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Stock Market

I’m Waiting For A Bargain – Cadbury 2012 9 Months Unaudited Accounts Review

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If you are looking for a company that has financial history and track record then look no further Cadbury is one of such. If you are also looking for one that is scandal free, high on margins and with ROE higher than 20% then Cadbury certainly isn’t the one. Cadbury posted a N24b revenue for the first 9months of the year representing a 2.4% year on year drop. Just as expected the drop in revenues cascades down to bottom line as operating profit slipped 5.6% to N1.8b in the period under review. Even the margins reflects the negative impact of the dip in revenue this year. But no need to fret, the chocolate maker’s full year revenue of N34b last year was a 16.9% year on year growth, the highest since 2008 and making this period dip innocuous. Heck, things may just improve by year end.

 

So rather than worry about revenue, other benchmarks worry me. Inventories is one of such and an inventory of N3.5b (39%) higher than last year should give one the shudders. Does this mean they are finding it harder to sell products? Inventory turnover of 52days suggest that. Cadbury  sits a cash pile of N13b with more than 90% of that flowing from prior year activities. Cash is king and no one can fault that, even though some expect the company to spend much more than the N367m it has spent investments. In response, the company has spent N1.8b in the last 21months on investment. A look at return on assets suggest margins is where the problem lies and not assets. The company simply can’t turnover inventories quickly enough.

 

Competition is rife and expenses aren’t budging either. With N13b in cash surely, Cadbury can produce more. But whats the point producing what you can’t sell. Share price is currently N25  50x trailing Eps and 37x current Eps. Pricey you might think but people will tell you to look at cash which currently is N4.2 per share 6x less than price. Net Asset per share is also around N6. In other words the current share price is trading at 6x its cash at hand and 4x its net asset per share. Is it time for me to buy yet? If I knew what I did now about 7 months ago answer would be yes. Then the share price was N11….chocolate is sweet but nothing is sweeter than a bargain price.

Cadbury Plc 9 months 2012 unaudited Financial Statement is posted on the website of the NSE

 

Ugo Obi-chukwu "Ugodre" is a chartered accountant with over 16 years experience in financial management, corporate finance and financial analysis. He is also a retail investor and a personal finance advocate with over a decade experience investing in the Nigerian stock market.Ugo is the founder/Publisher of Nairametrics and blogs regularly on the website.

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Consumer Goods

Four FMCG companies lost 15.2 billion in value in a single day

FMCG companies declined by N15.2 billion in a single day.

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Border closure weighing on operations of FMCGs

The prevailing sell-offs on the Nigerian Stock Exchange has extended the loss in the share price of key FMCG companies as well as their market capitalization on the Nigerian Stock Exchange.

Data tracked on the NSE website from the close of trade on the 3rd of March till the close of trading activities on the local bourse on the 4th of March 2021, revealed that the market capitalization of these FMCG companies declined by N15.2 billion in a single day.

FMCG companies declined by N15.2 billion in a single day.

 

Northern Nigeria Flourmills (NNFM)

NNFM is a flour milling company founded in October 1971, with key focus on the business of milling wheat, maize, and similar grain. The company printed one of the highest loss on the Exchange on Thursday.

The share price of the flour milling company dropped by 9.97% to close the day lower at N6.32. This move significantly affected the market capitalization of the company, which culminated in a loss of N125 million in value.

Champion Breweries (CHAMPION)

Champion Breweries Plc has been in the news for a while, following the acquisition of 1,903,609,538 ordinary shares of the company by Heineken through its wholly-owned subsidiary, Raysun Nigeria Limited, at a price of N2.6 per share.

This move saw the share price of the brewing company surge from N0.93 on January 8 2021, to N3.76 on the 2nd of February 2021. Since then, the share price of Champion Breweries has continued to suffer significant losses.

At the close of trade on NSE yesterday, Champion Breweries shares suffered a 9.19% decline to close the day lower at N1.68.

This move significantly affected the market capitalization of the brewer, taking its loss on the exchange in a single day to N1.331 billion.

This decline is a potential opportunity for bargain hunters to key in once more, with the expectation to enjoy a gain of about 55%, should Heineken launch a takeover bid of N2.60 per share for the balance of 17.3% or 1,351,954 units of Champion Breweries shares with shareholders.

Honeywell Flour Mill (HONYFLOUR)

The share price of Honeywell Flour Mills Plc has suffered major declines in recent times. The flour milling company, who is also an important part of the Honeywell Group -a foremost indigenous Nigerian conglomerate engaged in select businesses in key sectors of the Nigerian economy- has seen its shares gone from being valued at N1.40 in February to trading at N1.20 towards the end of the same month.

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Worthy of note is the fact that the shares of the company during trading activities on NSE yesterday, went as low as N1.13 per share, before buying pressures on the exchange pushed the price back to N1.20 per share.

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This move significantly affected the market capitalization of the indigenous flour milling company as it approximately lost N397 billion in a single session.

Dangote Sugar Refinery (DANGSUGAR)

Dangote Sugar has seen its share price decline by more than 8% since declaring a 33% growth in its bottom-line in 2020. The company also proposed a better than the expected dividend of N1.50, 36.36% higher than 2019 dividend (N1.10).

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However, despite this impressive performance, Dangote Sugar continues to be punished on the exchange, as wary investors offload the shares of the company, to hunt for yields in the money market.

At the close of trade on NSE yesterday, Dangote Sugar shares suffered a 6.35% decline, to close the day valued at N16.25.

The sell-off in the shares of Dangote’s integrated sugar business on the floor of the Nigerian Stock Exchange yesterday culminated into a loss of N13.4 billion in a single day.

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Financial Services

Amid sell-off, FUGAZ investors lose N34.68 billion in a single trading session

Market capitalization of the top five banks dropped to N2.52 trillion as at close of business on the 4th of March 2021.

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FUGAZ Banks, loans, loan, Access, Zenith, GTBank, top actively traded stocks on Monday , FUGAZ lead actively traded stocks as bourse ups 1.7%, Nigeria’s top 5 banks spent more than N40 billion on adverts in 2019

Investors in the elite banks in Nigeria- FBNH, UBA, GTB, Access and Zenith have lost a total of N34.68 billion in a single trading session, amid sell-offs.

According to data from the Nigerian Stock Exchange (NSE), the market capitalization of the top five banks dropped to N2.52 trillion as at close of business on the 4th of March 2021, shedding about 1.6% in a single trading session.

The loss is due to downward pressure on the share prices of the elite banks, evident by the sell-off witnessed in the market. A snapshot of how much each bank lost and the impact is succinctly captured below;

READ: Investors lose N352bn during NSE’s eight days of losing streak

UBA

The United Bank for Africa investors lost a total of N10.26 billion after its market capitalization dropped from N282.15 billion to N271.9 billion as at close of business yesterday.

The drop is due to a sharp decline in its share price which closed at N7.95, shedding about 3.64% in a day.

Investors cashed in on the decline to trade about 26,782,197 units of the Bank’s shares valued at N211, 571,939.35, placing the bank as the fourth most traded stock at the NSE. The volume of shares traded by the bank rose astronomically by 201.9%, when compared to 8.87 million units traded the previous day.

On the other hand, it is pertinent to note that the United Bank for Africa (UBA) is yet to release its audited FY 2020 result.

READ: United Bank for Africa provides $200 million for Nigeria’s Petroleum Industry – Timely financing for Post COVID economic growth

Access Bank

Access Bank Nigeria Plc lost a total of N8.89 billion after its market capitalization dropped from N286.14 billion to N277.25 billion. The loss is due to a decline in its share price from N8.05 to N7.80, indicating a dip of 3.11%.

Just like UBA, Access Bank investors traded a total of 21,586,491 units valued at N168, 090,266.60, placing it as the fifth most traded stock at the NSE today. In lieu of this, Access Bank stock volume appreciated by 229.1%, from 6.56 million traded yesterday.

Access Bank is yet to release its audited financial statements for FY 2020.

READ: Oando share price up by 10% off the back of court ruling

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Zenith Bank

Zenith Bank investors lost a total of N7.85 billion after market capitalization dropped to N794.3 billion today. The marginal drop is due to a slight dip in the firm’s share price, from N25.5 traded yesterday to N25.30 as at close of business, indicating a decline of 0.98%.

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Investors reacted to this drop by trading 38,647,711 units of the bank’s shares valued at N983, 251,467.75, placing the firm as the second most traded stock at the NSE market.

The drop in the market value of Zenith shares is in contrast to what was obtained last week, when investors gained a total of N37.7 billion, the highest recorded by the bank since the famous circuit breaker. The gains were sequel to an impressive financial performance by the firm for FY 2020, after it recorded a PAT of N230.6 billion and declared a final dividend of N2.70 per share.

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FBNH

FBNH investors lost N1.8 billion after its market capitalization declined to N253.06 billion as at the close of business. The drop was due to a 0.7% decline in its share price from N7.1 traded earlier to N7.05.

In lieu of this, a total of 31,253,644 units of the bank’s shares valued at N983, 251,467.75 were traded, placing the firm’s stock as the third most traded stock at NSE. The total volume traded surged by 88.9%, from a total of 16.54 million traded a day earlier.

FBNH had earlier declared a Profit After Tax figures of N79.71 billion for FY 2020, indicating an increase of 8.2% YoY.

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GTB

GTB investors lost a total of N5.89 billion, following a drop in its market capitalization from N932.97 billion to N927.08 billion. The drop was due to a 0.63% decline in share price which closed at N31.50.

It is pertinent to note that GTB is yet to release its audited financial statement for FY 2020.

What you should know

  • The Nigerian Stock Exchange ended on a bearish note on Wednesday, March 4, 2021 after the ASI declined by 0.40% to close at 39,364.67 index points.
  • On a general note, investors lost a total of N82.35 billion, with FUGAZ accounting for 42.11% of the loss.

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