EUR 56.22 For Business Accounts Only

OANDO PLC 9M'16 - Some improvement in Q3 financials

• OANDO reported a loss after tax of ₦8.9 billion in Q3’16, showing some improvement from the ₦31 billion loss reported in Q2. The performance was driven by improved revenue, OPEX containment, reduced interest charge and lower net FX losses. Revenue for the quarter came in at ₦111.7 billion, up from ₦88.5 billion reported in Q2 and raising the cumulative 9 months figure to ₦228 billion (after adjusting for discontinued businesses). The cumulative loss for the year now stands at ₦35.9 billion compared to loss of ₦47.6 billion reported in the corresponding period of 2015.
• Following this 9M’16 result, we raise our revenue estimate to ₦302 billion (Previous: ₦212 billion) to accommodate the revenue (up until sale) of the discontinued businesses. With accumulated losses over the last 2 years, we think improvement of operations and reduction of debt are critical to OANDO’s performance going forward. We believe management is taking the right steps with the targeted sale of businesses and debt reduction, but will like to see greatly improved financial performance to justify these moves. We expect OANDO to continue to improve quarterly performance with improved production and complement from crude trading. We estimate OANDO should turn a profit in Q4 and cut FY’16 net loss to ₦31 billion. After adjusting for the sold businesses and including crude trading, our target price is raised to ₦8.81 (Previous: ₦8.26).