November 9, 2026/Cordros Report
This report provides an updated outlook and revised estimates for TOTAL following the release of its 9M-26 results. Revenue increased by 12.6% y/y in 9M-26, supported by stronger pricing amid elevated crude oil prices. Profitability also benefited from a 36.6% y/y reduction in net finance costs. Following our review, we raise our target price by 24.7% to NGN424.68/s (Prev.: NGN340.57/s) while maintaining our “SELL” recommendation.
The revised target price reflects expectations of a steeper decline in finance costs of 30.8% y/y (Prev.: -21.9% y/y) as reliance on overdraft funding continues to ease. We forecast a 2026E DPS of NGN11.43, implying a dividend yield of 2.2% at the current share price of NGN518.40/s. Based on our estimates, TOTAL trades at a 2026E EV/EBITDA of 5.6x, below the MEA peer average of 10.5x. However, its 2026E P/E of 22.2x represents a substantial premium to the peer average of 16.2x.
Earnings recovery on improved margins and lower finance costs: We maintain our 2026E revenue growth forecast at 15.3% y/y, with a higher contribution from product pricing following the upward revision to our Brent crude price assumption. We now project a 2026E average PMS price of NGN1,293.07/litre (Prev.: NGN1,225.01/litre), based on an average Brent crude price of USD94.00/bbl (Prev.: USD87.00/bbl), a PMS landing cost of USD0.90/litre or NGN1,194.49 (Prev.: USD0.85/litre or NGN1,173.57), and an average exchange rate of NGN1,380.00/USD. However, we revise our volume growth forecast downwards to 0.3% y/y (Prev.: +2.8% y/y), as higher product prices weigh on consumption and market share losses from the competitive pricing environment in 2025 have yet to fully reverse.
Nonetheless, we still expect revenue growth to outpace COGS growth of 13.6% y/y (Prev.: +13.5% y/y) and a 4.2% y/y rise in operating expenses (Prev.: +9.4% y/y), driving EBITDA margin expansion of 160bps y/y to 4.1% (Prev.: +110bps to 3.6%). We expect net finance cost to decline by 30.8% y/y as overdraft financing moderates. Overall, we raise our 2026E EPS forecast to NGN23.33 (Prev.: NGN12.62) and estimate a DPS of NGN11.43/s, implying a dividend yield of 2.2% at current pricing (NGN518.40/s).
Working capital management supports cash generation: We expect TOTAL’s working capital deficit to narrow to NGN13.25 billion in 2026E (2025: NGN20.15 billion), supported by higher trade receivables and cash balances, alongside lower inventories and short-term borrowings. We forecast a gradual recovery in the near term, with working capital returning to a surplus of NGN1.15 billion in 2028E. We also expect the cash conversion cycle to decline to zero days in 2026E (2025A: 7 days), turning negative at -1 day in 2027E, as improved working capital management and supplier credit support the operating cycle. This is expected to support operating cash flow, which we project to increase to NGN41.43 billion in 2026E (2025A: NGN2.60 billion).
Valuation: Our year-end target price is NGN424.68/s, derived from a 60/40 blend of DCF and sector relative valuation estimates (P/E & EV/EBITDA). Our DCF FV is derived from an equal blend of FCFF (NGN408.37/s) and FCFE (NGN199.95/s) estimates, assuming a 21.5% WACC, 23.7% CoE and a 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from an equal blend of EV/EBITDA (NGN877.25/s) and P/E (NGN333.66/s) multiples, utilizing Bloomberg’s Middle East and African peer median for both factors (8.9x and 14.3x) as multipliers.