Rating Summary:
We issue a SELL rating on TotalEnergies Marketing Ghana Plc (TOTAL), as we believe the stock’s price has run ahead of its fundamentals. The share price has surged 208.7% year-to-date to GHS 40.50, far exceeding our fair value estimate of GHS 30.84. This rally, in our view, reflects excessive market optimism surrounding the company’s solarisation initiative, cost-efficiency gains, and dividend stability, all of which are already priced into the current valuation. We note that, the solarisation programme has improved operational efficiency, reducing reliance on grid power and moderating operating expense growth to 17.5% (2018–2023) from 19.4% (2012–2017). We forecast operating expense to grow at an average of 16.3% (2025-2029), culminating in a forecast operating margin to average 7.0% between FY2025 and FY2029, only modestly above the historical five-year average of 5.6%.
However, competitive pressures in Ghana’s downstream petroleum market have intensified, with a total of 192 licensed OMCs, several of which offer aggressive pump-price discounts to capture market share. This dynamic continues to erode pricing flexibility and volume growth for TotalEnergies Ghana, while gradually constraining its overall market position. We estimate revenue growth to decelerate to a 9.4% CAGR (FY2025 – FY2029) from a historical 21.7%, reflecting the challenges of maintaining market share amid intensifying price competition. Additionally, global energy prices could remain depressed in the short-to-medium term as faltering global demand shifts the crude oil market into oversupply with the World Bank forecast average price of USD 61.5pb (2026 – 2027). Domestically, we expect a more stable Ghanaian Cedi with an average annual depreciation of 6.8%. This combined effect of a likely depressed energy prices and relatively stable exchange rate will cap the upside for domestic pump prices, restraining topline momentum.
The company has maintained a consistent dividend payment, steadily rewarding shareholders over the years. The company’s five-year average dividend yield stands at 16.4% (2020–2024), underpinned by a five-year average payout ratio of 47.6%. However, the sharp 208.7% year-to-date rally in the share price has compressed the dividend yield to an average of 15.1% (2021–2025) and a current yield of 6.3%., While TOTALEnergies’ current dividend yield of 6.3% appears unattractive relative to the current 364-day Treasury bill rate of 13.02%, it remains higher than GOIL’s dividend yield of 2.1%. However, we opine that the sharp decline in TOTAL’s dividend yield supports our thesis that the current price rally appears to outpace the company’s fundamentals. We obtained our fair value estimate using a blended valuation approach comprising Discounted Cash Flow (40% weight), Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortisation – EV/EBITDA – (45% weight), and Dividend Discount Model (15% weight). The intrinsic value estimate is based on a 15.69% risk-free rate, a weighted average cost of capital (WACC) of 20.7%, and a terminal growth rate of 5.0%.