A Viable Company For Investors

Transcorp Power becomes the second Electric Power Generating company to be listed on the mainboard of the Nigerian Exchange Limited (NGX) by Introduction.

The company listing by introduction entails that only existing shareholders of the company in this case, its owners trade their already existing shares with anyone who may be interested in buying a piece of the company.

It also provides a platform through which new investors (from the public) can be admitted into the Company, thereby diversifying the existing shareholder base. Listing on NGX also positions the Company for access to a larger pool of capital raising options and an avenue to contribute to the growth of the NGX and the Nigerian capital markets at large.

The company’s 7.5 billion shares outstanding at N240.00 per share on March 4, 2024, on the stock market has appreciated significantly, leading to its price heading towards N400 per share on the Exchange.

In terms of market capitalisation, the company listed N1.8 trillion when its price was at N240.00, rising to N351.30 per share to bring its market capitalisation to N2.63 trillion as of March 08, 2024.

In its week-on-week (WoW) performance, Transcorp Power has appreciated by N111.30 or 46.4 per cent to close at N351.30, while its market capitalisation added N834.75 billion w-o-w growth as at March 8, 2024.

The company’s stock price in the first week listed on the NGX has witnessed soar demand by investors and it is driven by management behind the company and robust fundamentals amid high return on investment.

 

The Fundamentals Behind Transcorp Power

The Transcorp Power has 18 gas turbines of different capacities comprising 12 Hitachi H25 gas turbines of 23.8MW capacity each and six Frame 9E General Electric (GE) gas turbines of 105MW capacity each.

Whilst installed capacity has remained same in the past few years, Transcorp Power has been able to steadily improve on its capacity utilisation rate. In 2023, the Company’s utilisation rate stood at 78 per cent (five-year high).

Transcorp Power revenue has grown significantly over the past five years, driven by a surge in energy delivery and capacity charge, coupled with the lucrative expansion into international markets.

The company between 2019 and 2023 has grown its revenue by 154.06 per cent to N142.12 billion from N55.94 billion, while net profit rose to N31.1 billion, representing an increase of 657 per cent in five years from N4.1 billion reported in 2019.

 

Management Driving Transcorp Power, Other Subsidiaries

Transcorp Power listing on the NGX is a reflection of the Group trust in the Nigeria capital market amid listing of other subsidiaries such as Transcorp Hotel Plc, and Transcorp Corporation Plc, all chaired by Mr. Tony Elumelu.

Elumelu, who is proponent of Africapitalism, a renowned turn-around entrepreneur, is also chairman of United Bank for Africa (UBA) Group and Heirs Holdings.

As of March 8, 2024, the three contributed about N4.36 trillion to market capitalisation amid impressive corporate earnings and robust dividend payout to shareholders.

The group and its subsidiaries are playing critical roles in key sectors such as the Power, Hospitality Energy, and agribusiness.

Elumelu stated that the purpose of listing on NGX is to improve lives and transform society, saying “we want this wealth creation to go round. We want to help improve the lives of our people and that is the reason we invested in the power sector. We know that access to electricity is critical in powering Africa out of poverty, in creating jobs, making hospitals to operate, helping schools to function and helping to industrialise Nigeria.

“We cannot industrialise Nigeria if we do not fix access to electricity. For us at Transcorp, it is not about wealth creation, but consistent with our philosophy of Africapitalism which is about creating economic opportunities for all of us,” Elumelu stated during the Transcorp Power listing on NGX.”

He insisted that for the power sector in Nigeria to work well, there is need to increase generation, fix gas supply to generating companies and make sure that the transmission lines are capacitised to evacuate the power.

The listing of Transcorp Power is a strong indication that Elumelu is optimistic about the Nigerian capital market. The market over the years has supported his companies in raising capital and reshaping its brands.

The MD/CEO, Transcorp Power, Engr. Peter Ikenga stated that the company presents a unique opportunity in Nigeria’s power generation sub-sector, which is pivotal to the country’s economic growth.

According to him, Transcorp Power is a leading thermal power generating company in Nigeria, accounting for seven per cent of Nigeria’s power generation capacity, yet currently generates 10 per cent of Nigeria’s power with existing assets, with capacity to contribute further.

He stated that Transcorp Power aims to be a leading power company with an annual revenue in excess of N500 billion by 2031, highlighting key pillars such as, diversified energy mix including renewables and off-grid solutions, capacity recovery and plant expansion, increased footprint in international electricity markets and significant market share in Nigeria.

 

Regulators Views

The group chairman, NGX, Dr. Umaru Kwairanga commended the listing of 7.5 billion ordinary shares of Transcorp Power on the Main Board of NGX, saying the listing was a testament to the resilience, innovation, and excellence within Nigeria’s power sector.

He added that it also underscores NGX’s pivotal role in driving economic growth and development in our nation, saying “we as an Exchange are determined to ensure that all sectors of Nigeria’s economy are fully represented on NGX and that the transparency, sustainability, ethical values, and private sector dynamism that drives the Exchange drives the economy.”

The acting CEO of NGX, Jude Chiemeka stated that with Transcorp Power boasting a remarkable market capitalization of over N1 trillion, marking the first listing of the year, underscored the pivotal role NGX plays in shaping Nigeria’s economic landscape.

He added that “the listing of Transcorp Power exemplifies our belief that NGX serves as a viable platform for the privatisation of energy companies, driving efficiency, innovation, and sectoral growth.”

 

Analysts’ Expectation On The Company

Financial analysts and stockbrokers have forecasted high yield for Transcorp Power Plc for discerning investors. Speaking on the listing, managing partner, QL Resources Limited, Abdulmumin Ali said playing in the capital market will provide impressive rewards for investors and also help in enriching the Nigerian capital market.

According to him, Transcorp Power shares have already gained more than 47 percent since it was launched one week ago. The stock will sustain good performance in the market and investors who take early positions will reap immense benefits in the short to medium term.

“Anybody with investible funds at this time should buy Transcorp Power shares. Such investments will likely triple within the next one year.”

CEO, Crane Securities Limited, Mike Eze said the listing of Transcorp Power on the Nigerian Exchange bodes well for both the newly listed company and Nigerian investors, adding that the Nigerian securities market remains the destination of choice for businesses in need of low-cost capital, while also providing the right opportunities for the diversification that improves governance.

Also speaking, managing director/CEO of De-Lords Securities Limited, Vincent Ugwu believed the capital market may eventually become the destination of most of the players in the power sector in Nigeria because of the advantages the market has in raising low-cost capital.

Transcorp Power, a subsidiary of Africa’s leading, listed, diversified conglomerate, Transnational Corporation Plc (Transcorp) – is Nigeria’s largest gas-fired power generating station in the country, leading the way in energy generation for millions of people in Nigeria and Africa.

Transcorp Power was founded on September 24, 2012, as Transcorp Ughelli Power Limited (TUPL), having emerged as the preferred bidder during the privatisation of the national electricity assets by the Federal Government of Nigeria. TPP is the owner of the 972MW installed capacity Ughelli Power Plant (UPP) at Ughelli, Delta State, Nigeria.