The Nigerian stock exchange issued a press release on Friday saying it had removed Lafarge Africa from the list of 10,000 Unit Market Trade Equities, referencing the Rules and Regulations governing Dealing Members Amendments and Additions (VI) Article 100:
According to the rules Pricing methodology ‘For purposes of calculating price movements and price limits, equity securities traded on the Exchange shall be classified as follows:
Group A shall consist of equities with a Primary Market Maker that are not classified in Group B; and
Group B shall consist of equities with a Primary Market Maker that are priced above N100.00 per share for at least four of the last six months; or new security listings that are priced above N100.00 at the time of listing on The Exchange’
Since WAPCO (Lafarge Africa) has traded below N100 for the past 4 months within the past 6 months’ timeframe, it has been removed from the list of 10,000 units’ market trade price movement equities.
The implication of this are perhaps more technical than fundamental in our view as it affects liquidity and the preference it could benefit from being included in the Group B class. Including Lafarge Wapco in the Group B class is significant for the company as it would mean they are grouped along with the likes of Dangote Cement, Nigerian Breweries, Seplat, Nestle and other heavy weight stocks who significantly affect the movement in the index. It also ensures the company’s valuation is at least closed to its closest competitor Dangote Cement.
WAPCO shares has been on the rise since it hit a year low of N66.5 in December 2014 and has gained 33.8% since then closing at N89 on Friday. Unfortunately the rally did not go all the way to N100 during this period giving the exchange no option than to yank it off the Group B list.
Lafarge is yet to release its full year results as its Board of Directors is scheduled to meet on Wednesday, 11 March 2015 to consider dividend payable to its Shareholders in respect of the year ended 31 December 2014. Whether it will make any dividend announcement this week is what we can’t confirm. However, any corporate action such as dividend announcement or release of impressive results could trigger another rally for the stock. In the absence of this, we opine the rally could still continue, albeit slowly, as the Relative Strength Index (RSI) closed about 50 last Friday.