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Markets

Flour Mills trading close to 10 year low on the Nigerian Stock Exchange

@thefmngroup ended last week’s trading session on the @nsecontact at N13.80, a price level last seen nearly 10 years ago.

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Flour Mills Nigeria Website

Flour Mills of Nigeria Plc was one of the worst performing stocks last weekshedding 12.10% to close at  N13.80.  

 

 

Year to date, the stock is down 40.26%, underperforming the Nigerian Stock Exchange All Share Index which is down 1.75% year to date.  

The stock is also trading at levels last seen in almost a decade. The stock last traded at these levels in July 2009.   

 

Why is the share price tanking? :The drop in the company’s share price can be attributed to two reasons: general market sentiments which have been poor, and the company’s poor results.  

Save for a brief rally following the listing of MTN Nigeria, the All Share Index was down close to 8% and was one of the worst performing frontier markets year to date.  

Investor apathy, driven by unclear economic direction, has left many of them staying on the sidelines.  

Poor results:The company’s nine months results also show a decline in both topline and bottom line. Revenue fell by 6.3% from N427 billion in 2018 to N400 billion in 2019. Profit fell much more sharply. Profit before tax fell by 42.5% from N19.5 billion in 2018 to N11.2 billion in 2019. Profit after tax also fell from N13.2 billion in 2018 to N7.8 billion in 2019, down 40.9% 

The company had attributed the drop in revenue to logistic challenges at the Apapa ports. From all indications, the company would thus fall short of the N13 billion in profit after tax it made in its last financial year.   

Will it fall further ?: Upward or downward movement are dependent on two factors:  general market sentiments and the company’s full year results which are usually out sometime in July.

If market sentiments are positive, the stock could witness a rebound. If the market continues to decline, the stock could drop to new lows.  

About the company: Flour Mills of Nigeria Plc was incorporated on September 29, 1960, as a private limited liability company and converted to a public company in November 1978. 

Jaiz bank

The company’s operations are divided into four value chains: food value chain, sugar value chain, agro allied value chain and support services.  

 

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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    Markets

    US economic performance bolster Wall Street surge 

    U.S. stocks made a late-session turnaround on Thursday, closing at session highs.

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    U.S stocks futures rebound , cryptocurrency, ExxonMobil, JP Morgan Chase, MasterCard Up by over 10%

    Following upbeat corporate earnings and signs of continuing progress in the labour market, U.S. stocks made a late-session turnaround on Thursday, closing at session highs.

    After jumping around the flatline earlier in the day, the S&P 500 ended just short of a new high, while the Dow Jones Industrial Average jumped more than 300 points, setting a new high. The Nasdaq Composite gained ground as well, ending the day in the black and breaking a four-day losing streak. Earnings were a factor in the stock market’s biggest gainers, as Kellogg led the S&P 500 higher after outperforming analysts’ expectations.

    Treasuries remained stable, with the 10-year yield remaining about 1.57%, a far cry from recent peaks. The Fed said in its semi-annual financial stability report that a growing appetite for risk across a variety of asset markets is stretching valuations and creating vulnerabilities in the US financial system. Meanwhile, applications for state unemployment benefits in the United States hit a new pandemic low, and separate data revealed a productivity rebound. Traders are now looking forward to Friday’s payroll figures.

    Economists expect Friday’s report to show that the US economy added 1 million jobs in April, as the economy recovers from losses suffered during the coronavirus shutdowns. The non-farm payrolls report will be closely scrutinized by investors for information about the Federal Reserve’s next steps, as the central bank has said that it will continue to buy $120 billion in bonds every month until the labour market improves.

    Although markets are benefiting from stronger growth in the world’s largest economy, investors are worried that a faster-than-expected recovery from unprecedented government and central bank stimulus would result in excessive inflation. The Federal Reserve remains committed to near-zero interest rates in order to achieve a complete recovery, but in the second half of this year, an announcement of a reduction in its large monthly bond purchases seems increasingly imminent.

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    Cryptocurrency

    Crypto aftershocks send Doge crashing by 10%

    The fast-rising crypto was trading at below 60 cent posting losses of about 10% for the day on the FTX exchange.

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    doge

    The Crypto market is currently undergoing some form of price correction amid intensified profit-taking and fear of regulatory oversights, thereby pushing Dogecoin below the 60-cent price levels.

    On the broader crypto market, for the day, about 171,444 traders were liquidated. The largest single liquidation order happened on Bybit-ETH valued at $5.98 million.

    The fast-rising crypto was trading at below 60 cent posting losses of about 10% for the day on the FTX exchange, after trading near 70 cents some hours ago.

    Consequently, market pundits argue that the crypto asset doesn’t have any real case use.

    READ: Crypto crash: 3 major risks involved in investing in Crypto

    I worry that, once the enthusiasm rolls out, there are no developers on it, there are no institutions coming in. But it’s got this moniker of the people’s coin right now,” Galaxy Digital’s Michael Novogratz said on Squawk Box.

    Dark clouds seem to be building upon recent reports that the Crypto market is about to face a wave of regulatory oversights when Janet Yellen the custodian of the world’s most powerful economy stated that the United States is yet to have the needed framework to deal with a host of money laundering, terrorist financing, and consumer risk protection that crypto raises.

    Also, the U.S. Securities and Exchange Commission Chair, Gary Gensler advised U.S lawmakers on providing more regulatory oversight to the cryptoverse.

    “Right now, the exchanges, trading in these crypto assets, do not have a regulatory framework either at the SEC or our sister agency, the Commodity Futures Trading Commission,” said Gensler, who further added, “there’s not a market regulator around these crypto exchanges, and thus, there’s really no protection against fraud or manipulation.”

    READ: Altcoins giving investors weekly returns of at least 100%

    That being said, the crypto’s stellar performance over the past few months can’t be ignored as Dogecoin maximalists try to convince the world that crypto is a serious asset class with powerful billionaires like Elon Musk and Mark Cuban giving the Crypto asset endless support.

    Crypto experts further anticipate that ongoing institutional interest will make it difficult to predict if the Doge bubble is ripe as they try to take advantage of its incredible bullish momentum, which could in turn, push the crypto value higher.

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