MOBIL Q1'18 earnings - Strong start to FY18 ahead of estimates
Strong start to FY’18, ahead of estimates
11 PLC (Formerly Mobil Oil Nigeria) reported a PAT of ₦2.8 billion in its recently released Q1’18 results, a significant rise from the ₦13 million reported in Q1’17 and higher than our ₦2.2 billion estimate. The decent result was driven by a strong y/y Revenue performance (+79% y/y) and continued resilience in Other Income from its Real Estate Business (+38% y/y), both beating our estimates. The y/y bottom line performance was further boosted by the normalization of the one-off expense (₦2.2 billion) that pressured Q1’17 earnings. Notably, Revenue over the 3-month period was the strongest Q1 on record, whilst bottom-line was the strongest since 2014.
In line with our outlook for the downstream segment, we expect MOBIL to remain largely dependent on NNPC for PMS supplies in 2018 as landing cost remains above the regulated pump-price. Meanwhile, we revise our FY’18 Revenue estimate higher to ₦178 billion (Previous: ₦130 billion) to reflect Q1’18 run rate, further supported by increased confidence in management to deliver on planned investment in the deregulated products space. We have also revised our OPEX ratio lower to 7.2% (Previous: 8.6%) following its stickiness around c.7% over the last four consecutive quarters. Coupled with income from MOBIL’s Investment Properties which we expect to remain resilient, we revise our FY’18 EBIT to ₦14.9 billion (Previous estimate: ₦12.8 billion). Overall, we revise our FY’18 PAT estimate to ₦10.3 billion (Previous: ₦8.9 billion), and our target price to ₦258.54 (Previous: ₦233.22).
Exxon Mobil operates or markets products in United States and other countries through its divisions and affiliated companies. The company's business involves exploration for, and production of, crude oil and natural gas and manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and other products. In United States, the company's development activities are focused on the onshore United States, in the Permian Basin of West Texas and New Mexico and the Bakken oil play in North Dakota. Gas development activities are also focused on the Marcellus Shale of Pennsylvania and West Virginia, the Utica Shale of Ohio and the Haynesville Shale of East Texas and Louisiana.
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