CardinalStone Securities, a subsidiary of CardinalStone Partners, a Nigerian investment and multi-asset management firm, has played a crucial role in facilitating the successful listing of Aradel Holdings Plc on the Nigerian Exchange Limited (NGX).
This listing marks a significant milestone for the Nigerian capital market, as Aradel Holdings Plc, a key player in the upstream exploration, production, and downstream refining sectors, debuted 4,344,844,360 ordinary shares at a notable price of N702.69 per share on the NGX Main Board, marking a major step toward expanding its market presence and enhancing investor access to its rapidly growing portfolio.
As the sponsoring stockbroker, CardinalStone Securities provided expert advisory and execution services throughout the process, ensuring a seamless transition to the NGX. The firm facilitated the public offering and optimised the transaction structure to maximise value for both Aradel Holdings Plc and its investors. CardinalStone’s deep expertise and insights into the Nigerian capital market were key to the smooth and successful execution of the listing.
“We are delighted to have played a significant role in Aradel Holdings Plc’s successful listing on the NGX,” remarked Peter Omoregie, managing director at CardinalStone Securities. “This achievement not only reinforces Aradel’s market leadership but also showcases our firm’s expertise in delivering seamless capital market transactions. We congratulate Aradel Holdings Plc on this milestone and look forward to supporting their continued growth.”
In conjunction with the listing, CardinalStone Research published an in-depth report on Aradel Holdings Plc, providing key insights into the company’s growth trajectory, strategic expansion, and long-term value potential for investors. The report sets a 12-month target price of N1,258.61 for Aradel, projecting a market capitalisation of N5.47 trillion, implying a 79.1 percent price return on the listing price of ₦702.69 and issuing a BUY recommendation.
Commenting on the listing, Adegbite Falade, managing director and CEO of Aradel Holdings, stated, “This listing is a testament to our resilience, adaptability, and unwavering dedication to providing sustainable energy solutions that drive growth across our communities and industries.
“As we embark on this new chapter in Aradel’s transformation journey, we remain focused on operational excellence, strategic expansion, and delivering returns that reflect our track record and vision for an energised future.”
Findings from the report
CardinalStone Securities initiated coverage on ARADEL with a 12-month target price (TP) and projected market capitalisation of N1,258.61 and N5.47 trillion, respectively. The TP implies a price return of 79.1percent on the listing price of ₦702.69 and a BUY recommendation on the stock.
The report stated: “Our outlook on ARADEL is premised on projected improvements in return metrics and is consistent with the company’s business model, which spans upstream and downstream segments of the oil and gas industry, including oil production, gas processing, and refining operations.
“Its diversified asset base across 2P and 2C reserves at the Ogbele, Omerelu, and Oil Mining Lease (OML) 34 fields positions the company for long-term growth. This structure also provides investors with the opportunity to key into a business with relatively stable earnings.”
According to the report, ARADEL’s strategically larger 2P gas reserves of 410.8 billion standard cubic feet compared to 48.6 million barrels in liquid reserves suggest a stronger focus on higher-margin gas production and development, which is expected to drive future earnings.
In its valuation, CardinalStone Research applied the Discounted Cash Flow (DCF) methodology to provide a comprehensive valuation of ARADEL, recognising the distinct characteristics of its upstream and downstream businesses.
“The DCF method assumes a weighted cost of capital (WACC) of 15.5% on dollar cash flows, driven by a cost of equity of 15.8%, the 10-year FGN Eurobond yield as the risk-free rate (9.8%), a weighted average effective interest rate on debt of 11.4 % that is consistent with management’s latest disclosures, and a perpetuity growth of 5.0%.
“The methodology resulted in enterprise and equity values of $2.32 billion and $2.91 billion, respectively, with the higher equity value underscored by the company’s net cash position.”
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