(Ecofin Agency) - Nigeria-based analysis and investment firm CardinalStone calls upon investors to ditch their interest in Total Nigeria. The capital market company says Total has a current stock market value of 21 times its last net profit. This indicator is on average 8 times the net profit for companies operating on the same segment.
Indeed, the year 2019 was a tough one for the local arm of French group Total, which ended the year with net income of 2.4 billion Naira ($6.58 million), down by 69.9% compared to 2018. This result was only possible thanks to an exceptional income of 2.8 billion naira, generated through asset transfer during the fourth quarter of 2019. Excluding this transaction, Total Nigeria posted a loss of 341.4 million Naira against a gain of 184.9 million Naira in the year 2018.
According to the National Bureau of Statistics, inflation has risen by 12.1%, putting pressure on the consumption capacity of businesses and households. A reduction in demand is to be expected. At the same time, downstream petroleum product marketers are vying for market shares. Most of the fuel sold in Nigeria is imported, and supply charges are likely to increase due to new environmental rules for maritime transport.