There are several companies in Nigeria which many people do not even know are listed on the Nigerian Stock Exchange (NSE). The reason for this situation is because some smaller securities are simply overshadowed by the pre-eminence of the bigger ones, especially the NSE 30. Moreover, these smaller securities are seldom in the news, thereby making it almost impossible for people to know what they are about and the investment opportunities available therein. A typical example of such companies is Union Dicon Salt Plc, which is the focus of Nairametrics’ company profile this week.
Corporate Information about Union Dicon Salt Plc
This Nigerian company’s business model entails the processing, packaging and merchandising of iodised salt. The small-cap company, with its authorised share capital of N300 million, is based in Lagos where it operates at the Kirikiri Lighter Terminal Phase 2.
The company was initially incorporated in 1991 as a limited liability company. Soon afterwards, it was converted into a publicly-traded company and listed on the Nigerian Stock Exchange in 1993.
Meanwhile, the actual history of the company prior to 1991 can be traced back to the 1984 joint venture partnership between the Brazilian firm AIMS Limited, and the Defence Industries Corporation of Nigeria (DICON). This partnership resulted in the establishment of Dicon Salt Limited. Note that this joint venture was 60% owned by the Nigerian entity and 40% owned by the Brazilian firm, which also served as the technical partner.
The company engaged in the processing and packaging of bulk, raw salt until 1988 when it was temporarily shut down. By the year 1991, a unanimous decision was reached by the stakeholders to merge with a separate salt processing company known as Union Salt Limited. This is how Union Dicon Salt Plc came to be.
The company’s target market
As one of the leading salt processing companies in Nigeria today, Union Dicon Salt Plc’s main target market is basically comprised of Nigerians who consume salt on a daily basis.
About the company’s ownership structure
The current nature of the company’s ownership structure is such that it is majority-owned by Nigerian entities/Nigerian investors, even though AIMS still has a considerable amount of holdings. As a matter of fact, AIMS Limited single-handedly owns the highest percentage of shares in Union Dicon Salt Plc.
According to information disclosed by the company, substantial shareholders in the company include the following entities:
- AIMS Limited holds 64,000,000 units of shares, which amounts to 27.5%.
- The Defence Industry Corporation of Nigeria holds a total of 44,000,000 units, which accounts for 18.9%.
- General T.Y Danjuma: owns 33,473,291 units which represents about 14.4% of the total shareholding.
- T.Y Holdings holds a total of 18,928,000 units which amounts to 8.1%.
- Taraba Fisheries Limited holds some 18,282,386 units, representing 7.9%.
- UDS Plc Staff Trust Fund holds 9,600,370 units of shares, which is 4.1%.
- Danjuma Grace Elizabeth holds 1,870,843. This represents 0.8%.
- Finally, the investing Nigerian public hold a combined total of 42,186,636 which represents 18.2% of total shareholding.
Some notable members of the company’s board of directors
One of the most prominent members of this company’s board is Retired Lt. General T.Y Danjuma. He serves in the capacity of the Chairman, a position he also currently holds in some other notable companies, including May & Baker Plc, Friesland Food WAMPCO Plc, and South Atlantic Petroleum Limited, to mention just a few.
Mr. Danjuma was a professional soldier who trained in military schools in Nigeria, the United Kingdom and the United States of America. His name has been etched in the history of Nigeria as one of the greatest Generals and businessmen the country has ever produced.
Retired Col. Henry I. Mgbemena serves as the company’s current Managing Director. Much like the Chairman, he too is a retired military personnel, having enlisted into service in 1979. Meanwhile, prior to joining the army, Mr. Mgbemena obtained a degree in Chemistry from the University of Nigeria, Nsukka in 1977. In 2002, he obtained a Postgraduate Diploma in Management from the University of Calabar.
Other notable members of the company’s board of directors are:
- Engineer Kayode M. Erikitola: Director
- Retired Lieutenant Col. Miri Dashe: Director
- Major General B.O Ogunkale: Director
Is the company faced with competition?
Most definitely, Union Dicon Salt Plc is not the only company operating in the Nigerian salt market. As a matter of fact, there are other companies struggling for market share. One of these companies is Nascon Allied Industries Plc, the makers of Dangote Salt. Others are Royal Salt Limited, Covenant Salt Company Limited, Bayswater Industries Limited, etc.
A look at the company’s recent financial report
Last month, the Nigerian Stock Exchange suspended the shares of Union Dicon Salt Plc and those of several others, due to their failure to submit their audited financial reports on time. Note that Union Salt has become a perennial offender in this regard, having flouted the NSE post-listing requirement in the past couple of years. This is happening just as the company experiences financial difficulties and dormancy, which could eventually lead to bankruptcy.
Note that the company’s external auditors had, in 2016, raised concerns over the company’s ability to continue operating as a going concern. According to the auditors, BDO Professional Services, the company was suffering financially despite the purported profit of N398.96 million which the company made in 2016. This was because “the subsisting negative shareholders’ funds and working capital raised material uncertainty on the going concern status of the company.”
Following the recent suspension of the company’s shares, the management and board were prompted to release the most recent results which show a loss after tax of N49.4 million during the third quarter period ended September 31st, 2018.
Despite the challenges it might be having, one fact remains that Union Dicon Salt Plc is one company with lots of potentials. It is, therefore, important that the board take swift actions towards remedying the challenges facing it before it is too late.
Zenith Bank notifies NSE of share dealings by insiders
In three separate transactions, major stakeholders purchased 5 million units of Zenith Bank’s shares.
Zenith Bank Plc, Group Managing Director, Mr Ebenezer Onyeagwu, and two Executive Directors, Messrs. Dennis Olisa and Ahmed Umar Shuaib, have purchased an aggregate of 5 million units of additional Zenith Bank Plc shares.
This was disclosed by the bank, in a notification sent to the Nigerian Stock Exchange, and seen by Nairametrics.
According to the notification, signed by the Company’s secretary, Michael Osilama Otu, the purchase was made in the bourse, over three transactions on the 16th and 17th of September, 2020.
As part of the regulatory requirements, the disclosure must be reported to the Nigerian Stock Exchange, especially when the trade is executed by a major shareholder or director of a listed firm.
Breakdown of the deal
According to the details of the deal verified by Nairametrics, Mr. Dennis Olisa pulled the highest deal as he purchased 2,000,000 additional units of Zenith Bank Plc’s shares at an average of N17.18 per unit, totaling N34.36 million. Mr. Ahmed Umar Shuaib also purchased 2,000,000 additional units of the Bank’s share, at an average price of N16.99 worth N33.98 million. Completing the trio was, Mr. Ebenezer Onyeagwu who purchased 1,000,000 additional units at an average of N17.05 worth N17.05 million.
This major purchase boosted the total number of trade deals (Volume) posted by the Bank in the NSE market, as the deals contributed about 11.61% of the Bank’s total deals between 16th and 17th of September, 2020.
What this means
Based on the recently released H1 2020 Financial Results of Zenith Bank, Mr. Ebenezer Onyeagwu had 45,500,000 direct shares as of June 30, 2020. Mr. Ahmed Umar Shuaib had 7,577,343 direct shares, while Mr. Dennis Olisa had 7,122,316 direct shares. All these remained unchanged from their reported shares in H1 2019.
With the addition of 1,000,000 shares, Mr. Ebenezer Onyeagwu’s stake increased to 46,500,000, indicating an increase of 2.19%. Mr. Ahmed Shuaib’s shares also leaped by 26.39% to 9,577,343, while Mr. Deniss Olisa’s shares increased by 28.08% to 9,122,316 direct shares.
This deal may signify that the Bank’s insiders expect an increase in share price. It is a positive signal to outsiders, coming from top insiders who are abreast with latest information on the Bank’s prospects.
This can play a vital role in stimulating a bullish trend. Zenith Bank’s share price is currently trading at N16.70 on the NSE.
Regardless of the impact of the pandemic on the income and revenue of banks, Zenith bank still remained one of the high-flying financial organizations in Nigeria. For example, the tier-1 bank’s gross earnings grew by 4.37% from N331.5 billion in H1 2019 to N346.1 billion in H1, 2020. Its Profit After Tax increased by 16.81% from N111.7 billion to N114.1 billion within the period under review. The aforementioned factors might have been the reason behind the recent bullish trend for its stock.
Fidelity Bank to raise N50 billion in bonds in Q4 to refinance existing debts
The new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
One of Nigeria’s second-tier commercial banks, Fidelity Bank Plc, has concluded plans to issue up to N50 billion ($131.3 million) in local bonds by the fourth quarter of 2020, in order to refinance existing debts as the yields drop.
The disclosure was made by the Chief Operations and Information Officer, Gbolahan Joshua, during an analyst call on Tuesday, September 8, 2020.
The crash of crude oil price globally, which was triggered by the novel coronavirus pandemic, has led to a decline in bond yields on the local debt market. This has made foreign investors to dump their local assets, leaving excess liquidity in the money market. This has also put a lot of pressure on the foreign exchange market as they look for dollars to repatriate their funds.
The Fidelity Bank top executive disclosed that the new issue will be made to redeem the existing N30 billion bond which was issued at 16.48%.
The global economic situation has seen yields in the debt market drop from as high as 18% about 3 years ago to less than 5% for the one-year treasury bill.
Fidelity Bank had revealed that it expected to see a 15% drop in profit this year when compared to 2019 result due to the coronavirus pandemic. Its profit after tax increased by 21.9% to N12 billion for the half-year 2020.
The second-tier bank also disclosed that its income declined in the second quarter due to a downward review of lending rates on loans as a result of the economic downturn.
Heineken buys more units of Nigerian Breweries Plc
The Dutch firm has invested N276 million in NB since August, to increase its stake in the Brewer by 0.10%.
The major shareholder of the largest brewer in Nigeria, Heineken Brouwerijen B.V, has increased its stake in Nigerian Breweries, with the purchase of 233,110 additional units of Nigerian Breweries shares. This was disclosed by the company in a notification sent to the Nigerian Stock Exchange, which was seen by Nairametrics.
According to the notification, which was signed by the Company’s Secretary, Uaboi G. Agbebaku, the purchase was made on the bourse over two transactions on the 2nd and 3rd of September.
This disclosure is a regulatory requirement that must be reported to the Nigerian Stock Exchange, especially when a major shareholder or director of a publicly quoted company purchases shares in the company they own.
The analysis of these transactions indicates that the purchase consideration for the 233,110 additional units of Nigeria Breweries shares at an average price of N39.94 is put at N9.3 million.
This purchase and previous purchases further cement Heineken Brouwerijen B.V’s status as a major shareholder; the company has accumulated a total of 7,720,236 since 30th June.
As of June 30th, when Nigerian Breweries released its Half-year financial results and reviewed its shareholding pattern, the company had exactly 7,996,902,051 outstanding shares, with Heineken Brouwerijen B.V being the majority shareholder with 3,019,363,804 units, which amount to 37.76% of the total shares of the company outstanding.
Hence, with the current purchase of 233,110 additional units, and previous purchases in August and September 1, which amount to 7,487,126 units, Heineken’s ownership percentage of Nigeria Breweries is now put at 37.85%.
Insider transactions, both sales and purchases, are often an indication of how shareholders perceive a company’s valuation. It could also mean a possible capital raise or that the majority shareholders are strengthening their existing holdings.
In like manners, the purchase of the shares of Nigerian Breweries by Heineken and other majority shareholder has mopped up stray volumes on the bourse, and pushed the stock price higher by 29% or N9, from N31 it closed at on the 3rd of August to its current value of N40 with 38.2x earnings.
About the company
Nigerian breweries is the largest brewing company in Nigeria. It engages in the brewing and marketing of lager beer, stout and non-alcoholic malt drinks, and the bottling of the Schweppes range of soft drinks and Crush Orange. Its brands include Star, Gulder, Legend, Heineken, Maltina, Amstel Malta, Fayrouz, Climax, Goldberg, Malta Gold, and Life. These products are mainly sold in Nigeria and other neighbouring countries.
Key takes on NB’s financials
Nigerian Breweries was affected by the disruption in the global and domestic demand and supply chain, as profit after tax of the largest brewer dropped by as much as 58%, at the back of the adverse impact of the sharp contraction in economic activities.
The knock-on effect of the COVID-19 lockdown, which affected the trade segment of the business, affected the company sales and this triggered the 11% drop in revenue in the first half of the year.