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We expect Oando shares to be volatile – Analysts

BY NKIRUKA NNOROM

The share prices of Oando Plc will remain unstable following the profit warning for its 2011 full year financial results issued, Tuesday, by the company, analysts at the FBN Capital have said.

Following the announcement, the analysts kept its rating of the shares at neutral, saying that it was keeping its estimates under review.

The report said, “We would expect the shares to be volatile over the coming weeks as the market digests the profit warning and the outlook statements for 2012. Ultimately, we believe that for Oando shares to see a meaningful re-rating, the market will need to see a marked reduction in the risk of negative surprises on targets. We rate Oando shares as Neutral. Our estimates are under review.”

Oando Plc had on Tuesday issued a fourth quarter 2011 profit warning and projected a profit after tax of N2.976 billion for the first quarter ended 31st March, 2012.

It also projected N3.612 billion for second quarter 2012 and N6.588 billion for the half year 2012, a 1.4 per cent drop from N6.679 billion during the same period in 2011.

The company put its sales in quarter one 2012 at N141.838 billion; N191.354 billion in quarter two 2012 and N333.192 billion for the half year 2012 which is 24.4 per cent improvement over N267.812 billion posted in the same period of 2011.

According to Oando’s management, it expects to book a one-off exceptional charge of N9.6 billion in quarter four 2011, made up of project expenses of N3.5billion, termination charges for technical and managerial services of N5.3billion and impairment of assets of just under N900m. Management had guided to a Profit before Tax, PBT, of N7.3billion for quarter four, 2011.


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