Both Transcorp Power Plc and Geregu Power Plc are the most capitalised Utility service firms and they both recorded better-than-expected earnings growth that surprised to the upside in the first quarter (Q1) 2024.

Geregu provides better value at its current price than Transcorp Power. It also has a higher return on equity (ROE).
Transcorp Power has better margins, and slightly bigger dividend yield.

Why you might want to choose Geregu:

Based on share price appreciation, Geregu is a better choice as its shares have gained 150.63 percent so far, which makes it the second best performing stock on the NGX.
Based on a lower price to earnings (P/E) ratio, Geregu looks to be the better value buy. A return on equity of 36.50 percent is higher than Transcorp Power, which means Geregu Powers’ management are efficient in utilising shareholders’ resources in generating higher profit.
Geregu has posted higher revenue growth in the first quarter of 2024.

Why you might pick Transcorp Power:

The dividend yield of 0.93 percent is higher than that of Geregu.
Transcorp Power net margin is higher than its peer rival’s, which makes it more efficient and profitable.

Growth catalyst for Geregu Power

Geregu Power Plc and Siemens Energy recently signed a Memorandum of Understanding (MoU) to jointly develop solutions for capacity expansion at the Geregu 1 power plant from its current capacity of 435mw to 500mw.

Relating to the latest deal, Geregu Power said it will lead to the establishment of a combined cycle operations to generate an additional 200mw and new builds using lower emission turbines with an added capacity of 500mw to birth Geregu 3, bringing Geregu Power Plc’s overall nameplate capacity to 1,200mw.

These initiatives, it stressed, are targeted at higher power output, improved efficiency, lower emissions, higher flexibility, longer equipment lifespan and maximising shareholder value through increased earnings.

Chairman, Board of Directors of Geregu Power Plc, Mr. Femi Otedola, led the Geregu Power Plc team while Mr. Dietmar Siersdorfer, Managing Director, Middle East and Africa led the Siemens Energy team.

Growth catalyst for Transcorp Power

Transcorp power is spending over N44bn ($44m) in capex in 2024 to help achieve 740 megawatts (mw) of available capacity by 2024 year end, with 240mw set to be added by this summer. The firm is in talks with 3 Discos to help receive excess power it produces that the national grid cannot handle.

The firm is investing to boost cost optimization, improve gas usage and efficiency, and boosting capex on turbines maintenance.

Its play in West African power pool which brings in 18% of revenue will help to reduce FX risk. The company currently accounts for 7.0% of Nigeria’s installed grid capacity but generates 10.0% of the country’s power needs, with its leadership position in the West African Power Pool (WAPP) and planned strategic alliances with DISCOs, eligible customers, and state governments leaving legroom for output growth in the near term.

Transcorp Power forecasts its annual revenues to surge to over N500 billion by 2031, from N142 billion in 2023, according to the CEO Peter Ikenga.

The final word on Geregu Power vs Transcorp Power

Whilst Transcorp Power has higher profit margins, Geregu has done a better job in turning the resources of its owners into a larger bottom-line as investors have been snapping up its shares since January.



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