Our opinion on the current state of OANDO(OAO)

Oando (OAO) is a Nigerian oil and gas company that operates both within Nigeria and internationally, with listings on the Johannesburg Stock Exchange (JSE) and the Nigerian Stock Exchange. The company’s shares embody high risk for several reasons, primary among them being its exposure to the volatile oil market and the political instability in Nigeria.

Historically, Oando has faced significant challenges, including regulatory scrutiny and allegations of financial misconduct. In April 2018, trading of Oando's shares was suspended by the Nigerian Securities and Exchange Commission to allow for a forensic audit into allegations of corruption and insider trading. The outcomes of these proceedings have cast a long shadow over the company's reputation and operational stability.

Further complicating matters, on June 3, 2019, the Nigerian SEC ordered certain board members to resign and imposed fines on the company, which Oando contested in court. This situation mirrors issues faced by other companies in Nigeria, such as MTN, indicating a pattern of contentious relations between corporate entities and regulatory bodies in the country.

Financially, Oando has been under considerable pressure. In 2019, it was reported that the company's liabilities exceeded its assets, casting doubt on its ability to continue as a going concern. Although Oando reported a shift in corporate strategy to focus on dollar-earning assets, which included the sale of a significant stake in Axxela to Helios Investment Partners, its financial performance has been inconsistent. For the year ending December 2019, Oando posted a significant loss, and although there was a brief return to profitability in 2021, the company reported another substantial loss in 2022.

The trading of Oando’s shares has been marked by low volume, indicating a lack of investor confidence and liquidity. This situation was exacerbated when the JSE suspended trading of its shares in April 2024, pending the publication of its overdue financial results for 2022 and interim results for 2023. When the company finally published its 2022 results, it revealed yet another loss.

Given these circumstances, Oando represents a highly speculative investment with considerable risks associated with its financial instability, regulatory challenges, and the geopolitical environment within Nigeria. Potential investors should exercise extreme caution, considering the company’s history of volatility and the ongoing concerns about its financial health and regulatory compliance. The recommendation would be to avoid this stock unless one has a high tolerance for risk and a deep understanding of the Nigerian market’s complexities.