The company has demonstrated exceptional earnings growth in H1 2025, backed by operational leverage, prudent cost control, and a healthy balance sheet. Despite agricultural seasonality and inflationary pressures, Okomu Oil's performance suggests continued upside potential in the near-to-medium term.
Strengths
- Explosive Revenue Growth
- Turnover rose by +73% YoY to ₦129.8bn (H1 2025) from ₦75.0bn (H1 2024), driven by higher CPO prices and production volume.
- Significant Margin Expansion
- Gross profit margin improved to 67% (vs 59% in H1 2024) on the back of operating scale and cost optimization.
- Net profit margin surged to 37%, with profit after tax growing +135% YoY to ₦47.5bn.
- Strong EPS Growth
- EPS grew 135% YoY to ₦49.83/share, highlighting attractive shareholder returns and dividend potential.
- Robust Balance Sheet
- Cash & bank balances: ₦41.1bn, with only ₦6.1bn in long-term loans, resulting in low leverage and financial flexibility.
- Total net assets increased by 41% YoY to ₦78.2bn.
- Operational Efficiency
- Operating expenses only increased 32% YoY vs revenue growth of 73%, showcasing efficient cost management and scale benefits.
⚠️ Weaknesses / Risks
- Working Capital Pressure
- Trade payables rose 51% YoY to ₦39.5bn, indicating increased short-term obligations and potential liquidity tightening.
- CapEx and Lease Commitments Rising
- Lease liabilities increased by 63% to ₦20.3bn, reflecting higher long-term obligations that could affect cash flow in periods of lower commodity prices.
- Deferred Tax Not Updated
- Deferred tax remained flat despite significant growth in profits, potentially understating future tax liabilities.
- Sector Risks (Agro-Industrial)
- Exposure to climate volatility, commodity price swings, and forex illiquidity may impact earnings stability.
🧾 Conclusion
Okomu Oil Palm Plc has proven its operational resilience and earnings power, delivering strong H1 2025 results. The consistent revenue growth, expanding margins, and lean cost profile make it a compelling buy in Nigeria’s agriculture sector. Given its solid fundamentals, ample liquidity, and sector tailwinds, we maintain a BUY recommendation with mid-term upside driven by both earnings growth and potential valuation re-rating.
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Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:OKOMUOIL. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.