In a newly released equity report titled “Strong Macros to Support Earnings,” the firm set a target price of ₦62.47 for Transcorp, up from a reference price of ₦49.00, citing improving macroeconomic indicators, policy reforms, and robust sectoral drivers as key factors underpinning the forecast.
Debt Refinancing Seen as Catalyst for Power Sector Recovery
CardinalStone highlighted the Federal Government’s proposed ₦4.0 trillion debt-refinancing plan as a pivotal development for Nigeria’s power sector. The analysts believe the initiative could ease funding constraints, improve cash flow for Generation Companies (GenCos), and help restore investor confidence in a sector long plagued by liquidity shortfalls.
For Transcorp, which operates a major power subsidiary, the report identified the debt clearance as a potential game-changer, noting that it could significantly reduce receivables, enhance liquidity, and support ongoing capacity expansion efforts.
Earnings Outlook: Sustained Growth Expected
The firm projects that Transcorp will maintain strong earnings momentum into the third quarter of 2025, buoyed by higher power generation output and steady growth in its hospitality segment.
The analysts noted that the summer months, extending into Q3, likely boosted hotel occupancy and leisure activity — factors expected to reinforce top-line performance in Transcorp Hotels.
The upbeat projections follow a solid first-half performance in 2025, during which Transcorp posted a pre-tax profit of ₦85.6 billion, marking a 20.84% year-on-year increase.
Financial Highlights: Strong Revenue and Balance Sheet Growth
Transcorp’s total revenue surged 59.43% year-on-year to ₦279.6 billion in H1 2025 — already 69% of its full-year 2024 figure.
- The power segment remained the main driver, contributing ₦183.5 billion in energy sales and ₦48.5 billion in capacity charges.
- The hospitality arm generated ₦31.3 billion from room sales and ₦13.6 billion from food and beverages, with other services rounding out the total.
Strong revenue growth, outpacing costs, helped sustain a gross profit margin of 46.81%, while total assets rose 20.7% to ₦907.3 billion. Retained earnings also increased to ₦140.9 billion, up from ₦112.3 billion a year earlier — reflecting solid operational strength.
Market Performance and Investor Sentiment
Transcorp’s share price has seen notable volatility in 2025. After opening the year at ₦43.50, it rallied to ₦57.00 in February before retreating in March and May to lows around ₦43.10. A mild recovery since June saw the stock climb back to ₦49.90 in September, before slipping again to around ₦46.10 in early October.
Analysts say this pullback presents a potential entry opportunity for investors seeking exposure to a fundamentally strong growth story.
“If the company delivers strong Q3 earnings as anticipated, the stock could regain upward momentum and sustain a renewed bullish trend,” the report noted.
With supportive government policy, rising energy output, and resilient hospitality earnings, CardinalStone believes Transcorp remains well-positioned for long-term value creation, offering a balanced play on Nigeria’s power and consumer sectors.