Aradel Holdings Plc recently released its Unaudited Financial Statements (UFS) for the twelve months ended 31 December (12M ‘24) 2024 to the market. Sales revenue rises by 162.7% y/y.
A close analysis of the results showed that Revenue (top line) rose sharply by 162.7% year-on-year (y/y) to settle at ₦581.02 billion, compared to the number achieved in 12M ‘23. The growth in the top-line was largely driven by export on crude oil, which grew by 244.03% y/y to ₦373.66bn, and contributed 64.3% (vs 49.0% in 12M ‘23) to the total revenue. Another substantial contributor to the revenue is Refined products’ sales, which grew by 74.9% y/y to ₦179.31bn, and contributed 30.9% (vs 46.4% in 12M ’23) to the total revenue.
On the rear, Gas sales rose by 174.7% y/y to ₦28.05bn and contributed 4.8% (vs 4.6% in 12M ’23) to the total revenue. Cost related items rises y/y Amid high crude oil handling charges and royalties/statutory expenses, costs incurred in generating revenue – ably represented by COGS rose by 231.5% y/y to ₦261.21 billion. However, stock adjustments relating to the net movement in the value of inventory, put at ₦27.65 billion provided some respite to the elevated cost of sales. As such, gross profit margin settled at 55.04% (vs 64.36% in 12M ’23).
Elsewhere, following pressured Marketing & admin expenses (+164.4% y/y), Operating expenses (OPEX) spiked upward by 165.6% y/y, settling at ₦54.08 billion, thereby pushing OPEX margin to 9.31% (vs 9.21% in 12M ’23). Notwithstanding the +160.8% y/y growth recorded by operating profit, margins whittled down to 55.04%, compared to 64.36% achieved in 12M ’23, amid the upward pressures on above cost line items. Down on the funding line, Net finance costs rose by 38.3% y/y to ₦7.07 billion, amid higher Finance cost paid on servicing existing obligations denominated in the US Dollar, put at ₦23.03 billion, which overshadowed Finance income put at ₦15.96 billion.
Bottom-line increases sturdily by 361.5% y/y On the bottom lines, pre-tax and post-tax profits lines posted healthy growths of +186.9% y/y and +361.5% y/y, settling at ₦321.84 billion and ₦248.03 billion, respectively, compared to 12M ’23 numbers. In summary, shareholders’ returns – ably represented by earnings per share (EPS) – on every ₦1.00 investment stands at 57.08k per share, compared to 12.37k posted in 12M ‘23.
We maintain Buy recommendation on ARADEL We have an existing 12-Month target price/fair value on ARADEL at ₦770.00 per share. At our target price of ₦770.00, ARADEL offers an upside potential of 42.6% to the market when compared against ₦540.00 it closed on Tuesday, 28 January 2025. ARADEL currently has a PE of 9.46x, ROE of 17.81% and ROA of 14.21%, which are above the industry averages. Based on the healthy performance posted above, we hereby maintain our BUY recommendation on the Company’s shares.
