PRESCO Plc (PRESCO) delivered a strong performance in FY'24, with revenue surging by 93.5% YoY, driven by favourable CPO prices, the partial consolidation of Ghana Oil Palm Development Company (GOPDC), and increased sales volumes. Following this robust performance and discussions with management, we have updated our projections for the company, setting a new 12-month Target Price (TP) of N903.16, which reflects a potential capital appreciation of 15.1% from our reference price and an unchanged BUY recommendation.
Higher CPO prices & GOPDC consolidation to drive FY'25 growth
In 2025, PRESCO's revenue growth is expected to remain on an upward trajectory, benefiting from higher local CPO prices and the full consolidation of GOPDC. On the former, while global CPO price growth may slow, rising by a modest 5.6% YoY due to weaker demand for bio-diesel amid lower crude oil prices, local CPO prices are projected to rise faster. This is driven by expectations of a higher average FX rate in 2025 (Ytd average: N1,525.66/$) compared to 2024 (average: N1,483.35/$).
Furthermore, the much-anticipated full consolidation of GOPDC, which began in 2024, is set to drive revenue growth further. This view is consistent with PRESCO's success in its last consolidation exercise. Notably, its 2021 acquisition of a 100.0% stake in Siat NL for N23.00 billion delivered strong financial results (FY'21 revenue: 98.5% YoY growth). With GOPDC now fully integrated into operations, we expect Group FY'25 numbers to be positively impacted by the added production capacity and foreign currency translation impact on Dollar and euro revenue from the Ghana operations. Overall, we forecast FY'25 Group revenue to surge by 65.4% YoY to N327.7 billion.
