NIGERIAN business:Transcorp SHARE Mask

Transcorp analysis by Jonathan Oladeji WordPress articles

Disclaimer: This author of this article does not take responsibility for any decision made by the reader. The article is a simple common sense provision of facts gathered from various online sources such as:
transcorpnigeria.com
Nse.com
Recommended links:
http://businessdayonline.com/2013/11/teragro-achieves-global-food-safety-certification/
http://investor.transcorpnigeria.com/news/40/
Other Business Writers who have aired opinions of caution to shareholders:
http://www.proshareng.com/articles/5/Transcorp-Nigeria-Plc-and-Tom-Iseghohi
“Transcorp in some ways is reminiscent of Nigeria where instability, leadership challenges, incoherence of governance standards & financial strategy and the visible lack of disciplined execution fritter away a great deal of the country’s” opportunity and momentum.
“Transcorp like any other business has issues and challenges and it should tackle them head-on using the best practice model”
“In its place he can put actual product and services on the table as evidence of the firm’s relevance and value-chain being used by real people in the market which might actually help people to appreciate the possibilities he seeks to visualise. The Transcorp Hilton Hotel at Abuja might, at this moment, represent the only flagship of the company with revenue growth potentials which can be touted”
http://theeconomyng.com/news39.html
thereby turning it into a bullying mega corporation.
For instance, shortly after inception, Transcorp was granted concessions to build a Lekki Free Port zone in Lagos, an Independent Power Plant and a cassava processing facility. It also bulldozed its way into buying NITEL, the NICON Noga (now Transcorp) Hilton Hotel in Abuja. This generated much fury in some quarters with many analysts describing it as an investment cartel by strong political and business cliques”.

“Everywhere Transcorp shows up, other competitors are immediately placed at a disadvantage”, Dr. Reuben Abati, Chairman Editorial Board of The Guardian newspaper said.

“In two years, it has been pushed into virtually every major area of the economy, without any structured attempt to assess its true capacity. A mega corporation such as Transcorp should build capacity, confidence and competence before it begins to expand, what we have seen with Transcorp is acquisitiveness made possible by access to power”,
Laying out the Facts
Transcorp Announces Profit before Tax of N5.1bn for the Nine Month Period ended September 30, 2013

Transnational Corporation of Nigeria Plc (Transcorp) has announced an impressive Profit Before Tax (“PBT”) of N5.1bn for the third quarter ended September 30, 2013 which represents 130% of its full year 2012 PBT. Commenting on the results, the President and Chief Executive Officer; Transcorp, Mr. Obinna Ufudo said: We are pleased to present our third quarter results which follow our now established trend of steady improvement.
Gross earnings for the Group stood at N16.1bn which represents 102% of full year 2012 earnings of N15.8bn
Group PBT for the period was N5.1bn representing 30% increase over PBT for full year 2012 of N3.9bn
• Total assets for the Group grew by 53% from N75.6bn for full year 2012 to N115.8bn as at the third quarter ended September 2013.
*Note:
1. 2% increase in GROSS earning, where are the NET figures? This is especially an important figure for all shareholders and stakeholders, this figure tells you how much in total your investment share could have probably earned for you. The earning growth rate seems to be a 2% from the information on transcorp report. That seems a bit slow to me!!
2. Who still uses PBT (PROFIT BEFORE TAX)? We all need to be clear on how much is left in our business profit so that next time we want to buy Transcorp or the likes we can be sure how much profit they are capable of earning for us.
3. The assets should not fool ME, they are the value of all the assets acquired by Transcorp which is supposed to at least in a way account for the value of capital raised in shares. In a way this shows a strong capital base for Transcorp hence investors should be rested in the thought that at least there is some rock solid backbone for the shareholdings.
2013-02-21
+Transcorp, recently dipped into the just emerging privatized Nigerian power sector by successfully bidding for the Ughelli power plant in the Delta. One of the recent additions to the total asset as mentioned above.
Evidently transcorp is either hoping to thrive on raising the dead or pooling investor’s funds as capital base for investments that are yet in view and not yet even yielding. We have our turn-around strategy in place, our US based partners Symbion Power and GE are on board, and within the next decade we will facilitate the generation of 10,000MW of additional power to Nigerian households.” We don’t debate that they will give Nigeria power but what is the future for returns like? Any evidence that power sector is changing in terms of business profit or efficient management?
More Facts
2013-06-24
the successful rebranding of Transcorp Hotels Calabar (previously Transcorp Metropolitan Hotel) as well as other remarkable achievements recorded in its business focus areas which continue to position the company as a world-class conglomerate committed to creating value for its stakeholders. ‘We are happy to be an integral part of the efforts being made towards the transformation of the Nigerian power sector, ultimately leading to an improved life for all Nigerians.
During the year, Transcorp led a consortium that submitted the most financially and technically competitive bid for the acquisition of Ughelli Power Plc under the Federal Government’s on-going power sector reforms and privatization programme. An initial deposit of USD75million has already been made.
Teragro Commodities Limited, our agribusiness subsidiary while planning to expand its juice manufacturing capacity is considering other emerging opportunities in the agricultural value chain’. In his review of the 2012 financial statements, Obinna Ufudo, the President/CEO of Transcorp attributed the impressive financial success recorded by the company to the focused execution of the company’s redefined corporate strategy of diversifying its income streams as well as effective cost optimization, risk management and control measures adopted by the company.
According to this link http://m.news24.com/nigeria/Business/News/Investments-push-Transcorp-shares-up-20131118
Further significant progress was shown with the signing of an agreement with Hilton Worldwide to commence the development of a 300 room five-star hotel in Ikoyi, Lagos.

This project will commence in the first quarter of 2014 and will be completed in 30 months.

The hotel is the first of eight new internationally-branded hotels Transcorp plans to build over the next few years.

Transcorp has also completed the acquisition of a site in Port Harcourt for the development of another 300 room five star hotel. The company’s flagship hotel brand, the Transcorp Hilton in Abuja is also undergoing an upgrade.

He said Transcorp’s existing oil block, OPL 281, will begin production before the end of 2014.
*More emerging businesses than established return yielding ventures!!
Profit growth looks good anyways
2013 – N5.1billion
2012 – N2.5billion nearly tripled that of prior year increasing by N1.6 billion and representing a growth of 167% over year 2011.
2011 – N0.9billion
2013-08-22
Transcorp makes full payment for $300million Ughelli Power Plant

Lagos, Nigeria. –August 21, 2013 – Transcorp Ughelli Power Limited (TUPL), a subsidiary of Transnational Corporation of Nigeria Plc (Transcorp) today announced the payment to the Bureau of Public Enterprises (BPE) of $225million, representing 75 per cent of the $300million bid price for the 972 mega watts capacity Ughelli Power Plant. A full payment thus achieved, investors should expect less returns within the next few months as more funds will be turned into the overhaul of the plant and the above listed new acquisitions.
*Acquisitions, Expansions, Overhauls seem to be a common trend in the asset base of Transcorp and although this is evidence of investment potential, in other words the business cycle is in its early life and thus in a sensitive state, investors should take precautions and be more informed before rushing into buy or sell decisions.
*Figure 1 below gives me another reason for concern.
Comparing Zenith Volume of deals with the value we can see that value per share holding is 1269209592.71/58899011= 21
While for Transcorp 1223483128.74/275354217 = 4
Checking with Skye bank 105875053.54/25449749 = 4!
Despite the fact that more deals or sales in lay language were made on Transcorp your value per share unit traded is not different from that of skye bank at the bottom of the chart.

Transcorp analysis by Jonathan Oladeji WordPress articles