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Oando Share Price Reaches Two Year High

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  • Oando Share Price Reaches Two Year High

Stocks hit a four-month high earlier this week, lifted by gains in Nigeria’s largest indigenous energy conglomerate, Oando PLC, and improved investor sentiment towards the country’s recession-hit economy. The stock market had gained N117 billion by Tuesday this week to extend a bullish eight-day run, while Oando rose by 131%, its highest level in 18 months.

Analysts at Afrinvest Limited said that the upbeat performance in the equities market was mainly driven by solid Q1 2017 earnings, as well as the knock-on effect of improved foreign exchange liquidity.

The upturn was significantly impacted by gains recorded in medium and large capitalised stocks. Oando, who remained at the top of the gainers list for five straight days led 33 other gainers on Thursday, May 9 including Access Bank, FBN Holdings, Guaranty Trust Bank, Dangote Cement, Nigerian Breweries, Okomu Oil, Zenith Bank and Stanbic IBTC.

Oando’s return to profitability and increase in share price is indicative of the successful implementation of its corporate initiatives focused on Growth across its operations; Deleverage via the divestment of non-performing assets; and Profitability, by focusing on dollar-denominated export earnings.

At the recently concluded Facts Behind the Figures session at the NSE, the ED Business Development, Nigeria Stock Exchange, HauraJalo-Waziri spoke positively to Oando’s FYE 2016 and Q1 2017 financials; also speaking was Oando PLC’s Group Chief Executive, Wale Tinubu “The challenge we faced was the economic and sector downturn, we came clean to the market, created a 5-point plan and successfully delivered on every part of that plan.”

The company deleveraged its balance sheet through the divestment of its upstream services company Oando Energy Services and embarked on the expansion of its retail and gas footprint through a strategic partnership with Helios Investment Partners and Vitol Group to recapitalize its downstream business for US$210 million and the US$115.8 equity buy-in of its Gas and Power business by Helios Investment Partners.

Oando acquired a N108 billion medium-term-loan with 11 Nigerian banks; this medium term 5-year consolidated facility, with a 3 year moratorium on principal, enabled the overall restructure of the Group’s obligations. Today, Oando’s borrowings have significantly reduced by 29% to N225.9 billion in the first quarter of 2017 from N355.4 billion in the first quarter of 2016 and its year to year return increased by 103.62% compared to the comparative period in 2016, quelling concerns of critics.

The successful deployment of the company’s five-pronged strategy is evident in its FYE 2016 results with a N3.5 billion profit-after-tax, a 107% increase from the loss of FYE 2015. A review of Oando’s results further show positive performance across all financial indices, turnover increased by 49% to N569 billion from N382 billion in FYE 2015, while EBITDA increased by 51% to N71.0 billion from N47.0 billion in FYE 2015, boosting investors and shareholders confidence in the company and its management team.

In Q1 2017, Oando’s turnover grew by 116% to N138.4 billion and gross profit by 53% to N13.4 billion compared to the first quarter of 2016. Profit-Before-Tax increased by 207% to N494 million compared to (N461 million) in the first quarter of 2016 while profit-after-tax decreased by 58% to N1.7 billion compared to N4.1 billion in Q1 2016.

“The first quarter earnings underscore our proactive decision to focus on our dollar denominated export businesses. Our resilience is evident in our capacity to grow via a diversified model, and as we continue to chart our deliberate path in this challenging business environment, we look forward to better performance in the quarters to come,” said Tinubu.

With the gradual decline in pipeline disruptions, increased efforts by the government to curb security issues in the Niger Delta, and an upturn in oil prices north of $50, the sector is optimistic of a near term recovery. “The plan is to go from 60,000boedp by the last quarter 2017 to 80,000 in 2018 and hopefully 100,000 by 2020. We also got approval from the president to repair, operate and maintain the Port-Harcourt refinery together with our partner Agip. We plan to increase the refinery capacity from 30% to a 100%, subsequently to 120%” the Group Chief Executive said at the NSE.a

The bullish performance of the NSE further affirms the International Monetary Fund’s (IMF) projection that Nigeria’s economic growth would rise by 0.8% in 2017. The IMF said: “After contracting by 1.5 percent in 2016 because of disruptions in the oil sector coupled with foreign exchange, power, and fuel shortages, output in Nigeria is projected to grow by 0.8 percent in 2017 as a result of a recovery in oil production, continued growth in agriculture, and higher public investment.” This will in turn impact the economic growth of the country, projected to rise to 2.6 percent in 2017 and 3.5 percent in 2018.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigeria’s Dangote Refinery Breaks Into Asian Market with LSSR Shipment

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Aliko Dangote - Investors King

In a historic move, Dangote Refinery is set to ship low-sulfur straight-run fuel oil (LSSR) from Nigeria to Singapore this week, its entry into the Asian market.

This development represents a significant milestone for the refinery, which began operations in January following a $20 billion investment.

According to ship tracking data and market sources, the refinery will initiate a new trade route from Nigeria to Asia, a region that consistently demands low-sulfur fuel oil for ship refueling at Singapore, the world’s largest bunker hub.

The Glencore-chartered vessel, Front Brage, will deliver approximately 124,000 metric tons (787,400 barrels) of LSSR to Singapore, with the shipment expected to arrive on Wednesday.

The Dangote Refinery, with a processing capacity of up to 650,000 barrels of products per day, is poised to become the largest refinery in Africa and Europe once it reaches full capacity.

Since March, the refinery has increased its LSSR exports, primarily sending cargoes to the Americas and Europe, as reported by ship tracking data from Kpler and Vortexa.

“This first shipment to Asia marks a new chapter in Dangote Refinery’s expansion strategy,” said a market analyst. “Breaking into the Asian market underscores the refinery’s growing influence and its capability to meet diverse global fuel demands.”

Market sources suggest that the cargo was redirected to Asia due to weaker demand in Europe. Data from LSEG indicates that the east-west spread for front-month 0.5 percent LSFO, reflecting the price difference between these regions, stayed above $40 per ton this week.

Dangote’s LSSR cargoes are priced against Rotterdam’s 0.5 percent LSFO quotes on a free-on-board basis, although the specific pricing differential for this shipment was not disclosed by market sources.

This pioneering shipment is the beginning of a series of exports to Asia. Another LSSR shipment from the Dangote refinery, containing around 157,000 tons, is expected to reach Singapore in July aboard the vessel Stena Suede, based on ship tracking data.

LSSR is typically blended with other fuels to create low-sulfur fuel oil (LSFO) for bunkering or used as feedstock in various refinery processes.

This export initiative not only diversifies Dangote Refinery’s market reach but also enhances Nigeria’s position in the global energy market.

In February, Dangote began exporting oil products and started purchasing crude oil, mainly from the Nigerian National Petroleum Company (NNPC) Ltd, in December 2023.

The refinery’s successful entry into the Asian market is anticipated to drive further growth and establish new trade relationships, reinforcing its status as a key player in the global oil industry.

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This landmark export not only demonstrates Dangote Refinery’s operational capabilities but also signals Nigeria’s expanding influence in the global energy sector. As the refinery continues to innovate and expand, it is well-positioned to meet the increasing global demand for cleaner, more efficient fuels.

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Nigerian Refiners Pursue Afreximbank Financing Amid $18bn Funding Plan

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Investors in Nigeria’s modular refineries are actively engaging with the African Export-Import Bank (Afreximbank) to secure a portion of the $18 billion fund earmarked by the bank for the development of refineries in Nigeria and other African nations.

This initiative follows the successful financial backing provided by Afreximbank to the $19 billion Dangote Petroleum Refinery, which has commenced production of refined petroleum products for both domestic use and export.

Sources within the modular refining sector confirmed that discussions are underway, with significant interest from Clairgold Refinery and Shinjin Petro Chemicals.

Both companies have initiated talks with Afreximbank officials to source funds for their refinery projects in Nigeria.

However, the modular refinery operators have expressed concerns regarding the feedstock supply for their plants, which is a critical guarantee required by financial institutions for funding.

The operators, represented by the Crude Oil Refinery Owners Association of Nigeria (CORAN), praised Afreximbank’s support for the Dangote Petroleum Refinery during its construction phase.

“We are in active discussions with Afreximbank, although no modular refinery has received financing from the bank yet,” said Eche Idoko, Publicity Secretary of CORAN. “Shinjin Petro Chemicals, which is constructing a 3,000 barrels per day plant, and Clairgold Modular Refineries are among those in talks with Afreximbank and the Bank of Industry. We are hopeful for positive outcomes.”

Afreximbank’s commitment to supporting refinery construction was reiterated at the 2024 Afreximbank annual meetings in Nassau, The Bahamas.

The bank’s president, Benedict Oramah, highlighted the strategic objective to refine 50% of Africa’s crude oil production within the continent.

Oramah emphasized the bank’s role in the successful financing of the Dangote refinery as a model for future projects.

“We are proud to be associated with these transformational projects, which demonstrate the critical role of African capital in financing our development,” Oramah stated. “Our broader strategy includes supporting the construction of a new refinery in Cabinda, Angola, and refurbishing the Port Harcourt refinery in Nigeria. Our goal is to ensure that at least 50% of the crude oil produced in the Gulf of Guinea is refined in Africa.”

Despite the optimism, modular refinery operators have identified several challenges in accessing these funds.

These include securing guarantees related to feedstock supply and completing necessary engineering designs.

“The issue of feedstock remains a significant hurdle, as financiers require assurances on this front,” Idoko noted. “We are optimistic that Afreximbank will address these concerns given their recent declaration to support modular refineries.”

The ongoing discussions come at a time when Nigeria is grappling with its highest inflation rate in 28 years, driven largely by food costs.

The economic strain is exacerbating poverty and reducing the purchasing power of the nation’s 231 million residents, 60% of whom are classified as multidimensionally poor.

Modular refineries, which require significantly less capital investment compared to traditional full-scale refineries, are seen as a viable solution to boost local refining capacity and reduce dependence on imported refined petroleum products.

However, the operators have raised alarms about systemic issues within the oil sector that impede in-country refining, echoing concerns voiced by Aliko Dangote regarding the influence of entrenched interests.

As negotiations with Afreximbank continue, the modular refinery operators remain cautiously optimistic, hoping that the bank’s support will pave the way for enhanced domestic refining capabilities and contribute to Nigeria’s economic resilience.

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From 1999 IPO to AI Titan: Nvidia’s 591,078% Return on Investment

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Nvidia Corp. has transformed from a fledgling chipmaker to the world’s most valuable company, boasting an astronomical total return of 591,078% since its initial public offering (IPO) in 1999.

This unparalleled growth underscores the company’s pivotal role in the technological revolution, particularly in the realms of graphics processing and artificial intelligence (AI).

Nvidia’s ascent to the top of the market culminated on Tuesday, as it unseated Microsoft Corp. to claim the title of the world’s most valuable company, with a market capitalization of $3.34 trillion.

The company, which debuted on the Nasdaq stock exchange at a modest valuation, has added over $2 trillion to its market cap this year alone, driven by surging demand for its cutting-edge AI chips.

The Early Years: Laying the Foundation

When Nvidia launched its IPO in 1999, the tech landscape was vastly different. Intel dominated semiconductors, and Nvidia was a relatively unknown entity.

However, the company’s strategic focus on developing advanced graphics processing units (GPUs) quickly set it apart. By securing deals to supply GPUs for popular video-game consoles like Microsoft’s Xbox and Sony’s PlayStation, Nvidia established itself as a key player in the gaming industry.

Overcoming Challenges: Litigation and Competition

The path to success was not without obstacles. In the early 2000s, Nvidia faced significant challenges, including a major legal dispute with Intel that temporarily pushed it out of a crucial market segment. The stock also endured three separate annual declines of over 50%, testing the resolve of its investors.

However, Nvidia’s commitment to innovation and strategic foresight kept it moving forward. In 2012, the company introduced graphics chips for servers in data centers, opening a new and lucrative market. Although initial sales were slow, this move laid the groundwork for future growth in high-performance computing.

The AI Revolution: A New Era of Growth

Nvidia’s fortunes took a dramatic turn with the advent of AI. The company’s GPUs, initially designed for rendering video game graphics, proved to be exceptionally well-suited for the parallel processing tasks required in AI and machine learning. This versatility positioned Nvidia as a leader in the AI hardware market.

The release of OpenAI’s ChatGPT in late 2022 was a pivotal moment. As interest in AI applications skyrocketed, so did the demand for Nvidia’s chips. The company’s revenue from data centers, driven by AI-related sales, began to eclipse its traditional gaming revenue. By the first quarter of 2023, Nvidia’s earnings report revealed a jaw-dropping surge in sales, far exceeding Wall Street’s expectations.

A Test of Staying Power

Despite its meteoric rise, Nvidia faces ongoing challenges. Sustaining its current market position will require continued innovation and substantial investment in AI infrastructure. The company’s future success hinges on the broader adoption of AI technologies and the ability of its customers to generate significant returns on their investments in AI hardware.

Vision and Leadership: The Jensen Huang Effect

Much of Nvidia’s success can be attributed to the visionary leadership of co-founder and CEO Jensen Huang. His foresight in steering the company towards “accelerated computing” has been instrumental in Nvidia’s dominance. Under Huang’s guidance, Nvidia has consistently been at the forefront of technological advancements, catching every wave of innovation in hardware.

The Road Ahead

As Nvidia continues to navigate the complexities of the global tech market, its story serves as a testament to the power of strategic vision and innovation. With AI set to revolutionize industries from healthcare to automotive, Nvidia’s role as a key enabler of this transformation positions it for continued success.

Investors and analysts alike will be watching closely to see if Nvidia can maintain its lead in the fiercely competitive AI market. If its past performance is any indication, the future looks promising for this once-modest chipmaker turned AI titan.

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