C&I Leasing: Good For Value Investors, But Business Continuity Plan Needed

Rating: Buy

Current Market Price: N3.95
Latest Cash Dividend (2019): N0.20

Year High: N7.35
Year Low: N3.80
Fair Value: N7.50
Equity Analyst: Tunde Segun Jeariogbe


  • This report observed the result of C&I Leasing result for the period ended 31st March 2020, compared the same with that of the 1st quarter 2019 to establish growth and make recommendations accordingly. Establishing the appropriate value of the company’s shares, we used the full-year numbers and projected for future returns.
  • It is noteworthy that the company has at least four major sources of income. They are Leasing, Outsourcing, Tracking, and other Joint Ventures.
  • A quick scan through its numbers over the years revealed that the major or core income source is the Leasing Business, followed by Outsourcing, while Tracking contributes the least income. C&I recorded good revenue from its other joint ventures over the years.
  • Generally, when the first quarter of 2020 business was placed side by side the corresponding quarter of 2019, we observed that the performance was well below that of 2019, as will be shown below.
  • We have also established that the company is currently trading below Book Value, just as Our Valuation for each unit of C&ILeasing is equally below the Book Value.

Statement of Comprehensive Income

  • Gross Earnings posted for the first quarter of 2020 stood at N8.65 billion, 10.81% above the N7.81 billion posted in the corresponding quarter of 2019.
  • Net Lease Income is estimated at N2.89 billion, versus N2.95 billion in the corresponding quarter of 2019. The difference between the compared figures is a marginal 4.38%.
  • Net Outsourcing Income stood at N308.71 million, as against N202.83 million in the similar quarter of 2019. Notice that it contributed 52.20% more income, compared to the 2019 first-quarter business session.
  • Net Tracking Income is estimated at N40.10 million, the same as 20.74% above the N33.21 million in the comparable period in 2019.
  • Meanwhile, Joint Ventures contributed N98.55 million to the company’s income through the first three months of 2020, 21.71% below the contribution in 2019.
  • In other words, Net Operating Income is valued at N2.05 billion, this is 5.75% below the N2.18 billion estimated at the end of the first three months of 2019
  • Finance Cost builds 42.25% above that of the comparable quarter. Note that at the end of 2020 the first quarter, a total of N1.73 billion was reported as Finance Cost versus N1.21 billion in the similar quarter of 2019.
  • Operating Expenses adjusted down to N708.37 million, same as 11.69% below the N802.19 million used through the first three months of 2019.
  • Profit before Tax dipped by 49.10% to N221.42 million, versus N435.02 million in the corresponding quarter.
  • Tax Expenses for the period is estimated at N48.49 million, as against N36.56 million in the comparable quarter.
  • Profit for the period is valued at N172.93 million, the same as 56.60% below N398.46 million in the corresponding period.
  • Total Comprehensive Income for the period was valued at N179.18 million versus N392.36 in the similar quarter of 2019.

Statement of Financial Position

  • At the end of the first three months of 2020, C&I Leasing’s Total Assets was valued at N58.09 billion, a mild growth over the N55.18 billion at the end of 2019 first quarter business session.
  • Total Liabilities was estimated at N43.10 billion against N42.95 billion in the corresponding quarter of 2019.
  • Cash & Cash Equivalents at the end of the period was N4.87 billion, as against N1.41 billion in the corresponding quarter.
  • Property Plant and Equipment investment through the period is valued at N1.55 billion, compared to N1.64 billion in the corresponding period of last year.
  • Net Assets is currently valued at N14.98 billion, as against N12.22 billion in the similar period of 2019.
  • Retained Earnings stood at N4.09 billion, as against N3.04 billion in the corresponding period.

Financial Strength

  • At the end of the period under analysis, C&I Leasing’s Debt Ratio is estimated at N74.21% versus 77.84% in the corresponding period. In other words, Total Liabilities is currently 74.21% of the Total Assets Value.
  • Total Debt is estimated as 287.68% of the Equity Value at the end of the period, this is a lower percentage when compared to 351.23% in the corresponding period. In other words, Total Debt can replicate Equity 2.88 times.
  • Equity Ratio is estimated at 25.79%, as against 22.16%. That is, Net Assets is the same as 25.79% of the Total Assets valuation.
  • The estimated beta value for C&I Leasing at the end of the quarter is below market beta at 0.80.

Profitability Ratio

  • EBITDA Margin is estimated at 2.56% lower than the estimated 5.57% in the corresponding quarter.
  • Meanwhile, Pre-Tax Margin stood at 2.00%, the same as 60.83% below 5.10% in the similar quarter of 2019.
  • Return on Equity is valued at 1.15%, compared to 3.26% in the corresponding quarter.
  • Return on Assets stood at 0.30% versus 0.72% in the comparable quarter of last year.

Efficiency Ratio

  • Operating Expense is currently estimated as 1.22% of the Gross Earnings, which is a 16.12% improvement in management efficiency when compared to 1.45% estimated in the corresponding quarter.
  • Gross Earnings is 14.91% of the Total Assets Valuation at the end of the period. This is 5.26% improvement in management efficiency as against that of the corresponding quarter.
  • Capex/Share is valued at N2.56 a marginal higher investment when compared to N2.45 in the corresponding period.
  • Financial Leverage is estimated at 0.35x, as against 0.28x in a similar period. That is, Net Assets is the same as 35% of the Total Liabilities at the end of the period.

Investment Ratios

  • Within the two periods compared the share price of C&I Leasing dropped by 42.43%, from N7.99 to N4.60. Note that the prices at the released dates were used in this comparison.
  • The amount earned per unit of C&I Leasing at the end of the first quarter business session is N0.43 , lower than the N0.99 earned in the corresponding period of 2019.
  • Total Comprehensive Income per share is equally estimated at N0.44, versus N0.97 in the corresponding period.
  • PE Ratio is valued at 10.75x, higher than the 8.11x in the corresponding period.
  • The amount earned per share of C&I Leasing at the end of the 2020 first quarter yielded 9.30% of the price on the floor of the Nigerian Stock Exchange on the day the result was made available to the investing public.
  • Currently, each units of C&I Leasing in worth N37.07 in its book, this is a higher when compared to N30.25 in the similar quarter.

Confirming that the shares of C&ILeasing are currently trading below book value on the NSE is the Price-to-Book Value that stood far below unity. See the table below for details.


  • Since this report is targeted towards enhancing investors’ decisions in the shares of C&I Leasing, we have maintained a conservative approach while placing value on each unit of its shares. Thus, the currents stated of the economy is put into consideration, on this strength a reasonable adjustment was done on expected returns over the next two financial year (due to the pandemic negative effect). Nevertheless, it is assumed that the company will maintain dividend payment even at a lower growth rate. Hence, each unit of C&I Leasing is priced at N7.50. Considering the gap between our valuation and the current share price of C&I Leasing shares on the floor of the exchange, the stock is rated a Buy.

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