Site icon Nairametrics

[ANALYSIS] 21m units in 5 days, Is NASCON about to raise equity?

About 10 million units of Nascon crossed hands Friday in an unusual single day volume trade for the stock. This represents about double the amount that crossed a day before and 3x the volume traded the whole of last week. So who is buying Nascon?

The board and Shareholders of Nascon met last Wednesday (June 10th) at their AGM to approve dividends and discuss the future direction of the company. Apart from approving dividend, they also made formal some of the plans that had been in works. They will diversify from a purely salt making company and into a full-fledged consumer goods company and also renamed itself Nascon Allied Industries. But could that be a reason for the high volumes?

Nascon results have been poor lately and the share price has plummeted by about 50% from its year high last year. However, the stock is up 37% YTD and one of the better performers this year. This current rally has added about 20% to its share price this month alone.

Why the rally?

 

News continues after this ad

The company balance sheet also looks healthy considering their non-debt status, so Nascon probably need not raise money to pay debts.

Another reasons comes to mind. To position themselves very well as a Consumer goods company they might need to raise some capital. At N6.3billion its Net Equity falls way below Industry leaders, Nestle and PZ at about N38 billion and N42 billion respectively. It is also way below Cadbury (N11billion).

So could this then be an equity play? Is Nascon about to raise equity?

Typically, ‘smart money’ has a way of raising the stakes when they feel their share price is undervalued. They might just want to bump it up a bit to a price that is satisfactory to their needs. We have seen this happen a lot of times in this market even though many brokers and issuers will deny it. The fact that volume increasing is moving in close tandem with price further buttresses this view.

On a flip side, it might just be nothing or perhaps another bull trap set by smart money.

 

 

Exit mobile version