At the end of NSE’s trading session on Friday, August 24th, the share price of ABC Transport Plc stood at 0.34 kobo. This is the lowest the stock has performed ever; a clear indication that investors are increasingly losing interest in the company.
Year to date, this stock has declined by 28.00%. Unfortunately, the company’s recent financial records aren’t exactly impressive either. So, why are all these happening? Well you guessed it…!
On that note, welcome to company focus this week. This is a column where we let you in on details about little-known and small securities that are listed on the Nigerian Stock Exchange. ABC Transport Plc is our focus for today. So, get to know everything there is to know about its history, services, board of directors, financial records, and of course, the competition it faces.
Corporate Information about ABC Transport Plc
Associated Bus Company Plc, also known as ABC Transport Plc, is a Nigerian transportation company with headquarters in Owerri, the Imo State capital. The company has been transporting passengers across Nigeria and West Africa since its incorporation in 1993, using its coach, sprinter and shuttle services.
The coach service entail long distance journeys in luxury buses. This is similar to the sprinter service, which equally covers long distances but with midi buses. The shuttle service, however, covers shorter distance journeys using mini buses.
Undoubtedly, ABC Transport Plc is one of the best road transport services providers in the country. Little wonder it brags about its services being in tandem with internationally-accepted standards and “specially designed for distinguished travelers who would otherwise use air service.”
Over the years, ABC Transport has continued to diversify its operations, expanding into such areas as cargo services, haulage services, importation/sale of vehicle spare parts, assembling of heavy-duty trucks, and installation of vehicle speed devices. It is also now involved in the hospitality business, with the operation of its City Transit Inn Hotel which is in Nigeria’s capital city, Abuja.
Note that the company initially started off as a subsidiary of Rapido Ventures. But by 2004, barely eleven years after its incorporation, it had already founded ABC Transport Ghana where it currently owns 99% stake. In the same vein, the company owns 50% equity stake in Transit Support Services Limited, its subsidiary that is involved in the trade of vehicle spare parts.
The company became a quoted company in 2005.
A look at the company’s target market
As a full-fledged road transportation company, ABC Transport Plc targets commuters of various classes. Specifically, it targets passengers traveling to and from major Nigerian cities such as Lagos, Abuja, Port Harcourt and Owerri. It also connects commuters to major ECOWAS hubs such as Ghana, Togo and Benin Republic.
In line with its road transportation business, the company’s City Transit Inn Hotel also provides hospitality services to commuters, especially those who enter the city of Abuja late in the night.
Meanwhile, the company’s cargo business serves Nigerians in general, helping to deliver small parcels and letters across the country. Similarly, the company also targets operators in the manufacturing sector with its haulage services which helps to transport heavy manufacturing materials across long distances.
One of such companies is United Cement Company of Nigeria Limited, which is a major customer accounting for 26% of ABC Groups’ entire annual revenue, according to information contained in its 2017 full year financial report.
Finally, the company targets vehicle owners by selling spare parts to them.
Key members of the company’s Board of Directors
Mr. Frank Nneji is the founder and Chief Executive Officer of ABC Transport Plc. He is also the Chairman of ABC Express Courier Limited. He studied Biological Sciences at the University of Nigeria, Nsukka, graduating in 1982. He has since undergone studies at the Wharton Business School, USA, as well as the Lagos Business School, Nigeria.
Between 2000 and 2003, he served as the President of Owerri Chamber of Commerce, Industry, Mines and Agriculture, otherwise known as OCCIMA. He was also a pioneer member of the Board of Nigeria’s Federal Roads Maintenance Agency, FERMA.
Mr. Nneji is an Honorary Fellow of the UK’s Chartered Institute of Logistics and Transport (CILT). He has received several awards and recognitions, including the prestigious Officer of the Order of the Niger (OON).
Asides Mr. Nneji, the Board of ABC Transport Plc is comprised of 5 more members: Mr Jude Nneji, Mr. Olumide-Obayomi, Mr. Kabiru Abdullahi Yusuf, Mr. Uche Ohimai-Ehimiaghe, and Mr. John Okoro. In total, the company comprises of about 1500 employees.
But the company is faced with lots of competition…
Just like any other business, ABC Transport Plc has its share of competition. The competitors come in the form of state-owned road transportation companies such as Abia Line Transport and Imo State Transport Corporation. Others include Chisco Transport Ltd, Young Shall Grow Transport Ltd, GUO Motors and Cross Country.
But asides the above-mentioned companies, one road transport company that stands out as a major competition for ABC Transport Plc is GIGM Motors. GIGM Motors, which has existed since 1996, recently rebranded and remodeled its business to be more technology-driven, efficient and classy. This has, in turn, attracted a lot of customers to it; especially commuters who had in the past patronised ABC Transport Plc due to its ‘exceptional services’.
As the competition stiffens, therefore, it is left to ABC Transport to devise new ways of differentiating itself from the pack. In the meantime, the competition is having its toll.
The company’s financial overview
A look at the five-year financial reports (2013-2017) for ABC Transport (the company) shows that revenue began to decline in 2016. Note that this is around the same time GIGM Motors had just unveiled its rebranded and refocused business model.
The company’s (group) revenue for full year 2017 stood at N7.1 billion, against N6.7 billion recorded for it in 2016. Profit after tax for the group in 2017 was N513 million, compared to N599 million in 2016.
For its Q1 2018 result released earlier this year, reported revenue stood at N1.4 billion, compared to N1.7 billion reported for the same period in 2017. In the same vein, profit after tax was N65 million compared to N192 million reported for Q1 2017.
The company was yet to release its half year 2018 financial result as at time of preparing this article.
ABC Transport Plc’s road transportation business has not performed well in recent years. This can be due to competition in the sector, coupled with multiple taxation which unfortunately stifles profitability. Hopefully, the company can overcome its challenges and rebound in no time.
UBA denies N41 billion NITEL fraud allegations
United Bank for Africa (UBA) has described the alleged N41 billion fraud levied against its Chairman, Mr Tony Elumelu, as untrue, misleading, malicious, and libellous.
The Management of the United Bank for Africa (UBA) has described the alleged N41 billion fraud levied against its Chairman, Mr. Tony Elumelu, as untrue, misleading, malicious, and libellous, and said that it should be disregarded in its entirety.
This was disclosed in a statement issued by the bank to the Nigerian Stock Exchange and signed by the company’s secretary, Bili Odum, on Friday. Media reports in some online blogs alleged the former CEO of the bank was indicted” prompting the bank to issue a denial via a press release.
In the press release stated Statement To The Nigerian Stock Exchange on False Reports in the Media, the bank stated that “it has set in motion all appropriate legal actions to ensure that the misleading reports are retracted and the perpetrators held accountable for their actions”.
It also stated that it will “continue to conduct its business in line with global best corporate governance practices, extant laws, and regulations,” as it has done in over 70 years of operations.
Back story: The counsel to NITEL, J.U Ayofu petitioned the Senate Committee Chairman on Ethics, Privileges and Public Petitions about the alleged fraud. The committee chairman, Senator Ayo Akinyelure, claimed the ”the N41billion alleged fraud was committed against the defunct Telecommunications company and National Carrier, NITEL”
They alleged the amount was withdrawn “systematically from NITEL for nine years” under the leadership of the bank.
Senate Committee Chairman on Ethics, Privileges and Public Petitions, Mr. Ayo Akinyelure, reportedly said, “The N41 billion alleged fraud was committed against the defunct telecommunications company and national carrier, NITEL.
According to the reports, in view of this, the senate committee has summoned the Group Managing Director/CEO of UBA, Mr. Kennedy Uzoka, to appear before it on Wednesday, August 5, 2020.
UBA denies wrongdoing
Despite the allegations, the Management of the Bank denied all the allegations and will use all legal means to clear its name. “We have set in motion all appropriate legal actions to ensure that the misleading reports are retracted and the perpetrators held accountable for their actions.”
UBA’s 2020 second-quarter result is expected to be released next week. The market appears to have shrugged off the allegations as thee company’s share price closed at N6.2 gaining 3.3% week on week.
Airtel Africa’s profit up 12.9%, customer base reaches 111.5 million
Airtel Africa had risen in customers’ base by 11.8% to 111.5 million in spite of the pandemic.
Airtel Africa on Friday posted an impressive Q1 ending June 2020 financial statement with an operating profit of $210 million up by 12.9%which showed a 111.5 rise in customers’ base of 11.8% to 111.5 million in spite of the ravaging COVID-19 pandemic. The Company also reported an operating profit of $210 million up by 12.9%.
Airtel reports its year end March 31st 2020.
Key highlights of Airtel Africa Q1 2020 include;
- Customer base grew by 11.8% to 111.5 million.
- Revenue increased by 6.9% to $851m, with constant currency revenue growth of 13.0%
- Constant currency revenue growth was recorded across all key business segments, with voice revenue up by 2.2%, data by 35.7%, and mobile money by 26.3%.
- Underlying EBITDA increased by 7.9% to $375m, with constant currency growth of 14.6%
- The reported underlying EBITDA margin was 44.1%, up by 40 bps.
- Operating profit increased by 12.9% to $210m, an increase of 21.5% in constant currency
- Free cash flow was $96m compared to $62m in the same period last year.
- Earnings per share (EPS) before exceptional items was $1.0 cents and basic EPS was $1.1 cents.
- Net debt to underlying EBITDA was 2.2x, compared to 3.0x in June 2019.
Raghunath Mandava, chief executive officer, Airtel Africa explained the company’s business was to survive the COVID-19 pandemic amid all odds. He said;
“During the last quarter, our business was impacted by the Covid-19 pandemic, as restrictions on movements of people and ways of socializing were introduced to contain the spread of infection. In these unprecedented times, we have worked with governments, regulators, partners, and suppliers to keep customers and businesses connected as well as supporting the economies and communities.
“We focused on expanding and maintaining our network to ensure it could cope with increasing demand, we kept our distribution up and running by increasing the penetration of digital recharges and stock levels, and we expanded our home broadband solutions to ensure customers could work and access entertainment remotely.”
Raghunath Mandava, chief executive officer, Airtel Africa spoke about growing concerns on the resurgence of COVID-19, but he was optimistic based on Airtel Africa’s present result and investment. He continued by saying ;
“The outlook remains uncertain, particularly regarding a so-called potential second wave of infections and the actions governments will decide to take in that event. However, these results are further evidence of the growth opportunities our markets offer and the effectiveness of our strategy to focus on winning customers, investing in our network and expanding our voice, data and mobile money businesses.”
The stock is presently trading at N348 with a market capitalization of N1.308 trillion, dividend yield at 3.38%, price/earnings ratio at 10.63 at the time this report was drafted.
MTN expands scope of tower service, targets rural connectivity
The development would also improve cost for future technology evolution and backhaul in the network.
MTN Nigeria Communications Plc has reached an agreement with Global Independent Connect Limited, INT Towers Limited and IHS Towers Limited to expand the scope of their current service agreements, amend the currency conversion provision for tower services.
This was disclosed in a statement issued by the telecommunication firm and published on the website of the Nigerian Stock Exchange.
Chief Executive Officer, MTN Nigeria, Ferdi Moolman, explained that the company is pleased to agree to the mutually beneficial update to its agreements with IHS, adding that the changes would provide clarity for both parties on foreign exchange denomination with Naira payments, while also extending the telco’s relationship into key new areas.
What it means: With the concluded renegotiation of certain terms of its tower agreements, the telco giant can now increase focus on rural connectivity and fibre deployment. The development would also improve cost for future technology evolution and backhaul in the network, which will bear fruit in the longer term while agreeing to move the reference rate for conversions to Naira from the Central Bank of Nigeria’s official rate to the Nigerian Autonomous Foreign Exchange Rate (NAFEX).
Moolman said, “I am particularly excited about the partnership to expand fibre connectivity and deliver accelerated rural telephony. The COVID-19 pandemic has demonstrated the huge importance of digital infrastructure, and these agreements enable us to enhance fibre networks, while rapidly connecting those Nigerians in rural areas that are currently unable to access telecommunications services.”
In 2014, MTN Nigeria took a strategic decision to sell its passive infrastructure (including towers) and focus on its core business. Although the company retains a small number of towers, it currently has agreements in place with a number of tower providers across the country, including IHS.