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10 “zombie” Insurance stocks you should flee from

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The Insurance sector of the Nigerian stock exchange is not one to be entirely bullish about if you are a lover of fundamentals. Fundamental Investing refers to the use of a company’s past performance (profits and revenues) to project its performance for the future and thus value the stock today.

There are over a dozen insurance companies in Nigeria quoted on the stock exchange and quite frankly most of them are what we term zombie stocks. In this article, we will highlight why we think they are zombie stocks.

Unic Insurance

Unic Insurance happens to be a serial offender when it comes to submission of results as it is yet to submit its 2015 and 2016 results. Though the firm was recently acquired by Liberty holdings a South African company. Its 2014 results which are the most recent on the NSE website show a loss after tax of N687 million. The company has failed to pay dividends since 2013.

Equity Assurance

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Equity assurance is currently trading at 50 kobo which is the minimum price a stock can trade on the Nigerian Stock Exchange (NSE). The company is also yet to release its 2016 audited financial statements SIX MONTHS after it ended. The company had negative retained earnings of N5.6 billion as at December 2015, so paying dividends is out of the question.

Guinea Insurance

Guinea Insurance is also at the 50-kobo club on the NSE. In addition, the company has failed to submit its 2016 audited year results. The company had negative retained earnings of N900 million as at Q3 2016, and has not paid dividends in over two years.

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Cornerstone Insurance

While Cornerstone Insurance has released its 2016 results and made a profit, the stock remains at the 50 kobo mark for over a year, thus returning no capital appreciation to shareholders. The company has negative earnings of N797 million, so dividend payment is far off. The company hasn’t paid dividend for at least 3 years.

Mutual Benefits

Mutual Benefits insurance has been stuck at the 50-kobo bus stop for at least 3 years. The company made a loss of N1.2 billion in 2016. The company had accumulated losses of N1.2 billion as at December 2016, and has not paid dividends in over 3 years.

Staco Insurance

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Staco insurance has made sustained losses in the past 3 years and has remained at the 50-kobo floor. The company made a loss after tax of N1.2 billion in its financial year ended 2016. Negative retained earnings of N4.9 billion as at FY 2016 means hopes of the company paying dividends are very dim.

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Goldlink Insurance

Goldlink Insurance is yet to release its audited financial statements for 2016 and is also stuck at the 50-kobo floor. The most current results available on the NSE website are for Q3 2015 and the company had negative retained earnings of N11.9 billion. The company has also not paid dividends for several years.

International Energy Insurance

IEI has had a turbulent few years and is currently being run by an interim management board. The company, like most insurance firms on the exchange has been stuck at the 50-kobo mark. It has also failed in paying dividends for several years. The company made a loss after tax of N945 million in 2016.

Sovereign Trust Insurance

Sovereign Trust Insurance has remained stuck at the 50-kobo floor like many insurance firms listed on the NSE. The company has also failed to pay dividends and was one of the 17 companies that was suspended from trading for late submission of results. The company has also failed to pay dividends in several years.

Universal Insurance

Universal Insurance was one of the 15 firms suspended by the NSE for non-submission of its 2016 audited results. The company’s shares have also remained at the 50-kobo mark. The company has made negative retained earnings and losses since 2014, thus paying no dividends.

 

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

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Companies

Naira devaluation, FX scarcity caused increase in cost of goods – Nigerian Breweries

Nigerian Breweries has revealed that Naira devaluation, FX scarcity caused increase in the cost of its goods in 2020.

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Jordi Borrut Bel, Nigerian Breweries Plc

The Finance Director of Nigerian Breweries Plc, Rob Kleinjan, has revealed that the increase in the brewer’s costs of goods was due to the devaluation in naira and FX scarcity, which led to the increase in the cost of inputs such as sorghum and sugar, as they are not fully produced locally.

This disclosure was made during the Nigerian Breweries’ Fact Behind Figures results presentation today.

However, Kleinjan explained that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity, which exerts pressure on imported input materials.

He said the increase in Nigerian Breweries’ costs of goods sold, as reported in its unaudited financial results, could also be linked to the volume of goods sold, as the company’s sales volume in Q3 increased by almost the same percentage as the cost of goods sold.

However, Mr. Kleinijan reiterated that to mitigate further losses, it was important for the company to focus on the supply chain and seek ways to mitigate price increases.

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What they are saying

The Managing Director of Nigerian Breweries, Mr. Jordi Borrut, while speaking at the virtual event said:

In 2020, the results of Nigerian Breweries were adversely impacted by COVID, VAT increase, FX devaluation and scarcity of foreign exchange. The year started with a promising 1st quarter, which was heavily impacted in Q2. The Nigerian market, however, rebounded in Q3.”

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Mr. Rob Kleinjan, while explaining the factors behind the increase in Nigerian Breweries’ cost of goods sold in the first nine months of 2020, said:

It is also clear that the increase in cost is due to the devaluation and the FX scarcity which has put pressure on our input cost. If you look into the main elements we use, which are sorghum and sugar – they are not fully produced locally, so when the currency is devalued, the prices of these inputs will soar.

That’s why it’s important that we are focused on the supply chain, and seek for ways we can mitigate any of the price increases, because the increase in cost comes from the input prices, which come from FX scarcity.”

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Companies

United Securities Limited changes name to Coronation Registrars Limited

United Securities Limited formally notifies its numerous customers and stakeholders of a change of name to Coronation Registrars Limited.

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In line with section 30(3) of the Companies and Allied Matters Act 2020 (CAMA), United Securities Limited has formally notified its numerous customers and stakeholders that it has obtained regulatory approval from the Corporate Affairs Commission to change its name to Coronation Registrars Limited.

The disclosure is contained in a verified post on Linkedln, signed by the firm’s Secretary, Omotoyosi Kola-Ojo, and seen by Nairametrics.

What this means

In line with the recent corporate action and according to section 30(5) of the Companies and Allied Matters Act, the company has been issued a new Certificate of Incorporation by the Registrar General of the commission, evidencing the change of name.

What they are saying

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A verified post by the Firm read thus: “The Public is hereby informed that United Securities Limited having passed the necessary Special Resolutions in line with Section 30(3) of Companies and Allied Matters Act 2020 (CAMA) and obtained the necessary regulatory approval of the Corporate Affairs Commission, has changed its name to CORONATION REGISTRARS LIMITED.

The public is further informed that pursuant to Section 30(5) of the Companies and Allied Matters Act, the company has been issued a new certificate of incorporation by the Registrar General of the Commission evidencing the change of name. All stakeholders are requested to take note of the above information.”

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Companies

We have exported 7 clinker vessels to other African countries since June – Dangote Cement

Dangote Cement says it has exported 7 clinker vessels to other African countries since June.

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Dangote Cement reveals share buyback plans, DANGOTE CEMENT records loses as ASI decline by 0.39%

The Group Executive Director of Dangote Cement, Michel Pucheros, announced that Dangote Cement, Africa’s leading cement producer with nearly 48.6Mta (Million Metric Tonnes Annually) capacity across Africa, has exported 7 clinker vessels to date to other African countries.

This statement was disclosed by Mr. Pucheros in a press release issued on the Group’s performance in the third quarter.

  • The cement maker exported 2 vessels of clinker per month to Cameroon in the third quarter of 2020 via the Apapa export terminal, which takes the Group’s clinker export for the quarter to 6 vessels.
  • In addition to its maiden shipment vessel to Senegal, which is a total of 27.8Kt of clinker, took its clinker exports to other African countries from June to date to 7 vessels.

In his statement, Mr. Pucheros said, “We continue to focus on our export strategy and are on track to ensure West and Central Africa become cement and clinker independent, with Nigeria as the main supply hub.

“Clinker exports have steadily been ramping up in Q3 after our maiden shipment in June 2020, whilst land exports have also resumed.”

However, as the Group ramp-up production across all segments and regions to reach its cement production and bagging capacity of 48.55 Mta, he said,

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“Dangote Cement’s strategy to offer high-quality products at competitive prices is meeting customers’ expectations in Nigeria and across the continent, where we continue to deploy excellent marketing initiatives and operational excellence across the continent.”

About Clinker

  • Clinker is a nodular material which is used as the binder in cement products. Clinker is produced inside the kiln during the cement manufacturing process.
  • The primary use of clinker is to manufacture cement, as cement is produced by grinding clinker.

What you should know

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Nairametrics had reported that Dangote Cement Acting CFO, Guillaume Moyen, during a virtual event in September disclosed that the cement producer is set to commence clinker export to other African countries within the next few weeks.

He reiterated that the Management of the company is on course to sell more clinker across West Africa, and commence shipment to Central Africa in H2 2020.

Why it matters

The export of clinker to countries where limestones are not available in huge quantities gives these countries a chance to produce its cement for construction purposes.

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