The near-term outlook for TotalEnergies Marketing Nigeria Plc (TOTAL) remains weak, suggesting the need for significant change to its operating strategy in our view. The company posted a net loss of N2.9 billion in H1'25, dragged by weaker revenue, higher operating expenses, and a sharp rise in net finance costs. Performance was further pressured by intensified price competition in the downstream segment, as increased local refining capacity drove more competitive market pricing and dampened demand for TOTAL's products. In addition, the company's elevated cost structure and high leverage remain a burden on earnings potential for FY'25E.
We now forecast an operating profit CAGR of -10.8% over our forecast horizon compared to -6.3% previously. This new operating profit growth expectation resulted in a revised 12-month Target Price ("TP") of N464.44 (from N621.71 previously) with an unchanged SELL recommendation on the counter.
