Rating: Hold
Current Market Price: N213.90

Latest Dividend: N8.25
Year High: N213.90
Year Low: N133.20
Fair Value: N258.53
Equity Analyst:  Tunde Segun Jeariogbe

Introduction/Key Financials

See below the financial analysis and ratios.

• In this report, we have observed the three months financial statistics of 11 Plc (formerly Mobil Oil Plc), compared same with the figures released in the corresponding period of 2019 for proper growth analysis.
• Meanwhile, for projections and valuations analysis, we explored the full-year financial numbers for the year ended 31^st December, 2019, along with other past full-year records. Major risks put into consideration include the various security challenges currently plaguing the company’s lines of business. These include:
• The activities of insurgents in the North East as well as conflicts between farmers and herdsmen that have resulted in wanton destruction of lives and property across the country, crisis of separatist agitations in the South East, and militancy in the South-South zones of the country.
• Generally, the figures released for the first quarter, 2020 are below those of the similar quarter of 2019.

Company figures

• The management of 11 Plc achieved 17.81% growth in its revenue within the two periods compared in this report. The current turnover stood at N54.27 billion as against N46.07 billion in the corresponding quarter.
• Cost of Sales appreciated by 22.15% to N51.82 billion, compared to the N42.42 billion reported at the end of 2019first quarter business session.
• Operating Profit on the other hand is estimated at N1.85 billion, down from the N3.17 billion achieved in the corresponding quarter of 2019.
• Operating Expenses grew by marginal 9.96% at the current N2.65 billion, compared to N2.48 billion.
• As noted above, a total of N27.25 million was reported as Finance Cost through the three months reported, which is far below the N177.33 million spent in similar period.
• Profit before Tax dipped by 36.58% to N1.91 billion, as against N3.01 billion in the 2019 first quarter result.

Having made allowance for the income tax during the period, the management of 11 Plc reported N1.28 billion as Profit for the period, which is 37.02% below the N2.03 billion made at the end of the first three (3) months of 2019.

• Current Assets stood below that of the corresponding period of last year by a marginal 4.92%, as it is currently valued at N46.13 billion against N48.52 billion.
• Non-Current Assets equally appreciated by 54.40% to N50.76 billion, up from N32.87 billion in the 2019 first quarter.
• Current Liabilities on the other hand grew by 39.51%, from the previously reported N28.75 billion to N40.11 billion.
• Non-Current Liabilities inched up to N16.14 billion, same as 4.08% below the previously reported N16.83 billion.
• On the strength of the above, the estimated Net Assets is N40.96 billion, which is 14.39% above the N35.81 billion estimated in the similar period of 2019.
• Retained Earnings equally builds by 14.47%, as it is currently valued at N40.77 billion against N35.61 billion.

Financial Strength/Solvency Ratios

• 11 Plc’s Debt Ratio is fair enough at 58.06%, which is a marginal growth from the 56.00x estimated in the 2019 first-quarter earnings.
• Nevertheless, total reported Debt at the end of the period is higher than the Equity. We have estimated Total Debt to Equity at 137.34% as against 127.29%.
• We also estimated Equity Ratio at 42.28%, down from 44.00% in 2019 first quarter. This implies, that the company recorded a marginal drop in equity over the company assets.
• Due to the high price of 11 Plc shares on the exchange and the low shares outstanding of the company, patronage seems weak. Thus we have estimated a beta value of 0.48x lower than the industry average of 0.70x.

Profitability Ratios

• EBITDA margin estimated for the period stood at 3.42%, this is the same as 50.42% below the 6.90% estimated in 2019.
• In the same trend, Pre-tax Margin dropped by 46.17% to the current estimate of 3.53% against 6.55%, this is a confirmation of a drop in profitability within the compared periods.
• 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 92.08% to 95.47%.
• Return on Equity is currently estimated at 3.14%, lower than the 5.70% in 2019 first quarter.

Efficiency Ratios

• Measuring management’s efficiency we have tested few efficiency ratios.
• Operating Expenses to Turnover Ratio was confirmed at 4.89%, the same as 9.21% efficiency improvement from the previous estimate of 5.39%.
• Turnover to Total Assets was also considered. Thus, the company achieved a marginal 1.03% improved efficiency, having moved from 56.60% to 56.02%
• The Working Capital Turnover of 11 Plc could be considered fair when compared to the estimate from industry peers. Note also, that the ratio grew from 2.33x to 9.02x.
• Based on the general standard, 11 Plc’s Working Capital Ratio is Good at 1.15x, representing an improvement over the 1.69x estimated in the previous first-quarter earnings. This is a confirmation that it will not encounter difficulties in settling its current liabilities.

Investment/Valuation Ratios

• Compared to preceding the first quarter, the management of 11 Plc earned N3.56 per unit, which is a 37.02% drop from the N5.66 first-quarter earnings achieved in 2019.
• Since the price of 11 Plc on the exchange floor was fairly stable over the two periods, the first-quarter adjusted PE-Ratio increased to 60.04x from 30.94x.
• Similarly, it is estimated that the first-quarter earnings yielded 1.67% of the price on the exchange as at the time the result was made available to the investing public.
• Presently, the estimated first-quarter Book Value per share of 11 Plc is N113.61, the same as 14.39% growth from the N99.32 of last year. We note that the Book Value is far below both the current market price and our fair value for 11 Plc.
• Confirming the above is the estimated Price to Book Value that at above unity.
• See the table below for details.

Valuation

As noted above, having considered the financial statements of 11 Plc, with conservative projections and good consideration of visible risk elements, we have fairly priced each unit of 11 Plc share price at N258.53 and have rated it a Hold.