Nigeria | NGX

Following the strong performance in TOTAL’s Q1’24 result in line with the marketer’s dominance of the downstream oil and gas sector, we update our 12-month target price to N537.32 and retain a BUY recommendation on the ticker. Our view is premised on the sustained positive impact of the removal of subsidy payments and consequent deregulation of PMS, the improvement in the company’s sales mix by driving revenue from the higher-margin lubricant segment, its ability to continue leveraging its strong network infrastructure and expectations of better product availability on account of improved output from the Dangote and Port-Harcourt Refineries.

MTNN’s performance was constrained in FY’23 and Q1’24, owing to a surge in costs and FX-induced drag on profitability. In FY’24, we expect MTNN to report a loss of N27.41 billion, materially lower than the N137.02 billion in FY’23, due to a likely tamer currency pressure in 2024. Adjustments to our model translate to a 12-month target price of N240.28 per share and a HOLD recommendation.

The start of 2024 has largely been challenging for Nigerian Breweries Plc (NB), as the material FX devaluation and stubborn inflation dampened profitability in Q1'24. In FY'24, we expect NB to report a loss of N61.32 billion, materially lower than the loss of N106.31 billion in 2023, stemming from higher prices and volume coupled with a tamer currency devaluation. We have a BUY recommendation on the ticket with a 12-month TP of N47.85.

Despite the weak Q1'24 performance, largely driven by the impact of timing of lifting and a lower working interest production of gas from OMLs 4, 38 & 41, we remain optimistic about SEPLAT's ability to achieve production levels of 50.04 thousand barrels of oil equivalents per day (kboepd), above the midpoint of management's 44,000 to 52,000 boepd guidance set for FY'24. Our view is supported by: 

Investors were badly beaten in local equities, as the benchmark index declined by 6.1% and the market capitalization contracted by N3.5 trillion to N55.5 trillion. Consequently, YtD return moderated to 31.36% as of April's end.

In FY’23, ZENITHBANK demonstrated its capability as a strong pure-play bank with hardy earnings growth (+202.3%). Contrary to our earlier views, NII was at the centre stage of gross earnings expansion (+124.0%), displacing the strong contribution (c.55.0%) we saw from NIR in H1’23.