Rufybaba@Rufyb
The Initiates PLC Q1 2026 Results
Blockbuster earnings. This one is a very compelling money spinner, and it still shocks me that the market let this one be (until the past few days).
I knew it had rallied well in prior years, but the room for more was still there.
When you research a company, one of the common approaches is to adopt the "top-down" approach, where you:
✑ Set the macro expectations (what is the direction of the economy? What are government policies like? What are interest and inflation rates expected to be? Who wins and who loses?)
✑ Set capital market expectations (think about business cycles, and how the financial markets - equity, fixed-income, and foreign exchange markets will behave)
✑ Industry analysis: It is one thing for macro to be good, and for your industry to fall short. For example, the technology sector, with the likes of Nvidia, Microsoft, Alphabet, and Meta, continued to perform well, while folks like Starbucks, Nike, Lamb Weston, and Chipotle Mexican Grill were under pressure.
✑ Company analysis: The industry may be rock-solid, but it does not guarantee that a company within that industry is good. This is where internal company characteristics come into play. What is the competitive advantage? What is the market share? What is the corporate governance like? In the same banking sector, the likes of GTCO and Zenith appear to be doing well, but Unity Bank is in woe.
Having done all of these, I realised that the energy sector holds a special place in the current administration's heart, and it is no surprise that it is the best-performing sector in FY 2026, with a 118% YTD gain. The sector has practically doubled.
Since it was clear that the oil & gas lads were gonna do well, from the onset, what came to mind was "valuation"; what is the cheapest way to enter?
I knew Seplat and Aradel would cook, but is there a cheaper route that is valid and with no major comma? I found an answer in TIP, and I loaded as appropriate.
Seplat has done +80% YTD
Aradel has done +197% YTD
TIP has done +109% YTD
but even as we stand, ...
Seplat's P/E is 25x thereabout
Aradel's P/E is roughly 14x - 15x thereabout
TIP's P/E is less than 5x.😊
TIP has operated quietly as a specialist contractor to the oil and gas industry, providing hazardous waste management, industrial cleaning, and decontamination services.
The company gradually positioned itself as a niche monopoly, and they benefit from rising regulatory and ESG pressure on oil and gas operators in Nigeria.
In short, they derive their value from the oil & gas sector (like a complementary demand). And when you think about how local/indigenous oil players want to prove they are as good (and as compliant) as the IOCs, TIP's services are one way to show it.
I see TIP that enjoys the value that oil & gas lads enjoy, but is not entirely exposed to their risk (and that sounds like complete value to me). The idea is that although they majorly do oil waste, they are expanding their focus into other industrial waste (and it was the reason they raised equity capital).
Revenue trend:
FY 2025: +151% y/y
FY 2024: +152% y/y
FY 2023: +120% y/y
FY 2022: +152% y/y
And so far in FY 2026, I am seeing +197% revenue growth y/y.
The balance sheet is so clean, especially considering the industry they are in. The only eyebrow is the receivables typical of such business, but right now, the oil & gas lads are flush with cash.
Return on invested capital (ROIC) looks like 90%, and return on equity (ROE) looks like 67%, on a near-zero debt.
Damn.
