Geregu Power Plc, Nigeria’s first publicly listed power generation company, has recently reported outstanding financial results for the first nine months of 2024, showcasing remarkable growth that reflects both operational excellence and strong market positioning. The company’s pre-tax profits have doubled to N36.2 billion, up from N18.1 billion during the same period in 2023. Additionally, the profit after tax stands at N24.1 billion, indicating a robust financial health that bodes well for its future prospects.
The financial highlights of Geregu Power’s nine-month performance are compelling. Revenue surged to N112.5 billion, marking a staggering 102% increase year-on-year. The gross profit rose to N54.6 billion, up 89.2%, while the operating profit reached N37 billion, reflecting an 80.1% growth. Notably, the company’s net finance cost decreased to N753 million, a significant reduction of 68.6%. With an earnings per share (EPS) of N9.63 an increase of N4.54 Geregu Power’s financial metrics illustrate a company that is not only growing but doing so efficiently.
When annualized, the company’s profits indicate a compounded annual growth rate (CAGR) of 23%. This figure is particularly impressive given that Geregu Power operates at approximately 50% capacity due to persistent grid constraints and market challenges. Nevertheless, this level of profitability amidst operational limitations suggests significant untapped potential for the company.
Looking ahead, Geregu Power projects a pre-tax profit of N16.8 billion for the final quarter of 2024. If achieved, this would push the total pre-tax profit for the year to approximately N53 billion, representing a remarkable 118% year-on-year increase. This optimistic projection is supported by favorable investor sentiment, as reflected in the company’s share price, which has surged by 188% year-to-date. Despite this growth, the company currently maintains a high price-to-earnings (P/E) ratio of 102x, indicating that while the stock is seen as a high-growth option, it may also be considered overvalued based on current earnings.
The broader industry landscape plays a crucial role in Geregu Power’s outlook. Stakeholders anticipate potential tariff increases in 2024, although political considerations may complicate these expectations. Moreover, ongoing investments in grid infrastructure and moves toward the privatization of additional power assets are expected to enhance the operating environment for Geregu Power, enabling the company to unlock greater capacity and revenue opportunities.
In addition to strong earnings growth, Geregu Power is reportedly exploring acquisitions to further bolster its capacity and revenue base. This strategic approach could significantly expand its market reach and operational capabilities. While the company’s high P/E growth (PEG) ratio suggests it may be overvalued in terms of current earnings, the significant potential for future profit expansion attracts investors’ interest.
Geregu Power has established itself as a reliable dividend payer, with an average payout ratio exceeding 100% over the past three years. This consistent commitment to returning value to shareholders, combined with the robust performance in 2024, positions the company as an appealing option for income-focused investors. With ongoing improvements in capacity utilization and favorable industry dynamics, Geregu Power is well-positioned to maintain its dividend payouts and deliver strong shareholder returns.
