Last Update29 Jul 25
WaneInvestmentHouse made no meaningful changes to valuation assumptions.
Industrial & Medical Gases Nigeria Plc (IMGN) has published its unaudited financial results for the half year ended June 30, 2025, reflecting mixed performance indicators and raising questions about margin sustainability and profit trajectory.
📊 Key Highlights and Performance Metrics
✅ Strengths
- Revenue Growth: IMGN recorded a 19% YoY growth in revenue for H1 2025, increasing from ₦3.65bn in H1 2024 to ₦4.33bn. This signals continued demand in the industrial gases segment.
- Stable Gross Margins: Gross profit grew by 29% YoY, outpacing revenue growth, suggesting some operational efficiency or pricing power, with H1 2025 gross profit hitting ₦2.26bn vs. ₦1.75bn in H1 2024.
- High Finance Income: Finance income surged to ₦586.5m in H1 2025 from ₦146.4m in H1 2024, providing some buffer against rising costs—likely from interest on short-term investments or cash deposits.
- Healthy Balance Sheet: The company maintains a solid equity base of ₦5.99bn, and cash and cash equivalents of ₦4.28bn, although slightly down from ₦5.16bn in FY 2024.
- Investment in Assets: PPE increased to ₦7.14bn from ₦6.79bn, reflecting reinvestment for future capacity or operational scale-up.
❌ Weaknesses
- Profit Decline: Despite revenue growth, net profit dropped sharply by 69% YoY, from ₦1.55bn in H1 2024 to ₦476.5m in H1 2025, mainly due to a lack of forex gains which had bolstered prior-year earnings.
- Foreign Exchange Losses: In contrast to a ₦1.2bn FX gain in H1 2024, the company incurred a ₦63.5m FX loss in H1 2025, significantly denting the bottom line.
- Rising Operating Costs: Administrative expenses rose 45% YoY (₦881.8m vs. ₦608.6m), while selling and distribution expenses remained elevated, weakening operating leverage.
- High Borrowings: Total loans and borrowings rose to ₦5.42bn, up from ₦5.33bn in December 2024, suggesting continued dependence on debt financing amid rising interest rates.
- EPS Decline: Earnings per share dropped to ₦0.95 from ₦3.10 in H1 2024, a notable hit for income-focused investors.
📌 Outlook and Recommendation
While IMGN demonstrates solid topline growth and retains a strong liquidity position, the sharp drop in profitability—especially the absence of foreign exchange tailwinds—highlights the company's vulnerability to macro volatility and operating cost pressures.
The stock may still appeal to long-term investors due to:
- Its strong asset base and market positioning.
- Opportunities for margin recovery if forex volatility moderates and cost optimization measures are enforced.
However, short-term investors should exercise caution, as earnings momentum appears weak relative to the prior year’s extraordinary FX-inflated performance. There’s also a risk that rising borrowing costs could compress net margins further if not offset by higher operating efficiency.
📍Recommendation:
- Hold for existing investors, pending stronger profit visibility and improved cost control.
- Avoid fresh entry until the company delivers a clear turnaround in profitability independent of forex movements.
Bottom Line: Industrial & Medical Gases Nigeria Plc is still fundamentally sound but currently navigating margin pressure and FX headwinds. The company needs to prove it can sustain profitability from core operations rather than one-off forex gains.
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Disclaimer
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