Earnings Update- CONOIL: 9M 2019.

CONOIL’s topline expansion surged further in Q3:2019; 9M:2019 revenue printed at NGN112.72bn (vs. NGN75.84bn in 9M:2018; +48.64%), driven by a 10.72% uptick in Q3. Q3:2019 revenue of NGN40.53bn (+89.65% Y-o-Y), is the highest recorded so far this year and was highlighted by an impressive 91.98% Y-o-Y growth in white products (PMS, AGO, ATK, LPFO and DPK). Year-to-Date, the segment has contributed 95.30% to topline which is commendable, given the mounting competition to push volumes in a difficult market. CONOIL is clearly leveraging its ubiquitous retail presence in Nigeria (395 dealers concentrated in areas of robust vehicular traffic and commercial activities) and goodwill amongst commercial vehicle operators to edge its peers in terms of sales growth. Lubricant Sales for the first 9 months is also up by 34.72% (NGN5.30bn), albeit suffering a 5.61% Q-o-Q contraction in Q3, to settle at NGN1.79bn (vs. NGN1.90bn in Q2). This is possibly a consequence of other industry operators also ramping up Lube marketing and sales, to improve depressed margins in a worsening cost environment. The LPG segment remains dormant, since management took a strategic decision to shut it down temporarily in 2017 and made a commitment to restart at the earliest possible time. We think it is imperative that the reopening of this segment is expedited, for the company to participate in Nigeria’s budding transition towards LPG (for cooking) and capture further value, given its strong presence and appeal. We now expect topline growth at 26.91% in 2019FY to reach NGN155.10bn. Kindly find attached the full report.

CONOIL’s topline expansion surged further in Q3:2019; 9M:2019 revenue printed at
NGN112.72bn (vs. NGN75.84bn in 9M:2018; +48.64%), driven by a 10.72% uptick in Q3. Q3:2019
revenue of NGN40.53bn (+89.65% Y-o-Y), is the highest recorded so far this year and was
highlighted by an impressive 91.98% Y-o-Y growth in white products (PMS, AGO, ATK, LPFO and
DPK). Year-to-Date, the segment has contributed 95.30% to topline which is commendable,
given the mounting competition to push volumes in a difficult market. CONOIL is clearly
leveraging its ubiquitous retail presence in Nigeria (395 dealers concentrated in areas of robust
vehicular traffic and commercial activities) and goodwill amongst commercial vehicle operators
to edge its peers in terms of sales growth. Lubricant Sales for the first 9 months is also up by
34.72% (NGN5.30bn), albeit suffering a 5.61% Q-o-Q contraction in Q3, to settle at NGN1.79bn
(vs. NGN1.90bn in Q2). This is possibly a consequence of other industry operators also ramping
up Lube marketing and sales, to improve depressed margins in a worsening cost environment.
The LPG segment remains dormant, since management took a strategic decision to shut it down
temporarily in 2017 and made a commitment to restart at the earliest possible time. We think
it is imperative that the reopening of this segment is expedited, for the company to participate in
Nigeria’s budding transition towards LPG (for cooking) and capture further value, given its strong
presence and appeal. We now expect topline growth at 26.91% in 2019FY to reach NGN155.10bn. Kindly find attached the full report.