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Markets

PZ Cussons: Cost cutting brings back the green

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PZ Cussons Plc, PZ Cussons Nigeria Plc

PZ Cussons Nigeria Plc, one of Nigeria’s Fast Moving Consumer Goods (FMCG) giant,  had a difficult 2017/2018 financial year, as well as equally turbulent Q1 2018/2019.

Half year results show a massive improvement in its bottom line, largely due to cost-cutting.

PZ Cussons Nigeria is our stock pick for the week.

Recent results

Results for the half year ended November 30, 2018, show that revenue fell from N41.1 billion in 2017 to N35 billion in 2018.

Profit before tax jumped from N868 million in 2017/2018 to N1.3 billion in 2018/2019. Profit after tax also rose from N589 million in 2017 to N1.2 billion.

About the company

PZ Cussons Nigeria Plc was incorporated on December 4, 1948 under the name, PB Nicholas and Sons Limited. The company’s name was changed to Alagbon Industries in 1953, then Associated Industries in 1956.

The company went public and was listed on the Nigerian Stock Exchange in 1972. It adopted the name, Paterson Zochonis Industries on 24th November 1976 and became a public limited liability company on 22nd September 1990.

It adopted its current name on 22nd September 2006.

PZ Cussons Nigeria Plc is into the sales, manufacture and distribution of consumer goods and home appliances. Popular brands include Morning Fresh washing liquid, Mamador cooking oil, Joy soap, and Olympic milk.

 Price Information

Current Share Price: N12

Year High: N12

Year Low: N12.3

Year to Date Return: 0.83%

One Year Return: -42.22%

Price outlook

PZ  Cussons is currently trading at N12 per share, 33.3% above its 52 week low of N9. Despite the improved results, possibilities of a sharp rise in price are unlikely, due to the negative sentiments in the markets as a whole.

Valuation

PZ Cussons is currently trading at a price to earnings ratio of 18.9 times earnings, higher than Unilever Nigeria which is trading at a PE ratio of 15.3 times earnings.

Outlook 

While full-year 2018/2019 results are likely to show a vast improvement over the 2017/2018 financial year, the company still remains in a tight spot. Positive results were largely driven by a 47.9% drop in administrative expenses (from N3.8 billion in 2017/2018 to N1.9 billion in 2018/2019) as well as lower foreign exchange losses, from N2.5 billion in 2017/2018 to N524 million in 2018/2019.

Revenue remains challenged and may continue to remain so in the medium term.

 

Jaiz bank

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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Cryptocurrency

Troubling signs on crypto market, SEC tags many crypto assets as Securities

These further suggest the head of the financial watchdog could tighten its grip on the crypto market.

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Dark clouds hover above the cryptoverse as the leader of the world’s most powerful investments regulatory agency affirmed most crypto assets as securities.

Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC) in his most recent appearance on CNBC’s Squawk Box, opined that “many” crypto-assets were securities, meaning many of these assets required regulatory oversights and exchanges trading such crypto assets require at least a form of SEC regulation.

In his words:

“The extent that something is a security, the SEC has a lot of authority. And a lot of crypto tokens—I won’t call them cryptocurrencies for this moment—are indeed securities.”

What you must know

An asset is considered a financial security asset if it is a tradable financial asset and thus has monetary value.

What Gensler said suggests that the financial assets watchdog could tighten its grip on the crypto market. Recall that SEC is already battling with Ripple and calling XRP a security asset.

However, Gary Gensler described the flagship crypto asset as a store of value but with a very volatile characteristic and not a security.

It’s important to understand why the regulator doesn’t classify Bitcoin as a security. It is based on the fact that its existence began through mining as an incentive in validating a distributed platform. There are no pre-mined coins, no initial token offering, and no kind of business entity governing it.

A few months ago, Nigeria’s Securities and Exchange Commission released guidelines referring to cryptoassets as securities, except proven otherwise.

  • The position of the Commission is that virtual crypto assets are securities, unless proven otherwise.
  • Thus, the burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, is placed on the issuer or sponsor of the said assets.
  • Issuers or sponsors are expected to satisfy the burden of proving that the virtual assets do not constitute securities by making an initial assessment filing.
  • However, where the finding of the Commission is that the virtual assets are indeed securities (not structured to be exclusively offered through crowdfunding portals or other exempt methods), then the issuer or sponsor must register the digital assets.

That being said, recent price actions reveal the bullish trend in the crypto market is still very much in play despite regulatory fears surrounding the crypto market as its market value now stands at $2.42 trillion, posting a 2.47% increase over the last day.

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Markets

Bullish dominance in the NGX Banking Index

The NGX Banking Index made a bullish recovery at the end of yesterday’s trading session with an increase of +1.11%, pushing the index points to 354.25.

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gtbank, stock market, Bulls dominate Nigerian bourse ASI up 0.74%, Investors gain N77 billion., Crude oil bulls lose steam, as COVID-19 cases hit record high

The NGX Banking Index made a bullish recovery at the end of yesterday’s trading session with an increase of +1.11%, pushing the index points to 354.25. There were 5 profits opposing 5 losses, but the magnitude of the gainers pushed the Banking Index into the green.

Union Bank led the gainers with a profit of +0.45, pushing its price upwards from N4.95 to N5.40.

Zenith Bank came second amongst the gainers with a profit of +1.14%, posting N22.20 from the previous day’s close of N21.95.

Guaranty Trust Bank also closed in profits with an increase of +0.86%, leaving its price at N29.40 from its previous price of N29.00. Sterling Bank was also part of the gainers with a profit of +0.63% putting its price at N1.60 from its previous close of N1.58.

Access Bank made profits of 0.62%, pushing its prices to N8.15 from N8.10.

Wema Bank was the biggest loser at the end of yesterday’s trading session as it made losses of -4.92%, leaving its price at N0.58 from N0.61.

Jaiz Bank also made losses of -3.23%, pushing its closing price to N0.63 from N0.62 obtained the previous day.

Ecobank joined the losers, posting a loss of -1.89% which put its price at N5.20 from its previous price of N5.30.

Fidelity Bank followed with a loss of -0.90%, putting its price at N2.24 from N2.22. UBA also posted a loss of -0.69%, pushing its price from N7.25 to N7.20.

Outlook

  • Market sentiment tends bullish as the magnitude of gainers outweighed the losers despite the 5 gainers and 5 losers held at the end of the trading session.
  • Nairametrics advises cautious buying amid growing uncertainties.

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