McNichols has lost its shine

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Nigerian Stock Exchange
The NSE Building, Lagos

McNichols Plc has hit a 5-year low of N0.39 in yesterday’s trading session at the Nigerian Stock Exchange. The stock opened at N0.43 and closed at N0.39, down N0.04 or 9.30%.

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Year to date, the stock is down 17.02%, underperforming the NSE All-Share Index which is down 2.21%.

For investors that got into the stock after it was listed, the losses are much more. The firm listed at N0.98 per share, so investors that have held on since then are down 60.2%.

About the firm 

McNichols Plc is a manufacturing, packaging and distribution company that is into the processing and packaging of sugar, chocolate powder, cereals, and other food products.

The firm commenced operations in April 2005 and was listed on the floor of the Nigeria Stock Exchange on the 18th of December, 2009.

Recent results 

Results for the nine months ended September 30, 2018 show that revenue dipped from N769 million in 2017 to N640 million in 2018. Profit before tax, however, rose from N30.9 million in 2017 to N35 million in 2018. Profit after tax also rose from N24.1 million in 2017 to N27.8 million in 2018.

How low will it go? 

A N0.20 floor on the Nigerian Stock Exchange means that the stock could still go much lower. The probability of the stock trading at a lower price would largely depend on market sentiments as a whole.

The stock is, however, tightly held and thinly traded, so a sharp decline in price is out of the question.

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Shareholders may smile 

Possibilities of a dividend payment may cushion the losses suffered by shareholders, in terms of capital appreciation.

The firm paid a dividend of N0.03 per share for the 2017 financial year. 9M 2018 results indicate that the company had earnings per share of N0.08.

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