Africa Prudential maintains strong earnings growth

Africa Prudential Registrars is likely to achieve another strong growth in profit this year. The share registration company had already exceeded its 2014 full year profit figure by the end of third quarter. A stable growth in revenue and a big gain in profit margin are the underlying strengths for the strong profit growth this year. The company grew after tax profit by one-third in 2014, which is expected to accelerate to over one-half this year.

Africa Prudential Registrars isn’t anywhere to be found among the top leading companies by revenue and profit numbers but it beats every other listed company 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 raised its net profit margin further to over 61% at the end of the third quarter. 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, is pursuing his mission to build value for shareholders so far. At the listing of the company in the Nigerian Stock Exchange in 2013, he promised 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 third quarter operations with gross earnings of N1.76 million, which is an increase of 17% year-on-year. Revenue growth is led by net investment income, which grew by 33.4% year-on-year to N1.15 billion. Registrar’s fee income declined during the period, as companies rethreaded generally on dividend payments and other income dropped sharply during the period.

Based on the third 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 31.7% over the closing revenue figure of N1.86 billion in 2014.

The company declared an after tax profit of N1.08 billion at the end of the third quarter, which is a year-on-year growth of 30.5%. This is already above the N1.03 billion after tax profit it reported at the end of last year. The full year outlook indicates after tax profit in the region of N1.58 billion for Africa Prudential Registrars in 2015. This will be an increase of 53.4% over the net profit figure in 2014. The company grew after tax profit by 33.2% in 2014.

Africa Prudential Registrars shows outstanding levels of efficiency on the two sides of the operational flow – assets into revenue and revenue into profit. This places it in a position to keep growing profit and rates of return. Net profit margin has continued to improve from 49.3% at the end of 2013 to 54% in 2014 and further to 61.4% at the end of the third quarter of the current year. It is an increase from 54.9% in the third quarter of last year.

The company earned 54 kobo per share at the end of the third quarter, up from 41 kobo in the same period last year and ahead of the 52 kobo it earned at the end of 2014. It is expected to close the current financial year with earnings per share of 79 kobo based on the projected full year profit. The company has maintained a cash dividend of 35 kobo per share in the past two years, 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. At the end of the third quarter, it had over N7.4 billion in financial assets held to maturity, which is however a drop of 10.7% from the closing figure last December. It also had about N3.66 billion in financial assets available for sale, which is unchanged from the opening figure for the year. The assets are built on the strength of over N14 billion of customers’ deposits, which constitute the critical element of the company’s N19.35 billion balance sheet.