Company: 11 PLC. (Formerly Mobil Oil Nigeria Plc)
Rating: Hold
Current Market Price: N153.5
Latest Dividend: N8.25
Year High: N188
Year Low: N153.5
Fair Value: N165.09
Equity Analyst: Tunde Segun Jeariogbe

Introduction/Key Financials
• In this report, we have observed the half-year financial statistics of 11 Plc (formerly Mobil Oil Plc), compared the same with the figures released in the corresponding quarter of 2018 for proper growth analysis.
• Meanwhile, for projections and valuation analyses, we explored the full-year financial numbers for the full-year business session for the year ended 31st December 2018. Major risks put into consideration include the various security challenges currently ruling the company’s lines of business, including:
I. Activities of insurgents in the North-East, as well as conflict between farmers and herdsmen, which resulted in wanton destruction of lives and property across the country.
II. Crisis of separatist agitation in the South-East.
III. Militancy in the South-South geo-political zone.
• The company does not have any direct debt. In fact, as at the end of the period, the overdraft column is empty. Nevertheless, a conclusive Finance Cost to the tune of N249.88 million was reported at the end of the period, as against N3.27 million in the corresponding period.
• On the strength of the above, one can conclude investors’ good standing in the company, safe for the major risk noted above. Also, note that major items in the liabilities column of the half-year report are Trade & Other Payables and Deferred Income.

Company Figures
• The management of 11 Plc achieved 8.02% revenue growth within the two periods compared in this report. The current Turnover stood at N92.80 billion as against the previous N85.91 billion.
• Cost of Sales appreciated by 11.37% to N85.38 billion, compared to the N76.56 billion reported at the end of the 2018 half-year business session.
• Operating Profit, on the other hand, is estimated at about N6.38 billion, down from the N7.76 billion achieved in the corresponding quarter of 2018.
• Operating Expenses adjusted down by 17.77% to N5.20 billion, compared to N5.98 billion.
• As noted above, a total of N249.88 million was reported as Finance Cost through the six months reported, this is far more than the N7.61 million used in the previous period.
• Profit before Tax dipped by 23.24% to N6.18 billion, compared to N8.05 billion in 2018 half-year result.
• After making allowance for income tax for the period, the management of 11 Plc reported N4.17 billion as Profit for the period, which is 23.41% above the N5.44 billion made at the end of the first six of 2018.

Company Figures
• The management of 11 Plc achieved 8.02% revenue growth within the two periods compared in this report. The current Turnover stood at N92.80 billion as against the previous N85.91 billion.
• Cost of Sales appreciated by 11.37% to N85.38 billion, compared to the N76.56 billion reported at the end of the 2018 half-year business session.
• Operating Profit, on the other hand, is estimated at about N6.38 billion, down from the N7.76 billion achieved in the corresponding quarter of 2018.
• Operating Expenses adjusted down by 17.77% to N5.20 billion, compared to N5.98 billion.
• As noted above, a total of N249.88 million was reported as Finance Cost through the six months reported, this is far more than the N7.61 million used in the similar period.
• Profit before Tax dipped by 23.24% to N6.18 billion, compared to N8.05 billion in 2018 half-year result.
• After making allowance for income tax for the period, the management of 11 Plc reported N4.17 billion as Profit for the period, which is 23.41% above the N5.44 billion made at the end of the first six of 2018.

• Current Assets build above the corresponding period by a marginal 1.28%, which is currently valued at N36.98 billion against N36.52 billion.
• Non-Current Assets equally inched north by 1.78% to N37.06 billion, as against the 2018 half-year value of N36.41 billion.
• Current Liabilities, on the other hand, dipped marginally by 6% from the previously reported N27.64 billion to N25.98 billion.
• Non-Current Liabilities dropped to N13.42 billion, same as 12.66% below the previously reported N15.36 billion.
• On the strength of the above, the estimated Net Asset is N34.97 billion, representing 16.87% above the N29.92 billion estimate in the similar period of 2018.
• Retained Earnings equally build by 16.98%, as it is currently valued at N34.77 billion against N29.72 billion.

Financial Strength/Solvency Ratios
• 11 Plc’s Debt Ratio is fair enough at 0.53x, this is impressive when we consider the fact that it adjusted from the 0.59x estimated in the 2018 half-year earnings.
• Nevertheless, total reported Debt at the end of the period is confirmed higher than the Equity. We have estimated Total Debt to Equity at 1.13x as against the previous 1.44x. Please understand that most of the debts in the books of 11 Plc do not attract interest since Trade & Other Payables and Deferred Income dominated the liability column.
• We also estimated Equity Ratio at 0.47x up from the 0.41x in 2018 half-year. This implies growth in equity over the company assets, and that equity is worth most of the company’s assets.
• Due to the high price of 11 Plc shares on the floor of the Nigerian Stock Exchange (NSE) and the low share outstanding of the company, patronage seems weak, thus we have estimated a beta value of 0.21x lower than the industrial average of 0.70x.

Profitability Ratios
• EBITDA margin estimated for the period stood at 6.88%, this is same as 23.88% below the 9.04% estimated in 2018.
• In the same trend, Pre-tax Margin dropped by 28.95% to the current estimate of 6.67%, as against the previous 9.38%, confirming a drop in profitability within the compared period.
• Effective Tax Rate was stable through the period as shown in the table below.
• Due to various business challenges and investment models, the Cost of Sales Ratio remains high. The Ratio stepped up from the previously estimated 89.12% to 91.88%.
• Return on Equity is currently estimated at 11.39% lower than the18.21% in 2018.

Efficiency Ratios
• Measuring management efficiency, we have tested a few efficiency ratios.
• Operating Expenses to Turnover Ratio was confirmed at 5.61%, a 19.48% efficiency improvement from the previous estimate of 6.97%.
• Turnover to Total Assets was also considered. Thus, the company achieved 6.40% improved efficiency, after moving from 117.79% to N125.33%.
• The Working Capital Turnover of 11 Plc can be considered fair when compared to the numbers from industry peers. Please note that the ratio dropped from 9.68x to 8.44x
• Based on the general standard, 11 Plc’s Working Capital Ratio is Good at 1.42x, an improvement over the 1.32x estimated in the previous half-year earnings. This is a confirmation that it will not face difficulty in settling its current liabilities. Perhaps, this is the reason why it has high Deferred Income.

Investment/Valuation Ratios
• Compared to the last half-year, the management of 11 Plc earned N11.57 per share, which is a 23.41% drop from the N15.11 half-year earnings achieved in 2018.
• Since the price of 11 Plc on the exchange was fairly stable during the two periods compared in this report, the half-year adjusted Price Earnings ratio increased to 13.65x from 11.91x.
• Similarly, the half-year earnings are estimated to have yielded 7.32% of the price of 11 Plc on the floor of the exchange as at the time the result was made available to the investing public.
• Presently, the estimated half-year Book Value of 11 Plc per share of the company stood at N96.98, same as 16.87% over the N82.98 of last year. Please note that the Book Value stood far below both the current market price and our fair value for the company.
• Confirming the above is the estimated Price to Book Value that stood above unity.
• See the table below for details.

Valuation
As noted above, having considered the financial standing of 11 Plc, with conservative projections and good considerations of visible risk elements, we have fairly priced each unit of 11 Plc share price at N165.09 and have rated it a Hold.