Presco Plc Delivers Explosive Earnings Growth in H1 2025 – A High-Yield, High-Confidence Investment Case
Presco Plc’s H1 2025 results reveal a remarkable earnings story driven by record revenue growth, margin expansion, and consistent operational strength. With a 125.8% surge in revenue and a 128.2% boost in net profit, Presco has firmly established itself as a top-tier performer in Nigeria’s agro-industrial sector. A ₦20 interim dividend and a 38.6% return on equity reinforce the company’s strong investment appeal.
🔑 Key Strengths
- Exceptional Top-Line Growth Revenue rose to ₦198.7 billion, a 125.8% YoY increase from ₦88.0 billion in H1 2024 — driven by improved market pricing, expanded production, and rising demand for edible oils.
- Explosive Profitability
- Gross Profit up 164.1% to ₦173.2 billion
- Operating Profit jumped 138.3% to ₦129.8 billion
- Profit After Tax grew by 128.2% to ₦88.7 billion
- EBITDA rose to ₦132.5 billion, reflecting strong cash-generating capacity.
- Strong Shareholder Returns
- Interim dividend of ₦20 per share
- Earnings Per Share (EPS) more than doubled to ₦88.72
- Return on Equity at 38.6%, outperforming sector averages.
- Balance Sheet Growth
- Total assets rose by 29.0% to ₦612.99 billion
- Current assets increased by 63.9%, enhancing liquidity and operational flexibility.
- Retained earnings surged by 74.1% to ₦220.7 billion, signaling long-term reinvestment capacity.
- Operational Resilience EBITDA and gross margins remained strong (66.7% and 87.2% respectively), showcasing cost efficiency even amid rising interest expenses.
⚠️ Weaknesses & Risks
- Rising Financial Costs Interest expense grew by 344.6% YoY to ₦17.95 billion, indicating increased debt or higher rates, which could weigh on future earnings if left unchecked.
- Slower Equity Growth Despite the earnings boom, total equity only grew 8.9%, suggesting limited capital infusion or retained earnings movement into reserves/assets.
- PBT Margin Compression PBT margin fell slightly from 57.3% to 56.3% — a minor dip, but worth watching for future trend shifts.
- Asset Efficiency Dip Return on Assets declined from 16.4% to 14.5%, possibly due to a larger asset base growing faster than earnings.
📈 Valuation & Recommendation
Using an annualized EPS of ₦177.44 (H1 EPS × 2) and applying a conservative 6x P/E multiple — common for agro-industrial stocks — Presco's fair value estimate is ₦1,064.64/share. With its current dividend payout and profitability trajectory, this stock offers a strong total return outlook.
Presco Plc presents a compelling case for income and growth investors alike. Despite higher financial costs, its superior cash flows, sector leadership, and consistent earnings delivery make it a top-tier pick in the Nigerian equities space.
Watchlist Considerations:
- Future dividend guidance
- Cost of debt trajectory
- FX or commodity price exposure
- Expansion announcements or capacity scaling
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Disclaimer
The user WaneInvestmentHouse holds no position in NGSE:PRESCO. 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.