May 5, 2026/InvestmentOne Report

Okomu Oil Palm Plc recorded a revenue of NGN58.95bn in Q1:2026, representing a modest 1.45% YoY increase from NGN58.11bn in Q1:2025, highlighting a slowdown in topline momentum relative to prior periods. The weak growth profile suggests limited expansion across pricing and volume within the quarter. However, performance at the cost level was notably stronger, as Cost of Sales declined by 24.53% YoY to NGN11.70bn (Q1:2025, NGN15.50bn). This sharp contraction in production costs drove Gross Profit higher by 10.90% YoY to NGN47.26bn, compared to NGN42.61bn in the prior year.

Consequently, gross margin expanded significantly to 80.17% from 73.33%, reflecting a material improvement in cost efficiency. The widening spread between revenue and direct costs underscores a margin-led earnings structure, where profitability is increasingly driven by operational efficiency rather than strong revenue growth.

Q1:2026 results highlight a margin-supported earnings profile, with efficiency gains sustaining profitability despite softer revenue growth. However, rising overheads and financing costs remain key risks to upside, potentially limiting further margin expansion.

We expect steady operations and cost control to support earnings. However, while we forecast sustained growth, it is expected to be modest. With a target price of NGN1,398.22 against a current price of NGN1,765.00 (implying -20.78% downside), we maintain a SELL recommendation.

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