Conoil Rated Hold as Gross Earnings Declined By 15.95%

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Conoil Profit Drops By 67% in H1 2020 Results

Analysts at GTI Research maintained its hold or neutral rating on Conoil Plc, a leading Nigerian independent oil and gas exploration and production company with numerous licenses in the Niger Delta.

The company released its Full Year Audited Financial Statement for the period ended December 31st, 2020 to the investing public on Monday, 31st May 2021.

From the released result, Conoil’s Gross Earnings declined by 15.95%, as they recorded ₦117.47bn in FY’20, compared to ₦139.76bn recorded in FY’19. This was exclusively driven by the decline in the Revenue derived from the company’s domestic sales of petroleum products within the period under consideration. However, the company’s other operating income increased by 30.24% to print at ₦151.74m.

Conoil Profit Drops By 67% in H1 2020 Results

Also, the company experienced a decrease in its expense items, such as; Cost of Sales, Distribution expenses, and Administrative expenses, which dipped by 14.78% (from ₦126.32bn in FY’19 to ₦107.65bn in FY’20), 32.62% (from ₦3.07bn in FY’19 to ₦2.07bn in FY’20), and 21.51% (from ₦6.6bn in FY’19 to ₦5.18bn in FY’20) respectively.

There was also a decrease of 65.36% (from ₦1.11bn in FY’19 to ₦704.57m) in its Finance Cost due to a drop in the Interest on Bank Overdraft.

Also, the company experienced a decrease in its expense items, such as; Cost of Sales, Distribution expenses, and Administrative expenses, which dipped by 14.78% (from ₦126.32bn in FY’19 to ₦107.65bn in FY’20), 32.62% (from ₦3.07bn in FY’19 to ₦2.07bn in FY’20), and 21.51% (from ₦6.6bn in FY’19 to ₦5.18bn in FY’20) respectively.

There was also a decrease of 65.36% (from ₦1.11bn in FY’19 to ₦704.57m) in its Finance Cost due to a drop in the Interest on Bank Overdraft.

However, despite the decline in the aforementioned cost items, the company saw a drop in its PBT and PAT by 24.25% (from ₦2.83bn in FY’19 to ₦2.15bn in FY’20), and 26.98% (from ₦1.97bn in FY’19 to ₦1.44bn in FY’20) respectively, as a result of the impact of the COVID19 pandemic and lockdown measures in the country.

Consequently, the company reported an Earnings-Per-Share (EPS) of ₦2.08k in FY’20 as against ₦2.84k recorded in FY’19. As a result, the Board of Directors (BODs) has proposed a dividend of ₦1.50k/Share which represent a drop of 25%, compared to ₦2.00k paid in FY’19.

In addition, the company’s Current and Cash Ratio increased to 1.55x and 0.21x respectively in FY’20, as against 1.34x and 0.17x in FY’19. With the mentioned performance of the company in 2020, we can only envisage a better performance by the company moving forward, as global oil price continues to rise and the return to normalcy of economic activities in the country.

Therefore, we recommend a HOLD on the stock as against the closing of ₦18.70 on Thursday, 3rd June 2021.