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If Nigerian oil and gas play Oando had a board of directors comprising British investment bankers, the stock would be the punters’ darling and we wouldn’t be surprised if the South African Government’s pension money was being poured into it. Alas, Oando [JSE:OAO] has to make do with being one of those boring businesses that actually has to make a profit, return a share of those profits to shareholders and be tarred with the prejudice of being run by Nigerians who we should be wary of.
The above is obviously said tongue-in-cheek. But truth be told, Oando has hardly been an inspiring listing. Arriving on the JSE in April 2006 at around 595c it hit an all-time high of 1700c on 22 May 2008. Since then it’s tracked down pretty lamely to currently trade around 250c.
Let’s be honest: Oando isn’t a 1700c share. It got there on tiny liquidity and did nothing to deserve being there. Similarly, it’s not a 250c share and its price earnings multiple of five times earnings reflect that Oando is involved in the supply of natural gas, petroleum and energy solutions to West Africa. It’s head-quartered in Nigeria, with a primary listing on the Lagos Stock Exchange, with a secondary listing on the JSE.
It’s not a small business, with turnover of US$2,5bn and operating profit of $186,8m, with R500m of cash in the bank. More importantly, it’s a company that returns money to shareholders – and on a continent where there are still many trust issues that’s an important distinction. The decision to issue bonus shares sensibly as part of its dividend will also help with liquidity over the long term. It’s anecdotal, but investors should also take note of how much emphasis the group places on highlighting the business standards – including ISO and IFRS – to which it complies.
Though there are many “uncertain” factors when you consider an investment in Oando, for the retail investor looking for something a little different then this is one on that radar.
The above is obviously said tongue-in-cheek. But truth be told, Oando has hardly been an inspiring listing. Arriving on the JSE in April 2006 at around 595c it hit an all-time high of 1700c on 22 May 2008. Since then it’s tracked down pretty lamely to currently trade around 250c.
Let’s be honest: Oando isn’t a 1700c share. It got there on tiny liquidity and did nothing to deserve being there. Similarly, it’s not a 250c share and its price earnings multiple of five times earnings reflect that Oando is involved in the supply of natural gas, petroleum and energy solutions to West Africa. It’s head-quartered in Nigeria, with a primary listing on the Lagos Stock Exchange, with a secondary listing on the JSE.
It’s not a small business, with turnover of US$2,5bn and operating profit of $186,8m, with R500m of cash in the bank. More importantly, it’s a company that returns money to shareholders – and on a continent where there are still many trust issues that’s an important distinction. The decision to issue bonus shares sensibly as part of its dividend will also help with liquidity over the long term. It’s anecdotal, but investors should also take note of how much emphasis the group places on highlighting the business standards – including ISO and IFRS – to which it complies.
Though there are many “uncertain” factors when you consider an investment in Oando, for the retail investor looking for something a little different then this is one on that radar.
