Obinna Chima, Editor, THISDAY Saturday
EDGY OPTIMIST By Obinna Chima
Renaissance Capital Africa recently initiated coverage of Oando Plc with the argument that the market is valuing the company on the weight of its debts rather than the worth of its assets.
In a report titled, “Oando Plc: A billion barrels in search of a balance sheet,” the emerging and frontier markets investment bank contends that one of Nigeria’s largest indigenous energy companies is trading well below what its underlying oil and gas reserves are worth.
That disconnect between price and value runs through the report. Renaissance Capital puts Oando’s fair equity value at about N1.53 trillion, against a current market capitalisation of roughly N320 billion. Its central point is not that the shares are cheap by accident, but that investors are fixated on the company’s borrowings and overlooked its resource base.
