Stock investors at the Nigerian bourse who hitherto placed the shares of Forte Oil Plc on offer may have seen the need to rescind their decisions. In a newest move by some investors to add Forte Oil Plc stocks to their portfolio picks, the share price of the company has continued to gain.
After a record dip this year, the share price of Forte Oil Plc which opened this week at N67.51 is still showing strength for further uptick as many investors –domestic and foreign –continue to see value at its current price.
With a market capitalisation in excess of N100billion, the share price of Forte Oil Plc had reached a 52-week high of N200.10 per share.
“There are lots of foreign interests in the shares of Forte Oil Plc,” said Julius B Omodayo-Owotuga, Group Executive Director, Finance & Risk Management, Forte Oil Plc. He led other members of the management team to a media parley with capital market journalists in Lagos.
Investors increasing interest in the shares of Forte Oil Plc was attributed to the company’s diversification strategy; operating in the downstream, upstream and power sectors of the Nigerian economy.
Recall that shareholders of the company had earlier issued a mandate to the board and management to raise fresh funds of up to N100 billion; out of which N9 billion has only been raised.
In November 2016, Forte Oil Plc successfully raised N9 billion from a bond offering which it used to refinance short term bank loans and fund retail outlet expansion.
With the raising of this initial capital it shows the confidence the investing public has in Forte Oil Plc as an investment of choice.
The Nigerian Stock Exchange in February listed the firmly underwritten N9billion bond for Forte Oil as part of the planned N50 billion bond issuance programme for the leading energy company. Currently, the oil marketing major is proposing N20billion fresh capital raise for the expansion of its operations.
The management has approached the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to seek their approval for the proposed N20 billion fresh fund raising.
“We said to ourselves, because of the margin in downstream business, we cannot continue to use only debt; we have to bring in additional equity and we have started the process, we have approached SEC and the NSE,” Omodayo-Owotuga said.
The proceeds from the N20billion fresh capital will be used to enhance Forte Oil Plc working capital, business expansion and downstream businesses.
Forte Oil Plc future plans are geared towards five (5) pillars aimed at growing revenue and adding value to its shareholders.
The oil marketing firm is deepening its focus on high margin products such as lubricants, Liquefied Petroleum Gas (LPG) and power to drive revenue generation.
“We grew the lubricants business by 62percent in 2016, to 21 million litres from 13 million litres recorded in 2015,” Omodayo-Owotuga noted.
He said the second pillar is to strengthen the company’s balance sheet through enhancement of working capital and efficient management of inventory and trade account receivables.
“Another major pillar the company is moving its plans towards is the acquisition of the right upstream assets at the right price to increase market share,” he added.
Forte Oil Plc is also focusing on mergers and acquisitions (M&A) within the industry to increase its downstream business by looking at refineries.
The company is optimising distribution channels as well as partnering with telecommunication firms and financial institutions for effective distribution of its services.
In terms of revenue contribution to the operations of the company in 2016, the upstream business has contributed 1.5percent, power 9percent and the downstream 89.9 percent.
“In terms of gross profit, power has contributed 20percent, upstream 5 percent and the downstream contributed 75 percent,” Omodayo-Owotuga noted
In the first-quarter (Q1) to March 31, 2017, Forte Oil Plc recorded 57.49 percent increase in group profit before taxation (PBT) of N2.05billion, from N1.30billion in Q1’16. Forte Oil Plc is a foremost indigenous major marketer of refined petroleum products with strong presence in the thirty-six states of Nigeria and the Federal Capital Territory (FCT).
In the review first-quarter, the group gross profit rose by 20.77percent to stand higher at N5.8billion in Q1’17 from N4.8billion in Q1’16; while operating profit increased by 48.29 percent to N3.6billion compared with N2.4billion in Q1’16.
Forte Oil Plc operates a network of 500 outlets spread across the country with major fuel storage installations at both Apapa (Lagos State) and Onne (Rivers State). Its Aviation Joint User’s hydrants in Ikeja and Joint Aviation depots in Abuja, Port Harcourt and Kano makes it one of Nigeria’s leading providers of aviation fuel for local and international airlines.
The results at the NSE also show group’s profit after tax (PAT) increased by 97.49 percent in Q1’17 to N1.8billion from N954.2million in Q1.16. The group’s finance income increased to N563.5million in Q1’17 from 374.9million in Q1’16.
In addition to its strategic retail and commercial network in Nigeria, Forte Oil Plc is also well established in Ghana under the trade name-AP Oil and Gas Limited (APOG), with a network of retail outlets, liquefied petroleum gas plants and a lubricant blending arrangement with Tema Oil blending plant.
Forte Oil is currently using its presence in Ghana to leverage its expansion into other West African Countries as it seeks to dominate the African Energy market.
Forte Oil also has a footprint in the upstream oil services sub-sector, where is has established a reputation of efficiency; servicing the upstream sector under trade name- Forte Upstream Services Limited (FUS).
It also engages opportunities in the upstream sector to fulfill its aspirations of being present at every point of the energy value chain. Its acquisition of the 414 megawatts (mw) Geregu Power Plant is a demonstration of the company’s strategy to deliver long term returns for its shareholders.
In 2013, Forte Oil Plc was the best performing stock on the Nigerian Stock Exchange; Forte Oil shares were included in the Morgan Stanley Capital International Frontier Market in May 2014. Also in in 2014, it was listed among the Top 100 most respected companies in Nigeria. Forte Oil Plc won the 2015 BusinessDay Top 25 CEO’s Award for companies listed on the Nigerian Stock Exchange.
Iheanyi Nwachukwu
