WorldStage Newsonline-- FSDH Securities Limited, an investment banking firm has advised investors to buy Oando Plc stocks despite the conference call by the oil group on Tuesday, April 10, 2012 where it announced a shocking exceptional item of about N9.6 billion to be written off against earnings in 2011 result.
Oando listed the exceptional item to include: impairment of assets – N854 million; termination charges of technical service agreement (TSA) and management service agreement (MSA) – N5.25 billion and project expenses – N3.52 billion.
According to the analysts, Oando may likely incur an amount in excess of N6 billion within the next three years had the company not terminated the agreements.
“Therefore, in the medium to long term, it is in the best interest of the shareholders of the company to terminate the agreement especially as the company is capable of substituting the service with its internal capabilities,” they said.
“We however think that an advance notice should have been given to investors and analysts, preferably at the beginning of the financial year of 2011, in respect of the termination of the agreements.”
Oando at the conference, expressed belief that “its strategic focus which is transformation from downstream giant to a full value chain indigenous champion across West Africa region remains on course and its earnings forecasts remain robust.”
In FSDH latest valuation of Oando put Earnings per Share (EPS) at N2.01 and N4.84 for 2011 and 2012 respectively; estimated Dividend per Share (DPS) of N1.31 and N2.66 per share for the same period. The estimated DPS for 2011 is lower than N3 per share paid in 2010.