Custodian Investment (formerly known as Custodian and Allied Plc) yesterday made history as the firm hit a 5-year high of N6.89 in today’s trading session on the Nigerian Stock Exchange (NSE). The stock closed at N6.80, up 8.5%.
Custodian shares have appreciated by 119.76% in the last one year. From January 2, 2018 year to date, the stock is up 74.8%, making it one of the best-performing stocks on the NSE.
The stock also happens to be the highest priced stock in the insurance sector, with a market capitalization of N39.90 billion.
Custodian’s share price has been on a consistent rise in the last 5 years, largely due to stellar results. Gross income increased from N3.8 billion in 2013 to N8.0 billion in 2017. Profit after tax also rose from N3.6 billion in 2013 to N7.3 billion in 2017.
FY 2017 results show that revenue increased from N38.5 billion in 2016 to N43 billion in 2017. Profit before tax rose from N7.3 billion in 2016 to N8.9 billion in 2017. Profit after tax also jumped from N5.3 billion in 2016 to N7.3 billion in 2017.
The 2017 performance was largely due to a sharp increase in investment income, as a group and across several units. Investment income as a group rose from N4.2 billion in 2016 to N6.2 billion in 2017.
The firm may have taken advantage of the high yields on market securities last year, as it increased the volume of treasury bills it held. Held maturity treasury bills rose from N5.6 billion in 2016 to N9.7 billion in 2017.
Yields on money market securities rose sharply last year in tandem with the spike in inflation.
A 2017 ranking of listed insurance companies also saw Custodian and Allied Insurance coming tops, using criteria such as balance sheet, net asset and gross premium income.
Custodian Insurance is also one of the most diversified insurance firms in the country, with operations in trusteeship, pension fund administration, and real estate. The stock has also featured repeatedly on Nairametrics’ Buy Sell Hold list.
Q1 2018 results show that revenue jumped from N7.6 billion in 2017 to N11.4 billion in 2018. Profit before tax increased from N1.8 billion in 2017 to N2.1 billion in 2018. Profit after tax also rose from N1.5 billion in 2017 to N1.8 billion in 2018.
Earnings per share also increased significantly from N0.26 in 2017 to N0.30 in 2018. If the company maintains the performance this year, it could exceed last year’s earnings.
Custodian had earnings per share of N1.19 for the 2017 financial year, of which it paid a total of N0.42 in dividends comprising an interim dividend of N0.10, and a final dividend of N0.32, the highest in the company’s history.
Buy Sell or Hold?
Short-term investors who got in at the beginning of the year, could decide to exit at this point, having made over 70% returns.
Long-term investors thinking of investing in the stock could wait for a market correction before taking a position. Foreign portfolio investors have begun a gradual sell down as elections approach, preferring to stay on the sidelines.
About Custodian Investment Plc
Custodian Investment Plc (formerly known as Custodian and Allied Plc) is a holding company with interests in Life Insurance, General Insurance, Pensions, Trustees, Properties and Financial Services.
The company was incorporated on August 12, 1991, as a private limited liability company under the name, Accident and General Insurance Company Limited. The company’s name was changed to Custodian and Allied Insurance Limited on February 5, 1993, and converted to a public limited liability company on September 29, 2006.
It then changed its name to Custodian and Allied Insurance Plc, following approval by the Corporate Affairs Commission (CAC) on March 20, 2013.