October 27, 2023/CSL Research

Presco Plc (PRESCO) in its 9M 2023 results reported an impressive 29.8% y/y growth in Revenue to N76.87bn from N59.21bn (9M 2022). Also, on a q/q basis, Revenue was up 10.3% to N28.8bn (Q3 2023) from N26.16bn (Q2 2023). Its topline growth was driven by improved sales of CPO and Mill by-products.

The Cost of Sales (adjusted for depreciation) increased by 35.8 % y/y to N27.93bn from N20.57bn (9M 2022) and up 12% q/q. The company’s Gross margin declined marginally in the reporting period to 63.7% from 65.3% (9M 2022). Meanwhile, Gross Profit grew by 26.6% y/y to N48.94bn from N38.64bn (9M 2022), up 8.8% q/q.

Operating Expenses (adjusted for depreciation) moderated by 1.6% y/y to N11.17bn from N11.36bn in 9M 2022 but grew significantly q/q, up 286% to N4.2bn from N1.15bn (Q2 2023). EBITDA increased by 38.4% y/y to N37.76bn (9M 2023) from N27.29bn (9M 2022), down 11.7% q/q. lower CAPEX were incurred in the period for business operations as provision for Depreciation & Amortisation grew marginally by 5.4% y/y to N2.98bn (9M 2023) from N2.82bn (9M 2022). The business recorded Operating Profit of N34.79bn (9M 2023), a 42.2% increase y/y, and 11.8bn (Q3 2023), a decline of 12.9% q/q.

In 9M 2023, the company’s Finance Income increased from N350,000 to N30m although, insignificant when compared to what was incurred as Finance cost which rose marginally by 1.6% to N6.1bn (9M 2023) from N5.97bn (9M 2022) We noticed a rise in Cash and Cash Equivalents balance by 93.3% to N18.56bn (9M 2023) from N9.6bn (9M 2022), contributing to the business steady Quick Ratio of 1.19x, sufficiently meeting all short-term obligations..

Overall, in 9M 2023, the business reported N23.47bn in Profit After Tax, up 47.8% y/y, and in Q3 2023, N8.39bn PAT, down 10.9% q/q.

We maintain a Buy recommendation on Presco with a price target of N337/s. Current price is N220/s.

​​​​​Presco Plc 9M 2023 Quick Take.pdf​

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