Geregu Spikes to N772.5bn as Otedola Buys More Shares

After it was listed on the Nigerian Exchange in October 2022, Geregu Power Plc continues to add value to shareholders in the last eight months; paid N8 dividend per share in addition to its significant capital gain.

Record from the Nigerian Exchange showed that investors’ interest has been steady; and its chairman, Femi Otedola increases its stake in the company in May after Fund for Export Development in Africa (FEDA) joined the company with a 5% share purchase.

In its audited report, Geregu Power revealed that it has less than a 5% float rate in the local bourse, out of its 2.5 billion outstanding shares, investors could only trade on a small chunk.

Traded at N309, Geregu Power’s market valuation inched to N772.5 billion in eight months after it was listed. From the beginning of the year to date, the company’s shareholders have recorded a 110% gain per share.

It was listed at a valuation of N250 billion on the Nigerian Exchange main board with 2.5 billion ordinary shares at N100 per share under the utilities sector and electric power generation sub-sector in Oct. 2022.

The power generation company is the first to be listed on the main board, a listing segment for well-established companies with demonstrable records of accomplishments.

Though its financial scorecard suggests the company’s earnings performance may be facing pressures, the stock has continued to record solid demand due to positive sentiments about its future earnings performance.

In the last seven trading sessions, the power-generating company’s share price had peaked at N314, according to data from the local bourse. The company estimated its profit to print at N4.84 billion in the second quarter of 2023.

Daily Global News reported that after its earnings release, the company’s share price jerked up to N324 from N304 after Geregu Power forecasted an earnings target for the first half of 2023.

The company paid shareholders N8 per share despite a decline in profitability, and the share has been marked down for dividend payment.

In a regulatory filing, management said between April and June, Geregu Power Plc estimated its profit will print at N4.84 billion from a revenue expectation of N18.176 billion in the period.

It projected less than N262 million as its net finance costs for the three months ending in June following an expectation that its finance income will settle at N2.837 billion against the finance cost estimate of N3.089 billion.

The company expects its cash position to be positive. Cash from its three months operation is expected to be more than N900 million with moderate net cash used for capital projects worth N3 billion, the impact of which is expected to be reduced by inflow from placements.

In its 2022 financial statement submitted to the Nigerian Exchange, the company’s profit fell by more than 50% to N10.171 billion, from N20.550 billion. This followed an apparent decline in activities level.

Geregu’s revenue slumped to N47.619 billion at the end of 2022, a decline of 32.89% when compared with N70.956 billion in the corresponding year in 2021.

The company said in its financial statement that energy sold declined year on year to N30.252 billion, down 33.80% from N45.696 billion in the corresponding period.  Similarly, revenue from capacity charge nosedived to N17.367 billion from N25.260 billion.

On May 8, 2023, Paul Olurotimi Otedola, brother to the majority shareholder; Mr. Olufemi Otedola purchased 300,000 @ N288.9 per share. A day after, Femi Otedola topped up interest with the acquisition of additional 2,823,092 shares at an average price of N290.7 per unit.

The free float of the company as of 31 December 2022 was 111,073,957 shares; representing 4.44% while the majority shareholder, Amperion Power Distribution Limited, controlled 95.56%.

The parent company is owned by Femi Otedola (2,388,922,308), Olawunmi Otedola (2,490 ), and Akin Akinfemiwa (1,245). During the year, the company however sell down 5% to FEDA amidst an increased need for working capital despite bond capital raise.