Transnational Corporation of Nigeria: In-Depth Investment Thesis

Taslim Ahmed of Eximus Partners presented his in-depth investment thesis on Transnational Corporation of Nigeria (Lagos: TRANSCORP) at Best Ideas 2018.

Transnational Corporation of Nigeria, established in 2004, has two core businesses: (i) a hotel business with consistent earning power and a wide moat due to its position as the only hotel of its kind in the country’s capital, and (ii) a power generating company with installed capacity of 972 MW and operating capacity of 595 MW at yearend 2017. The hospitality company has two hotels under construction, with a completion date in 2019 for the more important hotel, which should more than double the company’s revenue. The power company is expected to reach full capacity by 2018 and to expand installed capacity to 2,500 MW in the coming years. The power company represents the more significant opportunity, with tariffs expected to increase by 65+% due to changing macro conditions. The share price has yet to reflect this change. Increased capacity and tariffs will lead to increased profitability for the 40% operating margin utility company. Transcorp recently traded at a market cap of 58 billion naira ($190 million) vs. a 46 billion naira ($150 million) market cap for the listed hospitality company alone. Meanwhile, the power company had 2016 revenue of $126 million and operating profit of $52 million. As a result, Taslim sees potential for 140+% share price upside.

About the instructor:

Taslim Ahmed is the founder and managing partner of Eximus Partners. He is currently a final year undergraduate at Bocconi University, Milan, Italy. He started Eximus Partners in 2013, after a short stint at Sigma Securities (Stock Brokerage) as an intern. He invests in the U.S and Nigerian markets with focus on the latter using an opportunistic approach to investing.

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