Transcorp Spikes to N100bn as Femi Otedola Buys More Shares

Hope for capital gain beckons on shareholders with a flood of ecstasy in the stock market after billionaire Femi Otedola shows interest in Transnational Incorporation Plc (Ticker; Transcorp).

The Otedola’s effect drove bargain hunting on the conglomerate company shares, pushing its market valuation higher by 45% after a long stay at the ebb. The company’s share still trading behind the listing price, making it one of the worst performers in the local exchange.

In the first quarter of 2023, the company suffered large earnings. Profitability slumped to N1.858 billion, more than 63% below record performance in the comparable period in 2022.

The group earnings per share (EPS) declined 50% to 2.58 kobo at the end of the first quarter of the current year from N5.17 12-month earlier amidst uncertainties in the economy.

Last week, Transcorp Plc.’s share became more popular among value hunters trading the highs and the lows in the Nigerian stock market following an official affirmation of Otedola’s strategic investment in the conglomerate.

In what Broadstreet analysts considered as Otedola’s effect, the conglomerate stock market price has gained 45% and there is an expectation that the market will rerate the company’s valuation further.

As confirmed by Transcorp through a disclosure on the Nigerian Exchange on April 20, billionaire investors Otedola placed a large bet on Transcorp by acquisitions of 5.52% of the conglomerate’s outstanding shares via open market transactions.

At the weekend, Otedola raised its shareholding to 6.3%, according to Apt Securities and Funds Limited, with the purchase of 105.5 million shares in addition to 228.4 units through Stanbic IBTC Stockbrokers Limited.

Data from the Nigerian Exchange showed Transcorp Plc’s outstanding shares settled at 40.647 billion, valued at about N100 billion. That takes his entire holding in Transcorp to 6.3 per cent or 2.6 billion shares.

In the first quarter of 2023, Transcorp’s total assets inched to N464.479 billion from N442.702 billion in December 2022 following an increase in debt and equities securities injections.

Its current asset balance inched higher to N112.637 billion from N101.869 billion in December 2022, driven by rising inventories, trade and receivable balances as well as cash and cash equivalent.

Its current liabilities increased by more than N6.7 billion in the period, to N206.962 billion reported at the end of the first quarter in 2023 from N200.147 billion in December last year.

In the first quarter, Transcorp group sales revenue settled at N32.393 billion which was about a 2% increase when compared with N31.389 billion reported in the comparable period in 2022.

The conglomerate company’s profit dropped by more than 63% in the first quarter of 2023 to N1.858 billion from N5.035 billion reported in its financial scorecard submitted to regulator in the first quarter of 2022.

The downward performance was fueled by more than N2.4 billion FX losses, which represents a significant increase when compared with about N505 million loss reported due to foreign financing exposures in 2022.

The conglomerate operates through five key segments including its hospitality, agro-allied, Power, oil and gas and corporate centre.

The hospitality business is made up of its direct subsidiary Transcorp Hotels Plc. (THP) and indirect subsidiaries, Transcorp Hotels Calabar Limited (THC), Transcorp Hotels Ikoyi Limited, Transcorp Hotels Port Harcourt Limited and Aura by Transcorp Hotels. These entities render hospitality.

Agro-allied segment relates to a subsidiary Teragro Commodities Limited. The subsidiary is engaged in the manufacturing/processing of fruit concentrates from fruits from which the Group derives revenue.

The power segment relates to a subsidiary of Transcorp Power Limited (TPL) and TransAfam Power Limited (TAPL). The subsidiary is engaged in the generation of electric power.

Oil & Gas: Two subsidiaries make up the oil & gas segment namely Transcorp Energy Limited and Transcorp OPL 281 Limited. The companies are into the exploration, refining and marketing of petroleum products. The subsidiaries are in the start-up phase and have not started generating revenue

The Corporate Centre segment is the parent Company, Transnational Corporation Plc and the other non-operational subsidiaries. #Transcorp Spikes to N100bn as Femi Otedola Buys More Shares