Meyer Plc, yesterday announced the appointment of a new Managing Director, Mr Devashish Lash, effective February 1st, 2019.
The company also announced the resignation of its Chief Financial Officer (CFO), Kehinde Yusuf, effective 31st December 2018.
The moves may be part of a shakeup which the company has embarked on in the last few years, following a rights issue in 2017.
Meyer Paints is Nairametrics’ stock pick for the week.
About Meyer Plc
Meyer Plc (previously called DN Meyer Plc) was incorporated on the 20th of May, 1960. The name was changed by a special resolution and the authority of the Corporate Affairs Commission on the 1st of July, 2016. The company manufactures and markets paints.
Recent Results
Results for the nine months ended September 30, 2018, show that revenue dipped from N778 million in 2017 to N752 million in 2018. The firm made a profit before tax of N186 million, as against a N156 million loss recorded in the comparative period of 2017.
Pricing
Current Share Price: N0.54
Year High: N0.59
Year Low: N0.54
Year to Date: -8.47%
Price Outlook
The possibility of a rally in the price of the stock is unlikely. The stock has underperformed the NSE All-Share Index year to date, as it is down 8.47%. It has also been at trading at a 5–year low of N0.54 in the last one week.
Valuation
Meyer paints is trading at a price to earnings ratio of 3.5 times earnings, that’s one of the lowest in the sector. CAP Plc, the industry leader, is trading at 17.4 times earnings. Berger Paints is trading at 10.7 times earnings.
Outlook
While the company is on its way to recovery, 2018 results would be too short a period to measure how sustainable this is. Investors would be better off waiting for the stock’s H1 2019 results before deciding to take a position.
The paint sector is filled with several low-cost alternatives. Meyer will have to produce at that price point or seek large ticket contracts where it can charge a premium.
