CardinalStone Partners has revised its 12-month target price for Transnational Corp Plc (NGX: TRANSCORP) stock upward to ₦69.71 from ₦67.38, maintaining a BUY recommendation on the counter as the firm’s power segment shows significant operational turnaround following TransAfam Power’s capacity ramp-up.
TransAfam Power turnaround
The revision reflects a more sanguine five-year outlook underpinned by TransAfam Power’s operational turnaround. Generation capacity increased to 102MW from 53MW in FY’24, translating to a strong revenue contribution of ₦85.7 billion to total power revenues of ₦484.0 billion in FY’25.
Management has outlined a near-term generation capacity target of 234MW for TransAfam Power, with peak generation capacity projected at 345MW. CardinalStone projects power revenue should hit ₦566.9 billion in FY’26 and grow to ₦665.5 billion in FY’27.
The turnaround stems from improved gas supply from key partners including Heirs Energies Limited, alongside targeted operational optimization involving the relocation of four turbines from Afam to Ughelli to improve gas accessibility.
Q1’26 headwinds
However, CardinalStone notes weaker-than-expected revenue of ₦125.1 billion (-12.9% YoY) in Q1’26, attributed to transmission infrastructure vandalism and gas supply disruptions that limited power generation capacity to 454MW. Although management is working with key stakeholders to address these issues, the firm maintains a conservative position on FY’26 revenue.
Upside risks
The success of the Presidential Power Debt Programme remains a key upside risk. The first tranche raised ₦501.0 billion, with cash disbursements to owed Generation Companies still ongoing. The government also advanced a royalty-offset mechanism to address legacy debts owed to gas suppliers, improving liquidity across the power value chain.
Hospitality strength
CardinalStone maintains a constructive outlook for hospitality revenues, complemented by management’s renewed push for non-room revenue streams.
Transcorp Hotels signed a leasing agreement with SORA Restaurant to boost food & beverage revenues. The 5,000-capacity event centre will deliver its first full-year contribution to earnings in 2026, having hosted the 32nd Afreximbank Annual Meetings with over 4,000 delegates from 80 nations in FY’25.
Outlook
Supported by sustained capacity expansion driven by the group’s integrated energy strategy, CardinalStone maintains an increasingly constructive view on TRANSCORP’s growth and earnings trajectory. The TransAfam turnaround has emerged as a key driver of incremental earnings over the forecast horizon.
The 51.5% upside to the ₦69.71 target price reflects confidence in the power segment’s capacity expansion and the group’s diversified revenue streams across power and hospitality. However, investors should monitor NBET receivables impairments, which could swing EBIT, PBT and PAT margins if worse than expected. Gas supply reliability remains the critical execution risk for the power segment’s growth sustainability.
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