which are producing mainly oil.
Production from these licenses represented approximately 14,000 barrels equivalent per day in company share in 2023, according to the statement.
The details of the deal revealed that TotalEnergies EP Nigeria will also transfer to Chappal Energies its 10% participating interest in the 3 other licenses of SPDC JV, which are producing mainly gas (OML 23, OML 28 and OML 77).
However, Total said it is retaining full economic interest in these licenses, which currently account for 40% of Nigeria’s LNG gas supply. The transaction was concluded for a firm consideration of USD860 million. Closing is subject to customary conditions, including regulatory approvals. #TotalEnergies Hits 52-Week High after Earnings Beat
