Geregu Power Increases Shareholders’ Wealth 8X

Few listed stocks have had a big rise in market valuation in 2024. As one of the fortunate few, Geregu Power Plc now has a market capitalization of over N2.5 trillion. Those who bought Geregu Power Plc at N100 per share would have seen their wealth grow by more than eight times as of Friday’s end.

Geregu Power Plc’s share price increased by 9.3% to settle at N901, per information retrieved from the Nigerian Exchange. The stock went from N819.80 at the start of the week to roughly 10% in the previous seven days.

Since going public in October 2022, the electricity generating firm has had a significant market re-rating. This is the initial Power company in Nigeria that become a public company. The share surge following the company’s earnings growth in 2023.

A slew of analysts thinks there will be a stock market correction on the power generating company’s stock, saying its share is already overvalued above its earnings capability. Last week though, the stock market nosedived, losing about N2 trillion.

Geregu Plc, on the other hand, climbed due to buying interest from local investors who spotted growth potential ahead of its Q1 earnings release. Market demand for the stock has been strong after the board of directors of Geregu Power Plc announced N8 the final dividend for 2023.

Geregu Plc expects to declare N5.56 billion as a profit in the first quarter of 2024. The company said it expects operating cash flow before working capital changes to settle at N9.79 billion in Q1-2024.

Details from the forecast document showed that the company expects a profit of less than N6 billion (about 18% of turnover) amidst an expectation that revenue would be over N31 billion in the same period.

The company forecasts its revenue to hit N31.242 billion, out of which it expects to offset N16.759 billion as costs of sales. This would leave the power generating company with N14.482 billion as gross profit. The company’s administrative expenses is expected to gulp N5.4 billion.

Net finance costs of about N800 million is expected to stand between the company’s operation profit of about N9.1 billion in the period and its pretax profit of N8.3 billion.

The company estimated about N2.4 billion as tax provision for the period, reducing its profit for the period to N5.56 billion.

Geregu Power Plc engages in the power generation business. It handles electric power sales through The Nigerian Bulk Electricity Trading Plc to the distribution companies in Nigeria.

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