Africa Prudential Registrars heads for another strong growth in earnings

Africa Prudential Registrars is on the way to another strong growth in profit this year. The share registration company doubled profit in its first quarter step, showing one of the most promising earnings prospects in 2015. A strong growth in revenue and a big gain in profit margin are the unbeaten earnings credentials the company is showing from its first quarter operations.

Africa Prudential Registrars isn’t anywhere to be found among the top leaders by revenue and profit numbers but it beats everybody else when it comes to ability to convert revenue into profit. In 2014, it led the entire group of listed companies by profit margin with a distance at 54%, the closest rival being 40.7% by Dangote Cement.

The company has begun this year by lifting net profit margin to over 66%. Increasing asset turnover and high and rising profit margin make the company one of the outstanding prospects on rates of return.

Peter Ashade (pictured), the company’s managing director/CEO, seems to have entered the cruising altitude in his mission to build value for shareholders. At the listing of the company in the Nigerian Stock Exchange in 2013, Ashade stated that his mission is to add value to shareholders and maximize their wealth. Since then he has grown revenue and profit every year and delivered some of the highest dividend pay-outs and dividend yields in the equities market.

The company ended its first quarter operations with gross earnings of N563 million, which is an increase of 35% year-on-year. Based on the first quarter growth rate, turnover is projected at N2.45 billion for Africa Prudential Registrars at the end of 2015. This will be an increase of 15% over the closing revenue figure in 2014. Revenue grew by 13.7% in the preceding year.

The company declared an after tax profit of N373.2 million in the first quarter, which is more than double the N185 million profit it reported in the same period last year. Full year outlook indicates after tax profit in the region of N1.6 billion for Africa Prudential Registrars in 2015. This will be an increase of 31% over the net profit figure of N1.22 billion the company posted at the end of 2014. Profit growth may step up further from the first quarter performance in the course of the year as happened last year. The company grew after tax profit by 33.2% in 2014.

The company shows outstanding levels of efficiency on the two sides of the operational flow – assets into revenue and revenue into profit. Net profit margin has continued to improve from 49.3% at the end of 2013 to 57.8% in 2014 and further to 66.3% at the end of the first quarter of the current year. It is a big leap from 44.5% in the first quarter of last year.

The company is clearly a distant number one in terms of ability to convert revenue into profit. This is a strong indication of a company that appears to be on a long upward journey to deliver high rates of return to investors.

It earned 19 kobo per share at the end of the first quarter, up from 9 kobo in the same period last year. It is expected to close the current financial year with earnings per share of 80 kobo based on the projected full year profit. It earned 61 kobo per share at the end of 2014 and maintained a cash dividend of 35 kobo per share, giving a dividend yield of about 12% – one of the highest yields in the market.

The company’s earnings engines are its portfolios of financial assets. As at the end of the first quarter, it had over N10 billion in financial assets held to maturity and N3.66 billion in financial assets available for sale. Earnings stability is ensured by giving priority to fixed income securities in a high interest rate environment. Financial assets held to maturity grew by 21.3% within the first three months of the year. Assets held for trading are unchanged over the same period, as the equities market remains generally subdued.