C&I Leasing Plc has issued a N10 billion Collection 5 business paper (CP) beneath its N50 billion issuance programme, registered with the FMDQ in 2022.
This comes as a part of the corporate’s continued efforts to optimize its working capital and refinance high-interest short-term borrowings.
The provide opened on March 10, 2025, and closed on March 14, 2025.
Key particulars of the issuance
- Challenge value: N1,000
- Tenor: 269 days
- Funding date: March 17, 2025
- Maturity date: December 11, 2025
- Minimal subscription: N5 million and multiples of N1,000 thereafter
- Goal traders: Certified Institutional Traders (QIIs)
- Supply of reimbursement: Working money flows
- Implied yield: 27%
- Low cost price: 22.519%
- Issuer score: “A3” by GCR, “Bbb-” by Agusto & Co
Monetary efficiency and debt place
C&I Leasing’s financials present robust income development however shrinking profitability:
- Massive income development: The corporate made N37 billion in 2024, up 75% from the earlier 12 months. Most of this (85%) got here from leasing earnings.
- However prices are rising quick:
- Lease bills (the price of leasing out belongings) jumped 55%
- Finance prices (the price of borrowing cash) surged 64%
- Working bills (together with salaries and gear wear-and-tear) skyrocketed 112%
Why does this matter?
Regardless that C&I Leasing is making more cash, additionally it is spending much more, which is squeezing earnings. In consequence:
- Pre-tax revenue stood at N2.278 billion, a small revenue in comparison with income.
- Pre-tax margin fell to simply 6% which means for each N100 earned, solely N6 stays earlier than tax.
- Return on belongings (ROA) improved barely to 2%, displaying that belongings are producing some revenue, however not a lot.
- Return on fairness (ROE) rose to 4.96%, which continues to be far under Nigeria’s 24.4% inflation price, which means traders’ actual returns are deeply destructive.
Steadiness sheet & FX translation influence
C&I Leasing’s whole belongings grew by 44%, however this was partially as a result of overseas foreign money translation positive aspects. The depreciation of the naira inflated the worth of its offshore subsidiaries, boosting the overseas foreign money translation reserve by 84% to N29 billion.
Whereas this strengthened fairness and diminished leverage, it didn’t translate to precise money circulate enhancements.
C&I Leasing’s whole belongings surged by 44%, largely as a result of overseas foreign money translation results from its offshore subsidiaries.
On the debt facet:
- Business paper excellent declined sharply from N19.7 billion to N7.169 billion as the corporate repaid N12.5 billion, a powerful sign of its dedication to assembly short-term obligations.
- Complete borrowings, nevertheless, surged by 21% to N44.976 billion, which means the corporate stays leveraged regardless of decreasing short-term debt.
- Working money circulate dropped considerably from N14.5 billion to simply N732 million, largely as a result of heavy business paper reimbursement from core operations.
Takeaways for shareholders and inventory traders
Though C&I Leasing’s N10 billion business paper (CP) issuance primarily targets institutional traders, it additionally has direct and oblique implications for shareholders and retail inventory traders.
By elevating funds by means of debt (CP) reasonably than issuing new shares, C&I Leasing avoids fairness dilution, which means present shareholders preserve their possession stake. That is constructive for inventory traders, because it prevents earnings per share (EPS) from being diluted.
Influence on dividend and bonus shares
In 2023, C&I Leasing paid a last money dividend of 5 kobo per share and issued a bonus of two shares for each 3 shares held. This implies that administration prioritized rewarding shareholders regardless of monetary pressures.
C&I Leasing has a powerful reimbursement report on earlier CPs. Extra so, the CP issuance gives much-needed money circulate to maintain operations and presumably refinance present obligations.
Nevertheless, the growing debt load might strain future earnings, doubtlessly limiting dividend funds.
Within the 2024 monetary 12 months, finance prices grew by 64% YoY to N10.427 billion, pushed largely by finance lease curiosity.
Though business be aware curiosity declined by 39%, contributing 15% of the finance price, the reimbursement affected the web money circulate from investing actions.
Whereas web revenue margin contracted to 1.96%, web money circulate from working actions declined to N752 million from N14.505 billion in 2023.
This might doubtlessly influence dividend funds for the 2024 monetary 12 months.
Inventory value volatility and restoration prospects
CP issuance influence: Elevating N10 billion with out issuing new shares prevents dilution, which is constructive for stockholders.
Nevertheless, if profitability doesn’t enhance, it might restrict the corporate’s means to generate robust returns on fairness (ROE), which is at present low at 1.59%.
The inventory fell 33% YtD in 2024 after gaining 75% in 2023 however has rebounded by 5.84% YtD as investor confidence slowly returns.
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