.… as Forte Oil, MRS, Mobil’s fortunes dwindle
- Growth must be sustained- Investors
- There is need for caution, say experts
The only way the development could translate to better days is when the companies pay more rewarding returns on investment at the end of the 2017 and 2018 financial years
T he market capitalisation of the Nigerian Stock Exchange increased from N9.85 trillion as at January 2, 2017, to N13.61 trillion by January 2, 2018, raking in N3.76 trillion within the period.
Aside from the value of the market, the analysis of the transactions showed that the aggregate value of transactions, from December 2016 to December 2017, increased by 95.45 per cent, from N1.055 trillion recorded in 2016 to N2.062trillion in 2017.
Investigations by The Point revealed that foreign investors outperformed domestic investors by 7.8 per cent. The total foreign transactions increased significantly by 121.91 per cent; from N67.64 billion recorded in October 2017 to N150.10 billion in November 2017.
Also, while the NSE’s total domestic transactions increased by 113.34 per cent, from N60.18 billion to N128.39 billion within the same period, the foreign inflows increased by 129.93 per cent; from N39.56 billion to N90.96 billion within the same period.
On the equities performance for 2017, Forte Oil Plc remained the worst performing stock on the NSE.
According to the statistics obtained by our correspondent, the stock, which opened trading in 2017 at N84.43 per share, dropped by over 80 per cent to close the year at N43.48 per share.
Forte Oil had, in 2016, also emerged the worst performing stock, having dropped by 74.42 per cent, from N330 as at December 2015 to N84.43 per share by December 2016.
University Press Plc followed with a loss of over 49 per cent to close at N2.28, compared with N4.24 with which it opened for the year.
MRS Oil Plc shed value by 36.49 per cent to close at 27.46, against N43.24; while Mobil Oil Plc lost 30.25 per cent to close at N194.60 in contrast with the year’s opening price of N279 per share. Julius Berger Plc also dipped by 27.42 per cent, from N38.58 to N28 within same period. Conoil Plc, which opened 2017 at N37.48, dropped by 25.42 per cent, as it closed at N28 per share.
The shares of Total Oil Plc also witnessed 23.09 per cent loss when it closed at N229.95 against the year’s opening price of N299; while Trans-nationwide Plc dipped by 22 per cent, to close at 78kobo in contrast with N1 posted in 2016.
However, Dangote Sugar Plc emerged the best performing stock in terms of share value during the review period. It rose by 227.33 per cent to close at N20 per share against the opening price of N6.11.
While International Breweries Plc rose by 194.59 per cent from N18.50 to N54.50, Fidelity Bank Plc, which opened at 84kobo, rose by 192.86 per cent, to close at N2.46 per share.
Fidson Plc increased by 189.06 per cent to close at N3.70, against opening price of N1.28; and Dangote Flour Mills Plc inched by 185.88 per cent, from N4.25 to N12.15 per share.
Meanwhile, an international rating firm, Standard & Poor Dow Jones, has rated the NSE as one of the five best capital markets across the world.
According to the rating body, the nation’s bourse grew by 42 per cent in 2017, thus making it the third-best performing capital market after Argentina and Turkey. Stock markets of Hong Kong and the United States occupied fourth and fifth positions, respectively, to complete the Top Five, for 2017.
The Argentinian market soared 73 per cent, Turkey’s jumped up by 43 per cent, Hong Kong’s grew by 35 per cent and the United States stock market increased by 25 per cent.
WE EXPECT BETTER ROI IN 2018- Investors
Meanwhile, the shareholders of the companies told our correspondent in separate interviews that the only way the development could translate to better days is when the companies pay more rewarding returns on investment at the end of the 2017 and 2018 financial years.
The National Chairman, Progressive Shareholders Association, Mr. Boniface Okezie, said, “We, as shareholders, expect good returns from our investment. It is not new that the companies’ performances are impressive, due to the ways the economy works. The companies are gradually making rebounds, which translates that the economy is out of recession.”
The National President, Constant Shareholders Association, Mallam Shehu Mikail, attributed the development to the companies’ strategy, which he believed boosted several consumers’ confidence in the firms.
“The companies’ result showed that various managements have adjusted and adapted to the economy, having survived recession and foreign exchange challenges. I pray it should translate to better returns to shareholders at the end of the year,” he said.
OPERATORS, ANALYSTS’ REACT
Reacting to the development, the Chief Operating Officer, InvestData Limited, Mr. Ambrose Omorodion, explained that though the growth witnessed in 2017 was impressive and sustainable, investors and the regulators should thread with care as the market was driven by information and not sentiments.
According to him, investors should not take decisions based on the increasing value of the shares as it is important for them to understand the factors that contributed to the price movement.
He attributed Forte Oil’s loss for two straight years to non-payment of dividend in 2016 financial year and weak earnings.
Omorodion explained that mixed performance posted by the company in 2017 and unclear business plan or direction to investing public on the happenings in the company or where it was heading to, contributed to the development.
He also attributed the University Press depreciation to dwindling dividend payout and unimpressive numbers, as increasing cottage industries’ operation continued to affect its bottom-line.
An economist and financial analyst, Mr. Nnamani Udenze, linked Dangote Sugar growth to improved numbers and 50kobo interim dividend as a result of backward integration that reduced operating cost due to sugarcane farms. He also attributed the IB’s gain to its merger with Intafact Beverages Limited and Pabod Breweries Limited as the major factor that moved the price, as earnings remained weak.
He said, “Infusion of the three major players would boost the value of the shares as the value is expected to rise further in 2018. Fidelity Bank’s growth was due to oversubscription of its Eurobond, which boosted investors’ confidence and as well improved positive numbers.”
A renowned stockbroker and Investment analyst, Mr. Peter Olawunmi, explained that the return of portfolio investors to the market also played a major role in the performances of quoted companies and stock exchange in 2017.
“These returns were made possible by creation of Investors and Exporters’ forex window by the Central Bank of Nigeria, thus helping to address the negative impacts of capital control by the apex bank,” he said.
