November 19, 2025/Cordros Report
This report provides an updated outlook and revised estimates for TOTAL for the remainder of 2025E. The company’s Q3-25 performance was notably weaker, with revenue declining by 38.0% y/y (9M-25: –26.0% y/y), reflecting broad-based contractions across all business segments. Operating expenses rose by 14.0% y/y, exerting additional pressure on profitability and driving an 880bps y/y deterioration in EBITDA margin to –1.2% (9M-25: 2.1%). Following the revisions to our forecasts, we revise our TP downwards by 28.2% to NGN344.85/s (Previous: NGN480.00/s) and maintain our “SELL” recommendation. The downward adjustment reflects our expectation of sustained weakness in sales volumes and heightened cost pressures, both of which continue to weigh on earnings performance. Based on our estimates, TOTAL trades at a 2025E EV/EBITDA multiple of 16.8x, implying a premium to the MEA peer average of 13.4x.
Softer revenue performance to undermine earnings: We revise our 2025E revenue forecast downward, projecting a larger decline of 24.1% y/y (Previous: -18.4% y/y), reflecting weaker sales volumes despite modest increases in product prices. Specifically, we estimate a 41.1% y/y contraction in volumes (Previous: -33.6% y/y), driven by subdued demand for TOTAL’s products amid heightened price competition and an associated loss of market share. On pricing, we now forecast an average PMS price of NGN902.61/litre for 2025E (Previous: NGN898.08 | 2024FY: NGN873.75), based on revised assumptions of an average Brent crude price of USD68.00/bbl (Previous: USD66.00/bbl) and an exchange rate of NGN1,520.00/USD (Previous: NGN1,588.00/USD). Given the weaker sales performance, we now anticipate a more modest gross margin expansion of 20bps y/y to 11.3% (Previous: +60bps to 11.7%), as the sharper volume contraction offsets the benefits from lower cost of sales (-24.2% y/y vs. -18.9% y/y previously). However, higher OPEX (+12.2% y/y vs +10.2% y/y previously) is expected to further pressure profitability, resulting in a 480bps deterioration in EBITDA margin to 1.8% (Previous: -340bps to 3.2%). Overall, we now expect a loss per share of NGN44.26 in 2025E (vs EPS of NGN80.99 in 2024FY), underscoring the combined impact of a weaker topline and elevated operating costs.
Declining equity base could heighten balance sheet risk: With sales expected to remain subdued, we project a loss after tax of NGN15.03 billion in 2025E, which would reduce retained earnings to NGN46.30 billion (2024FY: NGN74.91 billion) and further compress the equity base to NGN46.47 billion (2024FY: NGN75.08 billion). We believe the combination of working capital strain and a weakened equity buffer increases balance sheet vulnerability and limits the company’s capacity to absorb potential shocks. Should losses persist into 2026E, the erosion of the equity base could become more pronounced, potentially constraining the firm’s ability to sustain dividend payments.
Valuation: Our year-end target price is NGN344.85/s, derived from a 50/50 blend of DCF and sector-relative valuation estimates (EV/EBITDA). Our DCF FV is derived from an equal blend of FCFF (NGN163.73/s) and FCFE (NGN216.51/s) estimates, assuming a 24.1% WACC, 28.5% CoE and a 4.0% terminal growth rate. Similarly, our multiple-based FV (NGN499.57/s) was derived from an EV/EBITDA multiple, utilizing Bloomberg’s Middle East and African peer mean of 13.4x as multiplier.
