Eighty-seven, out of the 170 quoted companies on the Nigerian Stock Exchange failed to pay dividends to their shareholders in 2019, investigations by Nairametrics have revealed.
According to data obtained from the Exchange, more than half of these firms, across different sectors of the economy, last paid dividends five or more years ago.
Further analysis shows that majority of the firms, identified as the worst hit, are moribund and likely to be delisted from the emerging bourse anytime soon. Companies in this category owe between five or more years dividend.
Data from the NSE showed that a total of 45 companies were delisted from 2013 to 2019. A review of the list showed that 27 were delisted on regulatory instruction over non-performance, 13 of the companies chose to delist voluntarily, four companies delisted on merger, while one company was delisted on acquisition.
[READ MORE: Why Guinness is a stock to pick – RenCap]
What it means to be delisted
Under a voluntary delisting window, a quoted company can decide to delist from the Exchange due to reasons such as merger or acquisition. On the other hand, the NSE can compulsorily delist a firm when it fails to meet up with post-quotation standards.
Some of the companies
Despite the fact that South South-based Champion Breweries increased its profit before tax from N210.1 million in 2015, N63 7.3 million in 2016, and N517.56 million before it posted a loss of N263.80 million loss in 2018, it has not paid dividends to shareholders for over 10 years.
While Premier Breweries Plc and Studio Press last paid dividend in 1995, others like Livestock Feeds Plc, Costain West Africa Plc, John Holt Plc, Diamond Bank Plc (before it was delisted after the merger with Access Bank plc), Oando Plc, Skye Bank Plc, Neimeth Pharmaceuticals Plc, Fortis Microfinance Bank, Academy Press, LASACO Insurance Plc and Nigerian Enamelware Plc, have not rewarded their investors on the average of four years.
Fall and fall of share prices
Shares of the quoted companies have also witnessed a sharp decline for several years on the floor of the Nigerian Stock Exchange.
For instance, the share value of Livestock Feeds fell from N1.79 on January 5, 2016, to N0.50 by the end of trading of September 19, 2019.
Also, the share value of Neimeth, Champion Plc, LASACO Plc and African Alliance Insurance among others, have decreased from N2.27 to N0.40; N2.00 to N1.00; N1.00 to N0.30; N1.50 to N0.20 respectively within the same period.
However, financial analysts have warned investors that the companies may not be out of the woods anytime soon.
Managing Partner, Profit Plus Investment, Dr. Peter Olawunmi, explained that the rising interest rate and the depreciation of the naira had affected the performances of the companies in the last few years and might persist, except there were intervention measures.
“In an environment whereby you have rising interest rates, banks and firms (mentioned above) are net borrowers from the market and they have substantially high-interest expenses, that alone can shrink profits.
“Other banks are net placers of funds in the market and in an environment whereby you have high-interest rates, a net placer of funds will benefit from the rising interest and that is the case with the Tier1 banks.
“If you were doing business last year, the cost of running businesses between December 2016 and December 2019 had gone up by more than 45%. Therefore, if a company borrowed money to fund its transaction from a bank, it meant that it would need additional funds of over 45% to enable it to maintain the same level of production.”
Head, Research, FSDH Bank, Dr. Ayo Adewunmi, said, “The growth in the loans can be attributed to the effect of the devaluation of the naira. This is because if a company has a dollar-denominated loan that was converted to naira in the year 2015 at about N198 per dollar, now the same loan will be converted to naira at over N360.
“Therefore, a firm with a loan of $1 billion in 2015 would carry about N198 billion in its naira balance sheet as the value of the loan. But the same loan will now be worth over N360 billion in its balance sheet without any actual increase in loan.”
Coinbase debuts on Nasdaq at around $100 billion valuation
Coinbase resumed trading on the Nasdaq Composite Index today under the ticker “COIN”.
Coinbase, a Cryptocurrency exchange made its highly anticipated debut on Nasdaq on Wednesday, April 14, 2021, becoming the first company devoted entirely to cryptocurrency to enter the US stock exchange.
The IPO of Coinbase Global today was a big turning point for the cryptocurrency business. It had a rousing debut on Wall Street with the digital currency exchange’s stock growing as high as $429, giving it a market cap of $100 billion for a brief period of time.
According to analysts, retail trading accounts for 90% of Coinbase’s income, with the majority of trading taking place in the United States and focusing mainly on the two main cryptos: Bitcoin and ETHUSD. Dubbed the most talked-about IPO on Wall Street, Coinbase resumed trading on the Nasdaq Composite Index today under the ticker “COIN.”
What this means
Given Coinbase’s reception, Crypto optimists insist Bitcoin will not go anywhere in the near future, but will instead become more mainstream. They see the Bitcoin craze as the “start of a new era” in the digital currency world, rather than a passing phase.
Due to Bitcoin’s young and unpredictable existence, investors and public corporations are also wary of investing in it. However, as long as the currency’s popularity is sustained, the bubble hypothesis can be debunked as control and acceptance of the currency spreads further down the line, according to analysts.
It is important to note that Coinbase has a strong correlation with Bitcoin and as it benefits from its bullish run, it can also be hit by a downturn in the market.
What you should know
- Coinbase has become popular amongst cryptocurrency optimists since being founded in 2012, for providing an easier way to exchange shares of digital currencies.
- Coinbase announced last week that its first-quarter sales jumped 847% to $1.8 billion and that it currently has 56 million confirmed customers.
- Coinbase is now one of the largest publicly traded firms in the United States, with a market cap of more than $100 billion.
- Only 83 companies in the S&P 500 index have a market value greater than $100 billion.
- The combined market value of Nasdaq Inc., which operates the Nasdaq Stock Market, and Intercontinental Exchange, which owns the New York Stock Exchange, is greater than Coinbase’s.
Jaiz, Wema surge as NSE Banking Index drops
At the end of the trading session today, the NSE banking index dropped by (-0.71%) to settle at 348.20 from 348.28 index points.
At the end of the trading session today, the NSE banking index dropped by (-0.71%) to settle at 348.20 from 348.28 index points. This profit was less than the previous days (+2.19%). The NSE banking index started today’s trading session on a bearish trend. The market saw 3 gains, 3 stalemates, and 4 losses.
Jaiz Bank left the claws of the bears with a profit (+5.00%) settling its price at N0.63 as it eyed the N1 mark. Analysts speculate that this milestone may be surpassed by the end of the year. Wema banks topped the gainers with a significant (+5.26%), putting it on the top 5 list on the NSE-ASI.
Wema Banks share price stood at N0.58 at the end of the trading session.
Zenith Bank was saved from sell-off by posting a profit of (+0.46%) pushing the price to N22.00 from N21.90.
Sterling Bank led the losers as they made a significant loss of (-8.33%) dropping the price to N1.68 from N1.80 held the previous day.
Union Bank also dropped by (-3.06%) dropping the price at N4.75 from the previous close of N4.90.
Fidelity Bank saw a loss of (-0.80%) dropping the price to N2.47 from the previous day’s close of N 2.49. Technical analysis trended bearish from the beginning to the end of the trading session. GTB was not left out of the loss in the NSE Banking Index starting the day at N28.95 to close at N28.80 showing a -0.52% decrease.
UBA posted zero profit to hold the price at N6.95 which was exactly the same price as the previous days close.
Access Bank held another stalemate to hold the price at N8.10. Finally, EcoBank also saw a stalemate putting the market price at N4.80.
- Market sentiment still shows major consolidation as NSE Index companies have 3 gains, 3 Stalemates and 4 losses.
- Analysts project recovery from the NSE Banking Index before the end of the week.
- Nairametrics advises cautious participation in the market amid growing uncertainties.
Nairametrics | Company Earnings
Access our Live Feed portal for the latest company earnings as they drop.
- Tantalizers Plc reports a loss after tax of N422.05 million in FY 2020.
- NASD Plc announces admission of newly demutualized NGX shares.
- Lotus Halal Fixed Income announces dividend of N20 per unit for Q1 2021.
- Friesland Campina Wamco Nigeria Plc announces AGM, proposes dividend of N6.74 per share.
- ETI appoints Akin Dada as Group Executive, Corporate & Investment banking.