There are more than a hundred companies whose securities are listed on the Nigerian Stock Exchange (NSE). As you may well know, the whole essence for listing securities on any bourse is so that they could be traded. This is very important, because it is only when stocks are consistently bought and sold by the investing public, that wealth is created for both companies and their shareholders.
However, in the case of some companies on the NSE, this hasn’t quite been the case. As a matter of fact, little or no wealth is being created for the people that own shares in these companies. And the reason for this is simple – not all these securities are traded; at least not in the real sense of it.
Conversely, two things are bound to happen when companies’ listed securities experience little or no trading activities over a period of time. According to a well-known capital market source, trade inactivity leads to share price depreciation which ultimately results in zero wealth being created for shareholders. Therefore, shareholders of NSE companies with low share prices need to be worried for their investment.
“First, we need to understand how a company’s value is created. When a stock’s price increases, it does so because there are more people willing to buy the stock (demand it) than people willing to sell it (supply it). This high demand in relation to supply creates value for the stock because buyers must compete against one another for it. And the more they want the stock for themselves, the more they are willing to pay for it.
“The opposite occurs when a stock price decreases, which simply results from a low demand in relation to supply. Just as a high number of buyers create value, a high number of buyers erodes value.”
On that note, welcome to Nairametrics’ company focus for this week. Today, we are doing it a little differently – focusing on a number of companies whose share prices have consistently been low on the NSE. We decided to look into this matter because a growing number of readers have emailed recently to enquire about their shareholdings and why they haven’t been earning dividends since they acquired said shares.
If you have a similar complaint, just know that the reason you haven’t been earning any dividends is because the overall value of the company you co-own is low. That said, below are the companies with the lowest share prices, according to reliable information.
This company’s share price has, over time, hovered around N0.20. This explains why its market capitalisation is valued at just N642,325,581.40, even as shares outstanding is 3,211,627,907.
Financially, Tantalisers Plc hasn’t been performing very well. It consecutively ran at a loss between 2013 and 2016, until 2017 when it reported a profit after tax of N443.3 million. In 2018, however, it returned to loss-making. This is because the company’s unaudited third quarter result for the year shows that it ran at a loss of N213.5 million. We reported that this could be a pointer to a possible overall loss for the fiscal year ended December 31st, 2018.
Tantalisers Plc is the NSE’s only listed Fast Food Company. It has been in existence for more than twenty-two years, following its 1997 incorporation. Its business model entails the cooking and selling of staple Nigerian and foreign dishes such as jollof/fried rice, pastries, Chinese cuisines, etc.
Tripple Gee and Company Plc
Incorporated in 1980, Tripple Gee and Company Plc is a Nigerian company whose business model entails the printing of sensitive financial instruments and other security documents for financial institutions and government agencies.
But investors are disinterested in the company’s stock; hence, the reason why the share price has remained at N0.77 for a long time. Market capitalisation is N381,114,580.00, while shares outstanding is 494,954,000.
In recent years, Tripple Gee and Company Plc has struggled to achieve profitability. It did, however, record a profit after tax of N12.7 million for Q3 2018.
Rak Unity petroleum Company Plc
This company has a share price of N0.40, which has remained unchanged over a long period of time. Its market capitalisation stands at N22,649,813.20, and shares outstanding totals 56,624,533.
Incorporated in 1982 and listed on the NSE in 1989, the company is specialised in the merchandising of petroleum products such as premium motor spirit, automotive gas oil, kerosene, gas, etc.
Rak Unity Petroleum Company Plc generated a loss after tax of N2.6 million in Q3 2018, which makes it one of the worst performing companies in its sector.
Neimeth International Pharmaceuticals Plc
The company specialises in the manufacturing and merchandising of pharmaceutical products for both humans and animals. It has been operating this same business model for 61 years since it was first established in Nigeria back in 1957.
It has, however, struggled to be profitable recently. Its share price is a mere N0.67. However, the company’s market capitalisation is N1,272,435,262.36. Also, shares outstanding totals 1,899,157,108.
This company has a share price of N0.51, a market capitalisation of N166,617,000.00, and shares outstanding totalling 326,700.000.
It is a relatively new player in the fast moving consumer goods sector, having just been incorporated in 2004. It was listed on the Nigerian Stock Exchange on December 18, 2009. It recorded a total revenue of N640.9 million in Q3 2018, with a profit after tax of N27.8 million.
Japaul oil & Maritime Services Plc
This company’s shareholders already have a lot of reasons to regret their investment, and a low share price is one of them. This is because it has a share price of N0.23, a total shares outstanding of 6,262,701,716, and an overall market capitalisation of N1,440,421,394.68.
The Nigerian company operates in the oil and gas sector, offering a range of services such as maritime, logistics, drilling/installations, and dredging services. But despite its many potential sources of income streams, the company reported a loss after tax of N5.5 billion in Q3 2018.
It was incorporated in 1994 and listed on the Nigerian bourse in 2005.
Other notable mentions
- First Aluminium Nigeria Plc: This company’s share price is within the range of N0.29.
- Evans Medical Plc: N0.50
- DAAR Communications Plc: N0.40
- Courteville Business Solutions Plc: N0.20
- Afromedia Plc: N0.50
- Academy Press Plc: N0.40
If you own shares in any of the companies mentioned above and others like them, you should know that you co-own companies that are no longer perceived to be very valuable by other investors. Already, the initial price at which you acquired the shareholding have depreciated. If you should choose to continue holding on to the shares (in hopes of better days to come), you should also bear in mind that the chances of further depreciation abounds. However, a decision to sell would mean that you would be selling for far less than the amount you spent to acquire them in the first place.
It can be an uneasy decision to make. But no matter how you decide, ensure to consult your stockbroker.
You left Chams Plc in your list. It’s worse than some on your list. I bought 500,000 units in the year 2008 at N5.50 per share. I have been trying to sale it even at 20k per share but no buyers.
What of RESORT SAVINGS AND LOANS PLC?
Are they still there? Any hope at all?
But the irony of it all is that while the Shareholders weep themselves out, the Directors of this “Moribund Companies” smile to the banks with their fat salaries and allowances.
Who will save us – NSE, SEC or CSCS?