TotalEnergies EP Gabon Société engages in the mining, exploration, and production of crude oil in Gabon. As of December 31, 2019, the company held mining exploration area that covers approximately 1,461 square kilometers. It also holds interests in operated and non-operated production fields. The company was formerly known as Total Gabon. The company was founded in 1949 and is headquartered in Port-Gentil, Gabon. TotalEnergies EP Gabon Société is a subsidiary of TotalEnergies SE.

Gabon

TotalEnergies EP Gabon SA

Energy

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. On average, the company pays dividends annually. 

EC.PA reported revenue of USD 476mn in the last 12 months, up 7% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 55% from FY23 to USD 9.06.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 30ppts over past six months and grown 2ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported very strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 64.1% in the last 12 months, a decline from 69.1% in FY22. 

Historically, EC.PA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 8.6%, a growth from 5.9% in FY22. 

TotalEnergies EP Gabon SA reported a return on equity (RoE) of 2.3% in the last 12 months, up from 1.5% in FY22. 

In the last 12 months, the return on capital employed (RoCE) grew to 1.4%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.3% in the last 12 months, an increase from 0.8% in FY22. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.6 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are very high. In combination with poor business standards, full protection of shareholder rights is difficult to ensure.

EC.PA has poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is extreme. Among the negative credit factors, we point to slow historical revenue growth, negligible return on capital, and excessive margin volatility.

In highly turbulent market conditions, EC.PA is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, EC.PA is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

TotalEnergies EP Gabon SA

€ 193

4

TotalEnergies EP Gabon SA

€ 193

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

€ 193

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