Finance

Geregu Power Stock Poised for Explosive Growth as Positive Catalysts Drive Fundamentals

Geregu Power Surges to New Heights, Positioned for Breakthrough Growth in Energy Sector

Published

3 months ago

July 17, 2023

Geregu Power, a prominent player in the energy industry, appears to be on the verge of a significant breakthrough as it consolidates its position and exhibits promising technical patterns.

Market experts believe that the stock’s current price may just be marking time before an explosive upward surge, fueled by a series of positive catalysts that are set to drive the company’s long-term growth.

The second-quarter financial statement released by Geregu on Friday revealed a remarkable 34 percent increase in revenue from energy sales and capacity charges.

The company’s stock, traded on the NGX, experienced a notable 6.45 percent surge, reaching a new 52-week high of N330 per share. This positive development was met with great enthusiasm by investors, particularly in light of Geregu’s recent partnership announcement involving the Lagos State Government, the State Grid Corporation of China, and the African Development Bank (AfDB).

The company’s unaudited financial statement showed Geregu Power recorded revenue of N20.465 billion during the three-month period ending in June 2023, representing a 48.5 percent increase.

Also, Geregu reduced its receivables from related party Amperion Power Distribution Company Ltd to a mere N6.9 billion, while receiving a total payment of N31.58 billion. This resulted in an overall decline of trade receivables by 22.4 percent, settling at N59.633 billion.

In terms of liquidity, Geregu remained in a robust position with cash and cash equivalents amounting to a healthy N44.3 billion while the company’s interest earnings exceeded its interest payments, alleviating concerns over interest payment coverage.

During the quarter, Geregu also demonstrated its commitment to financial stability by repaying N35.82 billion in long-term borrowings.

This repayment led to a significant 47 percent reduction in outstanding term loans, which now stand at N17.363 billion. The outstanding amount represents a N17 billion facility provided by First Bank Ltd at a 20 percent interest rate, serving to augment working capital and finance major overhaul projects.

One of the major highlights for Geregu during this period was its collaboration with the State Grid Corporation of China, the largest electricity company globally, and the Lagos State Government (LASG).

The partnership aimed to enhance Geregu’s transmission capacity by approximately 3,000MW through a combination of upgrades and new developments in the short-to-medium term. Acting as the lead arranger and financier, the African Development Bank played a crucial role in facilitating this partnership.

The objective of the collaboration is to ensure stable and affordable electricity supply to residents of Lagos State, with long-term plans of establishing a state grid with a capacity exceeding 10,000MW.

This quick win initiative will enable immediate distribution and transmission upgrades, providing a minimum of 3,000MW, a significant improvement compared to the current 500MW supply.

Geregu Power’s market capitalization currently stands at an impressive N825 billion. Year-to-date, the stock has soared by an astonishing 121 percent, as traders continue to absorb the positive catalysts driving the firm’s earnings potential.

Market analysts and speculators anticipate further growth, with some eyeing the N1,000 per share milestone, largely due to positive announcements regarding public-private partnerships (PPP) and the company’s future acquisition plans, coupled with the favorable stance of the new government led by President Bola Tinubu in Abuja, which aims to open up the power sector to private sector players like Geregu, add further momentum to the company’s prospects.

“Investors and other speculators are looking to buy the shares, which could push it much higher towards the N1,000 per share level, especially in light of the positive announcements on PPP as well as future plans of the company in terms of planned acquisitions. There is also the new Government in Abuja under President Bola Tinubu who will further open up the power sector to private sector players like Geregu,” explained a buy-side analyst at a major investment firm.

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Samed Olukoya

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

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Finance

Nigeria’s Tax Revolution: Shifting Burden to the Wealthy and Streamlining the System

Published

3 days ago

September 29, 2023

Samed Olukoya

President Bola Tinubu’s administration is set to revolutionize the nation’s tax system.

The ambitious plan seeks to redistribute the tax burden, making the wealthy pay their fair share while stimulating business growth through corporate tax cuts.

The cornerstone of this tax reform initiative is a push to increase Nigeria’s tax revenue from 11% to 18% of Gross Domestic Product (GDP) within three years.

Spearheading this transformation is Taiwo Oyedele, who leads a panel appointed by President Tinubu.

Oyedele articulated the primary objectives of the reform, saying “We aim to make the rich pay what is fair and protect those in poverty.”

This move is crucial in a country where extreme wealth disparities persist, with only a small fraction of the population enjoying immense riches.

Notably, the plan also includes a reduction in the corporate income tax rate, which currently stands at an effective rate of over 40%.

The aim is to benchmark this rate against Nigeria’s international peers, fostering a more business-friendly environment.

Nigeria’s tax system has long been plagued by complexity, with nearly 70 different taxes and overlapping jurisdictions.

The reform initiative seeks to simplify this by streamlining tax structures and drastically reducing the number of taxes to single digits.

Also, a tax amnesty is under consideration, aimed at encouraging tax compliance and offering relief for past debts. The hope is that by fostering transparency and accountability, more Nigerians will willingly contribute to the country’s fiscal health.

In a nation where government debt has surged dramatically in recent years, this tax revolution is seen as a pivotal step towards reducing the deficit and ensuring sustainable economic growth.

Finance

Federal Government’s $3 Billion Rescue Plan to Bolster Naira Stability

Published

3 days ago

September 29, 2023

Samed Olukoya

The National Economic Council (NEC) has confirmed the deployment of the $3 billion emergency loan-for-crude oil, secured by the Federal Government in August, for the stabilization of the national currency.

The naira’s value has been under siege, with fluctuations in the Investors & Exporters’ window and a parallel market rate that briefly hit N1000/$ this month.

Addressing reporters following the 136th NEC meeting at the Aso Rock Presidential Villa, Nasarawa State Governor Abdullahi Sule expressed confidence in the plan.

He stated, “With the plan that will come out and with all these items that have been listed on the improvement of revenue, the $3 billion shall be useful to us down the line.”

The emergency loan, secured from Afrexim Bank, was initially intended to relieve pressure on the naira, facilitate the settlement of taxes and royalties in advance, and provide the Federal Government with vital dollar liquidity for naira stabilization.

The recent nomination of Olayemi Cardoso as the new Central Bank of Nigeria (CBN) governor by President Bola Tinubu has already shown promise.

The naira experienced a boost in the black market, strengthening by N10 against the dollar, closing at N990/$1.

Governor Sule indicated that the implementation of the intervention would require careful planning and time.

He emphasized the need for the new CBN team to devise effective strategies. In response to inquiries about a supplementary budget, Sule stated that there is no immediate need for one, as the situation does not warrant it.

As Nigeria’s economic landscape faces evolving challenges, the NEC’s decision to harness the $3 billion loan offers a glimmer of hope for a more stable naira in the near future.

Finance

Former FIRS Chairman Muhammad Nami Accused of Controversial N6 Billion Payments After Sudden Exit

Documents reveal questionable approvals and alleged backdating, raising concerns over financial misconduct

Published

4 days ago

September 28, 2023

Samed Olukoya

Muhammad Nami, the former chairman of the Federal Inland Revenue Service (FIRS), is under scrutiny for approving payments totaling N6 billion to contractors and consultants just days after his abrupt removal from office.

Documents obtained by TheCable shed light on these controversial transactions.

Nami, who was succeeded by Zacchaeus Adedeji, greenlit the payments on September 16, two days after his removal on September 14.

Sources privy to the situation, although not authorized to speak publicly, claim that Nami directed staff to work over the weekend to finalize these transactions.

Additionally, files were allegedly moved from the FIRS headquarters to his residence, where they were purportedly “backdated and signed.”

Perhaps the most eyebrow-raising revelation is that Nami transferred approximately N5 billion from the FIRS account to the Joint Tax Board (JTB) without apparent justification.

It is reported that the FIRS director of finance and accounts reluctantly approved these payments after warning Nami about potential repercussions.

Nami allegedly reassured his subordinates that the incoming FIRS chairman would remain oblivious to these approvals.

Also, documents indicate that Nami approved significant payments, including N1.4 billion for a ‘Business Case for Strategic Leadership’ retreat, N250 million for FIRS Data Mining Management and Analytics in Taxation Course, and N221 million for a ‘Skill Development and Management Improvement Workshop Training.’

Curiously, Nami also appropriated over N81 million for a study visit to the Inland Revenue of Malaysia.

The FIRS, when contacted for comment, remained tight-lipped about the situation. Spokesperson Abdullahi Ismaila stated that he had no knowledge of the payments, while Tobi Johannes, Nami’s former media aide, distanced himself from the matter, emphasizing that his role ceased when Nami’s tenure ended.

These revelations have ignited concerns about financial misconduct within the FIRS and have raised questions about the oversight and accountability of government agencies. The full extent of these allegations is yet to be determined as investigations into the payments and their legitimacy continue.