Transcorp Hits N236bn as Investors Line Up for Shares after Abuja Disco Acquisition
Tony Elumelu, Chairman Transcorp

Transcorp Hits N236bn as Investors Line Up for Shares after Abuja Disco Acquisition

Market valuation surged to about N236 billion as Alpha seekers took a special interest in Transcorp Plc.’s shares following its majority share acquisition in Abuja Electricity Distribution Company in the recent time.

The conglomerate recorded an impressive market valuation surge of 39% in five trading sessions last week, according to data from the Nigerian Exchange (NGX) tracked by MarketForces Africa. Stockbrokers said the price surge that spanned the whole week was driven by interest in the company’s future earnings stream after a successful acquisition of majority shares in AEDC.

On Friday, the company’s market value hit about N236 billion at a unit price of N5.80, it opened the week at N4.16 after it reported a more than 34% year-on-year increase in profitability. Transcorp’s post-tax profit came strong at N16.103 billion in the first half of 2023 versus N12.011 billion it reported in the equivalent period in 2022.

Despite myriads of uncertainness in the economy, Transcorp Plc boosted its earnings performance. Its earnings per share surged by 88.89% to N27.20 in the first half of 2023 from N14.40 in the comparable period in 2022.

The growth comes as management continues to deepen its footprint in the power sector. Transcorp recently acquired a 60 per cent stake in the Abuja Electricity Distribution Company (AEDC), thus becoming the majority shareholder in the utility firm.

Recently, the Board of Directors of Transcorp Group announced the appointment of Peter Ikenga as the Managing Director/CEO of Transcorp Power Ltd, following the appointment of Christopher Ezeafulukwe, as the new Managing Director/CEO of Abuja Electricity Distribution Company (AEDC).  

Mr Ikenga currently serves as CEO of Transcorp Energy, the Group’s oil and gas subsidiary, where he has led the Group’s upstream petroleum development strategy, management said in its regulatory filing.

According to the statement, Mr Ikenga has been instrumental in delivering aspects of Transcorp’s integrated energy strategy, focused on creating Nigeria’s largest domestic power player and ensuring Nigeria’s natural resources deliver robust power supply for the Nigerian economy and consumers.

The company said Mr Ikenga is a value-driven and result-oriented professional, with a wealth of global experience, having directly developed or managed major oil, gas and power assets and operations in multiple regions including Nigeria, Brazil and the United States of America. 

“In line with Transcorp’s track record of transformation across all our businesses, our commitment remains unwavering in delivering superior stakeholder returns, anchored in our ideology of Africapitalism and our ability to contribute positively towards improving lives and transforming our economy”, the statement reads.

Its first-half results showed that revenue increased by about 31% year on year to N82.123 billion from N62.889 billion, according to its unaudited financial statement. Due to better top-line growth than cost of sales growth, gross profit surged by more than 39% to N43.239 billion.

The company’s administrative expenses spiked in addition to strong impairment on financial assets recorded. This was compensated for more than a 633% year-on-year increase in other gains.

The company’s exposure to foreign exchange fluctuation resulted in N4.828 billion losses, an increase of about 363% year on year from N1.04 billion 12 months earlier.

The negative impacts of the naira devaluation affected the company’s net finance cost in the period. Its unaudited financial scorecard showed that Transcorp’s net finance costs jumped by 60.53% year on year to N11.424 billion from N7.116 billion in the comparable period in 2022.

Among other things, its share price was re-rated after Elumelus fought to retain control of the conglomerate. Otedola had made the move to join the company’s board as the single largest investor. However, Otedola who cannot play the second fiddle was met with a hostile reaction by the Elumelus.

Dr. Awele Elumelu, in reaction to the share purchase by Otedola, acquired 5.076% of Transcorp Plc from a large free float level for Heir holdings to retain control. At the close of business on Friday, the stock market placed N124.789 billion on Transcorp. The company has 40.647 billion outstanding shares priced at N3.07 per unit.

While the market keeps hope alive about the future, Transcorp Plc has proven to be a bad investment for a number of Nigerians who picked the stock at N7.50 when it launched its initial public offer in 2007.

Not many Nigerians who invested their hard-earned money in public companies benefited from either dividend payments or capital appreciation. The conglomerate’s underwhelming earnings performance over the years sent negative signals about investing in the Nigerian stock market up to date.

Transcorp Plc reminds a large number of people who threw their money into the wind about the pre-financial crisis IPO festival in Nigeria.  The company has rarely been out of the limelight since its creation in 2005 by a group of Nigerian business leaders with the support of then-President Olusegun Obasanjo. #Transcorp Hits N236bn as Investors Line Up for Shares after Abuja Disco Acquisition

Naira Steadies as Banks Issue Update on FX Purchase