INSIGHT BRIEF

Integrated Growth to Drive Sustained Earnings Expansion  

We initiate coverage on ZEN Petroleum Holdings PLC (“ZEN” or the “company”) with a “BUY” recommendation and a 12-month target price of GHS8.69/share. This translates to an upside potential of 44% compared the company’s current market price of GHS6.02. Also, we forecast revenue and EPS to grow at a CAGR of 11.79% and 9.25%, respectively, over the 2025 – 2030 period.  

Investment rationale  

Our positive view is anchored on ZEN’s position as a scaled, vertically integrated downstream petroleum platform, supported by strong volume visibility from its mining segment, a rapidly expanding retail network, and improving operational efficiency. These factors collectively underpin our expectation of sustained revenue growth, margin expansion, and strong cash flow generation, ultimately supporting attractive shareholder returns.

Our investment case is justified by:  

• Strong structural tailwinds for revenue growth, driven by mining sector demand, retail expansion, and favourable macroeconomic recovery
• Sustainable margin profile, supported by integrated operations, economies of scale, and improved cost efficiency
• Robust cash flow generation, underpinned by high throughput volumes and improving working-capital efficiency
• Diversified business model, providing exposure across multiple segments of the downstream value chain and enhancing earnings resilience  

Valuation: We assign a “BUY” rating with a target price of GHS8.69/share (implying ~44% upside), based on a 60:40 blend of DCF and relative valuation methodologies (P/E, EV/Sales, and EV/EBITDA). The DCF valuation incorporates FCFF, FCFE, and DDM approaches, assuming a cost of equity of ~17%, WACC of ~16%, and a terminal growth rate of 11%, reflecting Ghana’s macroeconomic environment and ZEN’s growth profile.  

Key risks to our views and target price: Working capital and liquidity constraints, FX and oil price volatility, global supply disruptions, and revenue concentration within the mining segment.  

Company background: ZEN Petroleum Holdings PLC is an indigenous downstream petroleum company in Ghana, operating a vertically integrated platform across importation, storage, logistics, distribution, retail, and marine services. The company holds a strong position in the mining sector, supplying major mines, while expanding a retail network of over 60 stations. With ~6% market share, ZEN ranks among top industry players, leveraging its integrated model to drive efficiency, reliability, and sustained growth.