Seplat Plc - Still Cheap Despite Short-Term Drags
- We update our views on Seplat Petroleum Development Company Plc. (Seplat) following release of FY 18 and Q1 19 financial results. We have revised our earnings estimates lower, following (1) reduced tax credit forecast over the horizon period and (2) increase in our estimated cost per boe. A culmination of our adjustments resulted in a reduction of our 2019E EPS to $0.31, compared to our previous estimate of $0.43 and FY 2018 of $0.25.
- Based on the foregoing, we revise our FVE on Seplat lower to N782.15 from N952.8, which still translates to a STRONG BUY rating. Seplat currently trades at a P/E and P/CF of 5.7x and 1.8x, a discount to Bloomberg’s MENA peers of 6.6x and 4.2x, respectively. That said, the ANOH gas project (which we are yet to incorporate in our model) has potential to significantly boost earnings in the medium term, thus, an upside to our estimates. On the flip side, a decline in oil price below $50/bbl. portends a downside risk to our estimates.
- Further in the report, we also give further details on the ANOH gas project as communicated by management during the last conference call.
See attached for full report.
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.