Becoming a listed company on the Nigerian Stock Exchange (NSE) is a thing of prestige, no doubt. However, that is not all there is to guaranteeing the success of a business. Little wonder there are many underperforming quoted companies in Nigeria today. It may even interest you to know that out of the 170 companies on the Nigerian bourse, only about six of them account for as much as 68% of the entire market capitalisation of the NSE. The rest are mostly kobo stocks, with market capitalisation so small that they can easily be acquired by a startup. One of such companies is Trans-Nationwide Express Plc.
The company’s market cap
The latest stock market data released by the NSE shows that Trans-Nationwide Express Plc is among the least-capitalised companies in Nigeria. The company has a market cap of merely N328.1 million, which converts to approximately $1 million. A company’s market capitalisation is typically calculated by multiplying the outstanding shares of such a company by the current market price of its shares.
Speaking of share price, Trans-Nationwide’s stock ended last week at N0.70, having remained unchanged throughout the month of August. Year to date, the stock recorded its lowest ebb on Monday, February 21st when it closed trading at N0.63. Its year high was N0.82 on Tuesday, April 16th, 2019.
The company’s business model
According to information available on its website, Trans-Nationwide Express Plc claims that it “is a leading Logistics Company engaged in domestic and International Express delivery, haulage, freight and other ancillary transportation and storage services.” In other words, the company engages in the business of both local and international parcel delivery, whilst offering haulage services.
The company’s target market
Due to the nature of its business, the company has a diverse market audience. According to information available on its website, some of its clients play in such areas of the economy as oil and gas, e-commerce, education, banking, and even the public service.
Considering the wide spectrum of customers the company targets, it is expected that its financial growth will be exponential. But this is not exactly the case. Instead, the company’s H1 2019 financial results show that a total revenue of N410.3 million was realised. Out of this amount, the company’s courier services generated the most amount at N246.6 million, while its warehouse generated the least amount at N4.5 million.
Meanwhile, the total direct operating cost incurred during the period was N158.3 million. In the same vein, administrative expenses stood at N235.7 million. Profit after tax only stood at N10.5 million.
The company’s ownership structure
Information available in the company’s full-year 2018 financial result shows that the company’s substantial shareholding is in the following order:
- MWML Nominees Ltd: 124, 600, 616 units representing 26.58%,
- Saham Unitrust Insurance Ltd: 99, 609, 000 representing 21.25%, and
- Adebayo Thomas Bandele (Otunba): 30, 367, 861, representing 6.48%.
Together, the three substantial shareholders make up 54.31% of the company’s shareholding. The remaining 45.69% are held by retail investors.
Why a startup could buy the company
Trans-Nationwide is currently in dire need of cash to boost its operation. It is rather intriguing that the company is still scrambling to scale/expand 35 years after it was founded in 1984. This is because one of its newest competitors in the market space – Kobo 360 – is expanding aggressively. Though established some years ago, Kobo 360 has made innovative use of technology to expand its operations. Its viable operation has also helped it to raise a lot of money, including the most recent $30 million capital raise which was backed by Goldman Sachs.
The $1 million valuation for Trans Nationwide is merely a fragment of the $30 million Kobo 360 recently raised. What this means, therefore, is that Kobo 360 could easily stake $1 million to buy out the company.
Other delivery startups that could potentially buy this company include GIG, which has grown to become a major player in the Nigerian logistics market. In the same vein, Chinese-owned OPera has the financial clout to cough out $1 million for quick acquisition of this company. Even Max.ng could afford $1 million to acquire Trans Nation-wide. The company recently raised $7 million for expansion purposes.
However, a possible acquisition may never happen. In a recent notice sent by Trans–Nationwide informing the NSE of its intent to raise fresh capital to the tune of N1.33 billion, the company specified that the right issue is limited to its existing shareholders.