Geregu Power Plc, a major player in Nigeria’s electricity generation sector, continues to capture investor confidence, driving its market capitalization to an impressive N2.8 trillion in September 2024.
This milestone highlights the company’s upward trajectory, underlining its domineering growth in the Nigerian energy market and reflecting strong bullish sentiment among investors.
Since the beginning of 2024, Geregu Power’s stock has been on a remarkable upward trend, with its market capitalization crossing the N1 trillion mark as early as January 15, 2024. This achievement was propelled by a 7.52% rise in its share price, marking the company’s entry into the prestigious “SWOOT” (Stocks Worth Over One Trillion) club.
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Although it experienced a period of stagnation from April to August, Geregu Power’s stock regained momentum in September, posting a 7.7% increase in market cap, which ultimately reached N2.8 trillion.
Share Price Performance
Since its listing on the Nigerian Exchange in October 2022, Geregu Power’s stock has seen a stunning appreciation, driven by positive market sentiment and the company’s robust financial performance. By September 2024, the company’s stock had soared by over 700% from its initial trading price.
The year 2024 we witnessed some of the most significant price hikes for Geregu Power. In February, the share price surged 72%, jumping from N568 to N977, with a market volume of 17 million shares. Although the stock experienced a quieter phase between April and August, market activity picked up in September, with a 15% gain by the third week and 2.5 million shares traded.
Key Drivers of Investor Confidence
One of the most significant catalysts for Geregu Power’s strong market performance is its strategic partnership with Siemens Energy. The two companies signed a Memorandum of Understanding (MoU) in Berlin on May 29, 2024, aimed at expanding the capacity of the Geregu 1 power plant.
This partnership is designed to boost the plant’s operational capacity, ensuring more sustainable and efficient power generation. This partnership positions Geregu as a key player in driving Nigeria’s power infrastructure development forward.
This strategic collaboration has been noted as a major contributor to Geregu Power’s stellar financial performance. The company reported an impressive pre-tax profit of N30.2 billion for the first half of 2024, a 145% increase from the N12.3 billion recorded during the same period in 2023. Despite this remarkable growth, the market did not immediately react to the company’s positive results. However, by September, investor sentiment turned bullish again, pushing the stock up by 15%, with 2.5 million shares changing hands.
At Geregu Power’s 12th Annual General Meeting, Chairman Femi Otedola expressed optimism about the company’s future, emphasizing its focus on aligning with global energy trends.
He stated, “In 2024, Geregu Power aims to align our business operations with the global trend towards affordable, clean, and efficient energy systems.” This vision, combined with the company’s strategic moves, is believed to have further fueled investor confidence in Geregu’s long-term potential.
Another factor bolstering investor confidence is the company’s commitment to its shareholders. Geregu Power’s dividend policy has been praised by market participants for its generosity.
Patrick Ajudua, President of the New Dimension Shareholders Association, lauded the company’s decision to pay dividends above its earnings per share (EPS). He highlighted that despite an EPS of N6.25, the company will pay N8.00 as a dividend, demonstrating its commitment to rewarding shareholders.
Looking ahead, Geregu Power’s recent earnings forecast for Q4 2024 projects revenue of N61.46 billion, a 103% increase from Q2 2024. Additionally, the company anticipates a pre-tax profit of N11.07 billion, up from N8.25 billion recorded in Q2.
A Bright Future in Nigeria’s Energy Sector
With ongoing challenges in the country’s electricity generation and distribution, Geregu Power’s expansion plans and strategic partnerships with global players like Siemens put the company in a strong position to help bridge Nigeria’s energy gap. This means, that as the government looks to improve power supply and attract investments into the sector, the company’s leadership role is becoming increasingly critical.
Energy experts have noted that Geregu Power’s strategic initiatives, including its capacity expansion and commitment to delivering shareholder value, will likely keep it at the forefront of Nigeria’s energy transformation.
Good day Sir.
For Geregu Power Plc to pay her shareholders dividend of ?8.00 which is more than its EPS of ?6.25, do you think they can maintain this and still be active in the market.
Do you not think that the company will run into trouble in the future?