C&I Leasing Plc H1/Q2 Result – Leveraging Operating Efficiency Amidst Capital Constraints

C&I Leasing Plc H1/Q2 Result – Leveraging Operating Efficiency Amidst Capital Constraints

C&I Leasing Plc demonstrates a solid operational performance trajectory, underpinned by strong leasing income growth and sustained profitability. The company has effectively managed to scale gross earnings by 12.5% YoY to ₦20.47 billion in H1 2025 (vs. ₦18.2 billion in H1 2024), driven primarily by higher lease rental income and contributions from joint ventures. Despite elevated finance and depreciation costs, C&I Leasing maintains a positive earnings trend, recording a 11.6% YoY increase in profit attributable to shareholders (₦1.05 billion vs. ₦945 million).

While C&I Leasing remains fundamentally resilient, concerns around high leverage and working capital strain prompt a cautious stance. However, the consistent earnings performance and significant equity position signal potential upside as the business navigates debt pressures and optimizes capital structure.

Key Strengths:

✅ Robust Revenue Growth Gross earnings increased by 12.5% YoY, driven by:

• Lease rental income up 11.5% YoY to ₦17.92 billion
• Higher income from joint ventures (₦820.6 million)

✅ Cost Efficiency and Operational Leverage

• Net lease rental income rose 44.3% YoY, indicating better cost containment on lease expenses (down 25.4% YoY)
• Net outsourcing and tracking income contributed positively, albeit modestly

✅ Strong Equity Base

• Total equity increased to ₦48.6 billion (vs. ₦48.2 billion in FY 2024)
• Retained earnings climbed 55% YoY, reflecting sustainable profit retention

✅ Strategic Asset Positioning

• Operating lease assets grew to ₦73.2 billion (vs. ₦69.4 billion), indicating fleet expansion and capacity investment

Key Risks and Weaknesses:

⚠️ High Leverage and Interest Burden

• Total borrowings and commercial notes rose 16% to ₦55.2 billion
• Finance costs surged 54% YoY to ₦6.97 billion, weighing on profit margins

⚠️ Working Capital Pressure

• Trade receivables remain elevated at ₦17.9 billion, suggesting cash flow risks
• Trade payables also climbed, signaling potential short-term liquidity tightness

⚠️ Depreciation Impact on Earnings

• Depreciation expenses rose 45% YoY, consistent with fleet growth but dilutive to net earnings

Outlook:

C&I Leasing is positioned for medium-term growth as it continues to deepen its leasing operations and strengthen joint venture contributions. However, deleveraging and enhanced working capital management will be critical to unlocking valuation upside. Strategic refinancing or equity injection could serve as key catalysts.

Valuation View: Given consistent earnings performance, improving margins, and strong asset base, C&I Leasing deserves close watch for re-rating potential once financial leverage is addressed. Investors with moderate risk appetite may consider accumulating on dips.

Rating: Target Reassessment in Q3 pending debt restructuring progress and operating cash flow improvements.