Presco: The Plantation Is Excellent. The Price Has Heard.

The business is integrated, scarce and prodigiously profitable. The shares are no longer a secret passed between sensible men beneath a palm tree.

The Lokoja Contrarian10 August 20269 min read

PrescoNGXPalm oilH1 2026Valuation

Presco is the sort of company Nigerian investors say they want: real assets, essential products, pricing power, hard-to-replicate plantations and cash arriving through the front door. Naturally, we noticed after the price had acquired a chauffeur.

The business deserves the admiration. Presco controls the chain from nursery and plantation to milling, refining and specialty fats. It operates thirteen estates across Nigeria and Ghana, owns processing assets that cannot be reproduced by ordering machinery and issuing a triumphant press release, and sells into a country whose edible-oil deficit provides a structural umbrella. Land, mature palms, mills, logistics and customer relationships take years to assemble. This is a moat measured in hectares and patience.

The group is larger than the old Presco familiar to NGX investors. Ghana Oil Palm Development Company, Siat Nigeria and Saro Oil Palm extend its footprint across West Africa. That creates scale, product breadth and procurement advantages. It also creates integration risk, goodwill and a more complicated set of accounts. A plantation can be inspected. A sprawling group requires considerably sharper spectacles.

H1 2026: a strong headline with a tax bill underneath

Revenue in the first half was almost unchanged at ₦198.75 billion. Operating profit slipped 2.6% as cost of sales, administration and distribution costs rose. Yet profit before tax increased 9.3% to ₦122.22 billion, helped by a 31.9% fall in finance costs and higher finance income. This is good balance-sheet work rather than a fresh burst of operating growth.

Six-month scorecard

Group figures for H1 2026 versus H1 2025.

MeasureH1 2026H1 2025 / change

Revenue₦198.75bn₦198.74bn · Flat

Operating profit₦126.48bn₦129.80bn · −2.6%

Finance cost₦13.27bn₦19.50bn · −31.9%

Profit before tax₦122.22bn₦111.85bn · +9.3%

Profit after tax₦82.27bn₦88.72bn · −7.3%

Basic EPS₦70.52₦88.72 · −20.5%

The tax collector then entered with admirable punctuality. Tax expense rose 72.7% to ₦39.95 billion, pulling profit after tax down 7.3% to ₦82.27 billion. Basic earnings per share fell to ₦70.52, also affected by the larger post-rights share count. The company can truthfully celebrate higher pre-tax profit. The shareholder, who owns the after-tax figure, should celebrate more quietly.

Cash conversion was healthier. Net cash generated from operations rose to ₦68.08 billion from ₦56.05 billion. The group repaid roughly ₦197.25 billion of loans during the half, while total liabilities fell 42.5% from December to ₦277.80 billion. Equity rose 13.8% to ₦503.62 billion. Cash and cash equivalents declined sharply because the balance sheet was used to repay debt. That is not a liquidity accident. It is the money leaving the parlour to do some work.

The balance sheet has changed shape

Group position at 30 June 2026 versus 31 December 2025.

Total assets**₦781.41bn**

Total equity**₦503.62bn**

Total liabilities**₦277.80bn**

Borrowings**₦119.52bn**

Cash, net of overdraft**₦123.11bn**

Interim dividend**₦10 per share**

The rights issue bought a cleaner future

Presco raised roughly ₦237 billion through a one-for-six rights issue at ₦1,420 a share. The offer was reported as 103% subscribed. Existing shareholders funded a large piece of the group’s expansion and deleveraging. The immediate dilution is real: issued shares increased from one billion to about 1.17 billion. The bargain only works if the enlarged asset base produces durable per-share cash earnings above the cost of that new equity.

So far, the evidence is mixed but respectable. Debt has fallen dramatically, finance costs are down and operating cash flow is strong. EPS, however, fell in H1. This is partly tax and partly arithmetic, but arithmetic is not a colonial conspiracy. It remains the method by which shareholders discover what belongs to each share.

Governance is not a decorative footnote

Siat Group holds 61.2% of Presco. Strategic control can support long-term investment and technical discipline. It can also leave minority shareholders relying heavily on the controlling owner’s judgement, related-party discipline and disclosure. The 2025 AGM has been postponed while appeals concerning court rulings around the 2024 and 2025 meetings await judgment. That does not impair plantation operations, but it is plainly material to governance. Investors should not treat it as a troublesome weed to be cropped out of the annual photograph.

The other risks are agricultural and commercial rather than mysterious: softer crude palm-oil prices, crop disease, weather, estate security, input inflation, acquisition integration, tax volatility and the temptation to convert a superb Nigerian franchise into a merely adequate regional empire. Biological assets also introduce valuation judgement into the balance sheet. Palm trees are tangible; their accounting can still acquire an impressionistic quality.

Valuation: excellent does not mean inexpensive

At the 7 August reference price of ₦2,070, the enlarged share count implies a market value of roughly ₦2.42 trillion. Annualising H1 earnings gives a crude multiple near 14.7 times earnings, while the shares trade around 4.8 times June book value. Neither figure is absurd for a high-return, scarce asset. Neither leaves much room for a harvest of ordinary quality.

A sensible valuation should use normalised earnings rather than simply doubling a half-year distorted by tax and acquisition effects. On normalised earnings of roughly ₦150 to ₦175 a share, a through-cycle multiple of 10 to 13 times suggests a broad value range. The result is not a magic number. It is a reminder that the market already expects Presco to remain exceptional.

Scenario valuation

Illustrative value per share, not a live price target.

Bear**₦1,200–₦1,450**

Lower palm-oil pricing, margin normalisation, stubborn tax and weak integration returns.

Base**₦1,750–₦2,100**

Strong cash generation, lower finance costs and steady per-share earnings without another rerating.

Bull**₦2,450–₦2,800**

Successful regional integration, sustained high margins and earnings compounding above the enlarged share base.

Prospective investor’s entry plan

Price discipline matters because the plantation has already been discovered.

PriceStanceReason

Below ₦1,600AttractiveThe price begins to compensate for palm-oil cyclicality, tax, governance and integration risk.

₦1,600–₦1,850Accumulate carefullyA reasonable entry for patient capital if operating cash flow and debt reduction remain intact.

₦1,850–₦2,150Hold / watchQuality is visible and much of the balance-sheet repair is already reflected.

Above ₦2,150Do not chaseThe return increasingly depends on sustained exceptional margins or another rerating.

What would change my mind

• More bullish: group EPS resumes growth after dilution, operating cash flow continues to cover dividends and capex, and acquired estates lift returns without fresh equity.
• More cautious: high margins prove mostly cyclical, tax remains structurally heavier, related-party or AGM disputes weaken minority confidence, or expansion absorbs cash without improving per-share value.
• Immediate thesis break: renewed large capital raising before the 2025 rights proceeds demonstrate acceptable incremental returns.

The decision is therefore rather less exciting than the business. Presco is investible. It has a genuine moat, strong cash economics and a substantially repaired balance sheet. Existing holders can continue to own it, provided they monitor per-share returns rather than plantation acreage. A new investor at ₦2,070 is paying a fair-to-full price and should buy only in stages, with the better asymmetry below ₦1,850.

The plantation is excellent. The balance sheet is much improved. The price, regrettably, has read the same annual report.

Research basis: Presco Plc H1 2026 unaudited financial statements, H1 2026 performance release, FY2025 disclosures and the 2025 rights circular. Reference share price: ₦2,070 at 7 August 2026. Valuation ranges are Seven Gates estimates. This article is analysis, not personal investment advice.