NAHCO Aviance, yesterday held a facts behind the figure session on the NGX. In the presentation shared, the company unveiled huge goals. A key detail was left out: The cost 

About the firm 

The principal activities of NAHCO are the provision of services including aircraft handling, cargo handling, passenger handling, passenger profiling, crew transportation, energy and power distribution and leasing of ground handling equipment.

Vision 2029

In the facts behind the figure session, the company unveiled plans to grow its revenue by over 900% to N300 billion in the next 5 years. 

• 2024 it expects N38.49 billion in revenue.
•  2025, it expects N71.12 billion in revenue 
• 2026, it expects N101.93 billion in revenue 
• 2027, it expects N146.07 billion in revenue 
• 2028, it expects N209.34 billion in revenue 

By 2029, it aims to have group revenue of N300 billion 

• Ground handling will contribute N120 billion
• Cargo handling will contribute N40 billion
• Logistics service will contribute N36 billion
• NFTZ will contribute N15 billion
• Commodities will contribute N80 billion
• Travel and hospitality will contribute N7 billion
• Aviation academy will contribute N2 billion 

Management also provided some insights into operations in that space. Here are a few screenshots. 

Ambition must have a cost 

The Chairman of the company Seinde Oladapo Fadeni in his remarks at the event had stated 

We dont need money. One of our subsidiaries. We expect them by the end of next year, to hit a $25 million revenue. Then we can ask them for money if we need. 

Despite two pointed questions  following the presentation by the ED Peter Obabori  asking if the firm would be raising money to achieve this goal management did not respond.

Failing to do this in my view renders the entire event a waste of time. Management could have as well held an analyst call or issued a press release. 

It is inevitable that to achieve this goal, the company will have to raise capital. Either or debt or equity (shares). If it chooses the raise equity, that means dilution. 

9M 2024 numbers 

9M numbers show revenue went up by over 80% from N18.5 billion in 2023 to N33.9 billion in 2024. Profit after tax went up by over 80% as well from N4.9 billion in 2023 to N9.1 billion in 2024.

Barring any mishaps, one can estimate that the company will end the 2024 financial year with over N40 billion in revenue and a profit after tax between N14 to N18 billion.

Whatever the final numbers come up to, they would be the highest the firm has made in the last 5 years. 

Potential dividend 

In FY 2023, NAHCO paid a N2.54 dividend from an earnings per share of  N2.84. That indicates a payout ratio of 89.4%

9M 2024 earnings per share came in at N4.71. 

FY 2024 earnings per share could be in the N7 to N9 mark).

Assuming a 70% payout ratio, FY 2024 dividend could come in at between N5 to N6.30). 

Valuation 

From a valuation standpoint, the stock is trading at a price to earnings ratio of 7.5 times earnings. So it is trading at a fairly cheap standpoint. 

If the firm is going to supercharge its growth, it will have to raise capital. That may put a drag to earnings and dividend payouts when this happens.