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Deep Dive into Geregu Power FY 2023 Earnings Shows Accelerating Growth

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MoneyCentral’s deep-dive into Geregu Power Plc’s Full Year (FY) 2023 earnings report shows the power firm is accelerating its growth, has a stress free balance sheet, and boosting shareholder returns.

Profit for the period rose 61 percent to NGN24.3 billion, revenue for the power generating company or GENCO increased 74% to NGN83 billion from NGN47.6 billion, and there was a 110% increase in operating Profit from NGN14.8bn to NGN31.1bn per the Financial statement audited by PWC.

Below are the major positives from the all-round solid report that investors should take note of as they are catalysts to propel shares higher in the short to medium term.

Geregu Power Energy Sold jumps 71%

In a sign of more uptime for the power plant and less gas disruptions Geregu Power energy sold increased by 71.2% to N51.79 billion, compared to N30.252 billion in December 2022. This is welcome sign that customers are being supplied power even as the company takes steps to make sure its plants are running optimally through regular repair and maintenance which cost N6.372 billion in 2023.

Total revenue for the period rose 74% to N83 billion.

N15.06bn Payment for Gas Turbine Overhaul

Geregu Power Plc made advance payments of N15.06 billion for the major overhaul of its gas turbine as of December 2023.

The overhaul is scheduled for the first quarter (Q1) of 2024.

As of June 2023, advance payment to Italian firm, Ansaldo Energia, was N8.783bn

In April 2022, Ansaldo Energia signed a three-year contract with Geregu valued at €32m to conduct a major overhaul of the 435 MW Power power plant in Ajaokuta, Kogi State, Nigeria.

The three-year contract included the supply of spare parts which would be entirely manufactured by Ansaldo Energia in Italy, and the maintenance services, which would be performed by its subsidiary Ansaldo Energia Nigeria, based in Lagos.

For Geregu Power, this represents the second major overhaul since the acquisition of the plant by Amperion Power Distribution.

Solid Cash Position

Geregu remained in solid liquidity position as its cash and cash equivalents for the period stood at a healthy N70.256 billion. This was up 36 percent from the Year-end 2022 levels of N51.63 billion.

Geregu earns more interest than it pays, so coverage of interest payments is not a concern.

The firm repaid N37.623 billion in borrowings helping to cut its outstanding term loans by 36.7% to N20.8 billion. The outstanding amounts are N17.575 billion non-current and N3.28 billion current loans.

Dividend

Geregu announced a dividend of NGN20bn proposed for the year ended December 31st 2023 as the First listed entity to release its audited Financial statement for 31st December 2023, is set to reward shareholders handsomely.

A Final Dividend of N8.00 per ordinary share, subject to appropriate withholding tax and approval will be paid to shareholders whose names appear in the Register of Members as at the close of business on the 27th February, 2024.

Earnings Per Share (EPS) up 57.7%

Basic earnings per share, calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of shares outstanding at the period, rose by 57.7% for Geregu Power to N6.42 from N4.02.

Investors usually reward companies growing EPS at such a high rate with an elevated earnings multiple.

Trade Receivables Fall 37.5%

Geregu Powers trade receivables fell by 37.5% in the period a good and healthy sign for the balance sheet as it shows that sales are translating into cash flowing into the company.

Trade receivables which stood at N76.9 billion at the end of 2022, fell to N48 billion in 2023 FY.

Trade receivables represent the total amounts that a company has invoiced to customers for goods and services that it has delivered but for which it has not yet received payment.

Stock Heading to N1,000

Geregu Power stock is up 29.77% year to date and closed trading at N517.80 per share on Tuesday. Analysts expect the stock to hit N1,000 per share sooner than later and these results validate the thesis.



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