As a distributor of Shell-branded fuel products across the world’s fastest-growing continent, Vivo Energy (VVO) has one of the strongest long-term investment cases out there. Well, on paper, at least. In its first set of results since going public, investors in the pan-African petrol forecourt retailer saw it shares fall 5 per cent – a tenth below the listing price.
Although the first six months of 2018 saw a 4 per cent increase in fuel volumes and an 11 per cent uptick in adjusted net income to $95m (£72.5m), events have progressed more slowly than initial backers may have hoped. The chief source of nerves is a stalled $399m deal to acquire certain assets from rival Engen, which has left a $300m revolving credit facility fully undrawn.
The deal, which will add 300 service stations across nine countries to Vivo’s footprint, has been held up by a state-authored claim in the Democratic Republic of Congo. Although Vivo believes governmental assertion of pre-emption rights is without legal basis, the matter looks set to complicate the transaction.
Meanwhile in Morocco, a government-led consultation on fuel price regulation has added a potential risk which, if implemented, “could have a material adverse effect” on profits, to quote Vivo’s admission document. In 2017, Moroccan fuel sales contributed 29 per cent to group adjusted Ebitda.
On average, analysts expect adjusted pre-tax profit of $284m and EPS of 14¢ this year, rising to $317m and 15.2¢ in 2019.
| VIVO ENERGY (VVO) | ||||
| ORD PRICE: | 149p | MARKET VALUE: | £1.8bn | |
| TOUCH: | 149-150.6p | 12-MONTH HIGH: | 198p | LOW: 130p |
| DIVIDEND YIELD: | 0.51% | PE RATIO: | na | |
| NET ASSET VALUE: | 38.4¢* | NET DEBT: | 68% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017^ | 3.23 | 117 | na | nil |
| 2018 | 3.67 | 114 | 5 | 0.665 |
| % change | +14 | -3 | - | - |
| Ex-div: | 16 Aug | |||
| Payment: | 17 Sep | |||
| £1=$1.31. *Includes intangible assets of $124m, or 10¢ a share. ^Company listed in May. | ||||
