Fate of Stocks to be Decided By Return on Investment
- By Business World
- Published June 22nd, 2010
- Back Page
- Unrated
RETURNS on equity will continue to determine which stocks are bought by the investing public. With Liquidity as a major problem now and the take-off of the Asset Management Company of Nigeria (Amcon) being delayed, prices will continue to remain low. “But it is also good for investors who employ technical analysis; they still make profit out of the down trend of the market,” says Mr. Fred Ogazi of Markon Limited. He continues, “if one understands the technique of up and downtrend, one can make profit as one will know where the market is headed. With this knowledge there must be every expectation of a profit even in this seemingly unprofitable market situation”.
As more reforms in the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) take place as well as in the Central Bank of Nigeria (CBN), all agree that the second half of the year is definitely going to be loaded with a lot of activities. Operators agree that this is the month to start positioning for the future as issues concerning AMCON, margin loans to stock brokerage houses and the new rules for margin lending will be resolved.
The little reforms that were carried out brought in some level of confidence which attracted some investors. By the time the reforms are completed, the Nigerian capital market will again be the preferred destination of foreign investors.
Those who avidly follow the market know that all the reforms will produce positive results. The market has moved from a hopelessly depressed one to a reasonable level of recovery that is still full of wonderful opportunities.
The company’s below (two are expected to release their audited results, two have released), can be a good buy.
Continental Re-Insurance
This company that was listed three years ago on the exchange has been very compliant with listing requirements as it provides promptly and regularly its quarterly and annual reports. It is a strictly reinsurance insurance company with 30% local and 70% foreign ownership. Prior to its listing on the exchange, it has been consistent in paying dividend to its shareholders in the last five years. A thorough look into its earnings history reveals that it has been growing its earnings quarterly by 6 percent. The audited result for the financial year ended December 31, 2009 is being eagerly awaited.
But the general feeling is that except it becomes quite generous, there might be little dividend because of the increased outstanding shares from its last public offer. This will dilute its earnings and makes the possibility of any dividend slim.
However, the management might decide to dip hands into its reserves to make shareholders happy. Again, at the current price of N1.10 it can support a very small dividend. There is also a very good ownership structure working for the company; 70 percent foreign but localized jobs. On the grounds of very strong potentials and reward history as well as ownership structure, the stock is a good buy. Its fundamentals are also strong.
BOC Gases
This company specializes in the production and sales of industrial, medical and special gases. It also sells medical specialist medical equipment.
It has been very irregular in the release of its quarterly results especially first and third quarter results but consistency in growing the earnings cannot be vouched for.
Operators just do hope that with the recent zero tolerance attitude of SEC to regulation breaches, Boc Gases will become regulation-compliant. This will help investors assess the quarterly performance of the company properly.
However, BOC Gases has been very regular in the last five years in paying dividend to its shareholders even in these had economic times. Its products are very much in demand in and out of season. Its price is always on the uptrend because of its relatively small outstanding number of units (393 million) in circulation. So, it is not very much available. Thus the earlier one takes position in this stock the better.
Cement Company of Northern Nigeria
This company has shown that it has returned to winning ways with the release of its December 31, 2009 year-end financial report. All indices were up - turnover, profit after tax and earnings per share. Its expansion and management reshuffling has produced heart-warming results. The market has come to appreciate the quality and re-packaging of its products and this have finally come to impact positively on its balance sheet.
In the period under review, the company’s turnover grew by a good 20 percent to close the year at N11.87 billion in December 2009 from N9.88billion in December 2008, profit after tax also grew by 18 percent to close at N1.81billion in December 2009 from N1.53 billion in December 2008, while earnings per share closed at N1.44 as against N1.26 as at December 2008. Asset equally grew by 6 percent from N3.98 billion in December 2008 to N4.22 billion as at December 31, 2009.
Out of the EPS of N1.44, it is paying a final dividend of 10kobo, bringing its dividend to a total of 90kobo in the year ended December 31, 2009. For as many as would want to grab this dividend should buy this stock on or before June 29, 2010 when the register closes. Payment is scheduled for July 13 2010.
Ashaka Cement Plc
Ashaka Cement is one of the leading cement companies in the country. It presented its year-end December 31, 2010 report recently but was not impressive as indices were all on the negative side.
However, for the generous bonus we advise that it should be bought. But in the long run it will pay patient investors because it is in a very viable sector - building materials.
The negative indices are not unconnected with the restructuring, both in human and material terms, that is going on in the company. Cement Company of Northern Nigeria (CCNN) was in the same state of affairs two years ago before it found its feet.
In the report under review, turnover dipped by 20percent from N21.38 billion in December 2008 to N17.19billion in December 2009, profit after tax declined by an astonishing 54percent from N2.07billion in December 2008 to N943 million in December 2009. However, to assure the investing public of its the company’s via liability, the management declared a bonus issue of one new share for every eight previously held. Investors should go for the bonus.
As more reforms in the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) take place as well as in the Central Bank of Nigeria (CBN), all agree that the second half of the year is definitely going to be loaded with a lot of activities. Operators agree that this is the month to start positioning for the future as issues concerning AMCON, margin loans to stock brokerage houses and the new rules for margin lending will be resolved.
The little reforms that were carried out brought in some level of confidence which attracted some investors. By the time the reforms are completed, the Nigerian capital market will again be the preferred destination of foreign investors.
Those who avidly follow the market know that all the reforms will produce positive results. The market has moved from a hopelessly depressed one to a reasonable level of recovery that is still full of wonderful opportunities.
The company’s below (two are expected to release their audited results, two have released), can be a good buy.
Continental Re-Insurance
This company that was listed three years ago on the exchange has been very compliant with listing requirements as it provides promptly and regularly its quarterly and annual reports. It is a strictly reinsurance insurance company with 30% local and 70% foreign ownership. Prior to its listing on the exchange, it has been consistent in paying dividend to its shareholders in the last five years. A thorough look into its earnings history reveals that it has been growing its earnings quarterly by 6 percent. The audited result for the financial year ended December 31, 2009 is being eagerly awaited.
But the general feeling is that except it becomes quite generous, there might be little dividend because of the increased outstanding shares from its last public offer. This will dilute its earnings and makes the possibility of any dividend slim.
However, the management might decide to dip hands into its reserves to make shareholders happy. Again, at the current price of N1.10 it can support a very small dividend. There is also a very good ownership structure working for the company; 70 percent foreign but localized jobs. On the grounds of very strong potentials and reward history as well as ownership structure, the stock is a good buy. Its fundamentals are also strong.
BOC Gases
This company specializes in the production and sales of industrial, medical and special gases. It also sells medical specialist medical equipment.
It has been very irregular in the release of its quarterly results especially first and third quarter results but consistency in growing the earnings cannot be vouched for.
Operators just do hope that with the recent zero tolerance attitude of SEC to regulation breaches, Boc Gases will become regulation-compliant. This will help investors assess the quarterly performance of the company properly.
However, BOC Gases has been very regular in the last five years in paying dividend to its shareholders even in these had economic times. Its products are very much in demand in and out of season. Its price is always on the uptrend because of its relatively small outstanding number of units (393 million) in circulation. So, it is not very much available. Thus the earlier one takes position in this stock the better.
Cement Company of Northern Nigeria
This company has shown that it has returned to winning ways with the release of its December 31, 2009 year-end financial report. All indices were up - turnover, profit after tax and earnings per share. Its expansion and management reshuffling has produced heart-warming results. The market has come to appreciate the quality and re-packaging of its products and this have finally come to impact positively on its balance sheet.
In the period under review, the company’s turnover grew by a good 20 percent to close the year at N11.87 billion in December 2009 from N9.88billion in December 2008, profit after tax also grew by 18 percent to close at N1.81billion in December 2009 from N1.53 billion in December 2008, while earnings per share closed at N1.44 as against N1.26 as at December 2008. Asset equally grew by 6 percent from N3.98 billion in December 2008 to N4.22 billion as at December 31, 2009.
Out of the EPS of N1.44, it is paying a final dividend of 10kobo, bringing its dividend to a total of 90kobo in the year ended December 31, 2009. For as many as would want to grab this dividend should buy this stock on or before June 29, 2010 when the register closes. Payment is scheduled for July 13 2010.
Ashaka Cement Plc
Ashaka Cement is one of the leading cement companies in the country. It presented its year-end December 31, 2010 report recently but was not impressive as indices were all on the negative side.
However, for the generous bonus we advise that it should be bought. But in the long run it will pay patient investors because it is in a very viable sector - building materials.
The negative indices are not unconnected with the restructuring, both in human and material terms, that is going on in the company. Cement Company of Northern Nigeria (CCNN) was in the same state of affairs two years ago before it found its feet.
In the report under review, turnover dipped by 20percent from N21.38 billion in December 2008 to N17.19billion in December 2009, profit after tax declined by an astonishing 54percent from N2.07billion in December 2008 to N943 million in December 2009. However, to assure the investing public of its the company’s via liability, the management declared a bonus issue of one new share for every eight previously held. Investors should go for the bonus.
