The Nation Newspaper

Category: Equities

  • Investors’ apathy lingers as equities slip further

    Investors’ apathy lingers as equities slip further

    Investors remained cautious and reluctant to engage in massive bargain hunting as Nigerian equities continued to wriggle in a wave of downtrend that presumably will shape the first quarter performance at the stock market.

    The overall market outlook showed signs of recovery but these were still timid and scanty to overwhelm the strong sell sentiment that had seen most equities crashing to their lowest values in recent period.

    With 41 decliners to 14 advancers, average day-on-day return at the Nigerian Stock Exchange (NSE) closed yesterday at -0.37 per cent, pushing the average year-to-date return at the Nigerian stock market to -10.14 per cent. This implies that an average investor has lost more than 10 per cent of its portfolio value so far this year.

    But the market appeared to be in good stead for imminent recovery with slowdown in the momentum and spread of the bearishness. Leading highly capitalised stocks also appeared to be building up a rally that could upturn the market situation, notwithstanding the spread of bearishness. The two most capitalised stocks on the NSE- Dangote Cement and Nigerian Breweries, mitigated the negative outlook yesterday.

    Aggregate market value of all equities dropped by N44 billion to close at N11.929 trillion as against its opening value of N11.973 trillion. This pushed total loss within the past six days to N685 billion.

    The All Share Index (ASI), the common value-based index that tracks all quoted equities, dipped by 0.37 per cent from 37,274.04 points to 37,136.60 points.

    Nestle Nigeria, NSE’s highest-priced stock, again led the decliners with a loss of N7.08 to close at N968. Total Nigeria trailed with a loss of N7 to close at N153. Union Homes REIT followed with a drop of N2.41 to close at N47.59. Presco dropped by N2.05 to N38.95. Guinness Nigeria declined by N1.85 to close at N168.15. International Breweries slipped by N1 to N24. Oando lost 72 kobo to close at N13.87. Guaranty Trust Bank dropped by 69 kobo to N23.10. National Salt Company of Nigeria (Nascon) lost 59 kobo to close at N11.28 while Union Bank of Nigeria declined by 41 kobo to N9.84 per share.

    Banking stocks remained the drivers of activities at the Exchange. Financial services sector accounted for 218.51 million shares valued at N2.61 billion in 2,473 deals out of the total turnover of 254.15 million shares worth N3.64 billion traded in 4,273 deals yesterday.

    On stock-by-stock basis, Zenith Bank was the most active stock with a turnover of 71.95 million shares valued at N1.49 billion in 512 deals. Diamond Bank placed second with a turnover of 35.42 million shares valued at N230.24 million in 83 deals. Guaranty Trust Bank ranked third with 19.78 million shares worth N463.56 million in 301 deals.

    Meanwhile, Mobil Oil Nigeria led the contrarian stocks with a gain of N4 to close at N121. Seven-Up Bottling Company beefed up its share price with addition of N2.99 to close at N91. Dangote Cement rallied 60 kobo to close at N229. Nigerian Breweries added 49 kobo to close at N145.50 while Unilever Nigeria rose by 35 kobo to close at N45 per share.

  • Stock Exchange targets 120 million phone users to boost penetration

    The Nigerian Stock Exchange (NSE) will leverage on its new advanced trading technology-X-Gen, to roll out and support innovative products and services that will enable phone users to directly access the stock market.

    Chief executive officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, disclosed this yesterday in Lagos at the investors’ clinic held for registered shareholders’ associations.

    According to him, X-Gen opens an unprecedented level of innovative trading capabilities for the Nigerian capital market, providing direct market access for both the buy and sell sides, and mobile access through smartphones to the retail investors.

    “Therein lies an opportunity for engagement with the 120 million mobile phone owners across the country. The new trading platform has also improved the overall quality of market experience for all stakeholders,” Onyema said.

    He outlined that while the focus of the NSE from 2011 to 2013 has been on revamping corporate governance, improving human capacity, cleansing and restructuring the market, improving technology, product development, and advocacy for changes to policy, the Exchange will this year shift gears to drive innovations centred on increasing global visibility for the Nigerian capital market.

    “We intend to develop a larger footprint on the African continent and ultimately, targeting emerging market status. That is why we are very much in support of the West African Capital Market Integration (WACMI) efforts and similar programs. This will open opportunities for you, the Nigerian investors, to extend your reach,” Onyema said.

    As the market tottered with new streak of bearishness, Onyema noted that though the Nigerian capital market has shown signs of improved investor confidence, the job is not done yet.

    He however pointed out that the improved regulatory environment and performance of quoted companies from 2012 till date have positively impacted on stock market prices and overall market indices.

    He noted that all vital performance indices at the capital market have bounced back from the critical low to which they backslid in 2008 and have generally remained upbeat with the market capitalization of listed equities increasing by more than 47.3 per cent in 2013 alone.

    He outlined various initiatives already taken by the Exchange to further strengthen investors’ confidence to include institution of a strong investor protection framework, which led to reconstitution of the board of trustees of the Investor Protection Fund (IPF).

    He stressed the zero-tolerance stance of the Exchange on dealing member firms and listed companies’ violations noting that the Exchange has proposed several rules to codify the accepted mode of engagement in the market.

    “We have also started building out a robust financial literacy programme. Back in February 2012, we kicked off our financial literacy programme as a first step in protecting investors. This programme aims to enhance investors’ understanding of the basics of investing around portfolio construction, asset allocation and risk diversification,” Onyema noted.

    According to him, the investors’ clinics have primarily been focused on particular segments of the investing community to discuss the finer details of investing and to shed more light on the capital market eco system.

  • Berger Paints eyes market dominance with new manufacturing plant

    Berger Paints Nigeria Plc will launch its new state-of-the-art manufacturing plant before the end of this year as the paints and chemical company consolidates efforts to strengthen its dominance and enhance value for shareholders.

    Addressing the investing public yesterday at the Nigerian Stock Exchange (NSE), managing director, Berger Paints Nigeria Plc, Mr. Tor Nygard said the company plans to complete and launch its new fully automated paint manufacturing plant in Lagos towards the end of 2014.

    According to him, the plant will be first of its kind in West Africa and it will produce the same high quality paints which are imported by others to Nigeria.

    He noted that Berger Paints had in 2012 entered into a commercial agreement with a coating manufacturing company in South Korea, KCC Corporation to jointly serve the Nigeria and West Africa Marine and Protective coating market.

    “This arrangement complies with the provision of the Local Content Act and the requirements of the Local Content Registration Board of Nigeria. This partnership creates an opportunity for transfer of much needed knowledge and training in the marine coatings sector to Nigerians, improving local knowledge in the onshore, offshore and shipping,” Nygard said.

    He said the company expects sales of N1.5 billion and net profit after tax of N80 million for the second quarter ending June 30, 2014.

    Nygard pointed out the improvements in the performance of the company in recent years noting that it posted a profit before tax of N379 million for the financial year ended December 31, 2013, an increase of 33 per cent when compared to N285 million recorded in 2012. The company recorded a turnover of N2.71 billion in 2013 as against N2.69 billion recorded in 2012.

    He added that the company has also undertaken strategic investments to diversify its earnings citing the building of a plaza in its regional office located in Abuja as one of the effective way of utilizing the company’s asset to generate additional income.

    “Our colour world centers as a concept are designed to promptly meet customers’ requests for a wide range of colors at point of sale. Going forward, after commissioning the new factory, Berger plans to have colour world centers in all key cities and locations in Nigeria. With investment in a state of the art modern factory, creating the colour world centers across Nigeria and the Berger/KCC partnership, the company is well poised to bringing cutting edge yet environmental friendly products to beautify homes and support project investment,” Nygard said.

    He reiterated the commitment of the board and management to continue to expand its operational activities to enhance profitability and increase shareholders’ value on investment.

     

  • Vitafoam Nigeria: Still tough

    Vitafoam Nigeria: Still tough

    Vitafoam Nigeria Plc remains under cost pressures on many fronts as the foam-manufacturing company struggles with high financial leverage and tight top-line. While the turnover witnessed modest growth and the company held tightly to operating expenses, finance expenses continued to undermine the bottom-line, depressing the bottom-line to another low. For the fourth consecutive period, the company held on to its dividend payout rate of 30 kobo and it still has substantial headroom to pay as much in the years ahead, but the future probability of similar dividend is on the decline.

    Audited report and accounts of Vitafoam Nigeria for the year ended September 30, 2013 indicated that sales rose by 12.8 per cent but pre and post tax profits dropped by 22.5 per cent and 18.2 per cent respectively. The largest growth on the profit and loss accounts remains finance expenses, which rose by about 40 per cent. With basic earnings per share dropping from 61 kobo to 50 kobo, the retention of the 30 kobo dividend payout cut dividend cover from 2.03 times to 1.67 times. This downtrend is also evident in the underlying returns and profitability of the company.

    Meanwhile, the company’s balance sheet improved slightly, although the gearing ratio remained high. Marginal increase in equity funding in relation to total assets, similar decline in debt-to-equity ratio and improved liquidity showed modest improvement in balance sheet.

     

    Financing structure

    Vitafoam’s total assets declined marginally by 2.9 per cent from N10.26 billion in 2012 to N9.96 billion in 2013. Current assets had dropped by 10 per cent from N6.94 billion to N6.22 billion as against 13 per cent increase in long-term assets from 3.32 billion to N3.74 billion. However, total liabilities also declined by 6.8 per cent from N7.35 billion to N6.85 billion. This was driven largely by decline in current liabilities from N6.54 billion to N5.75 billion. While the paid up share capital remained unchanged at N410 million, shareholders’ funds inched up by 6.8 per cent from N2.91 billion to N3.11 billion.

    The financing structure improved slightly in 2013, although it remained precarious and unhelpful. The proportion of debt to equity stood at 97.1 per cent in 2013 as against 111.4 per cent in 2012. Equity funds/total assets ratio improved from 28.4 per cent to 31.2 per cent. Current liabilities/total assets ratio also improved from 64 per cent to 58 per cent while long-term liabilities/total assets ratio firmed up to 11 per cent in 2013 as against 7.8 per cent.

     

    Efficiency

    Available extracts showed decline in cost efficiency and productivity, although there were not enough details to determine productivity and average employee performance. With16.4 per cent increase in cost of sales and almost 10 per cent rise in operating expenses, the proportion of non-interest expenses to sales increased during the period, underlining the decline in profit margins and returns during the period. Total cost of business, excluding finance charges, rose to 93.1 per cent in 2013 as against 91.8 per cent in 2012.

     

    Profitability

    The midline remained the Achilles’ heel of Vitafoam’s profit and loss accounts. While top-line sustained modest growth and the company struggled to curtail non-interest costs, interest expenses stifled overall performance and turned the bottom-line into negative. Both actual and underlying profit and loss items showed indicated decline, although the net bottom-line remained positive.

    Group’s total sales closed 2013 at N16.34 billion compared with N14.48 billion recorded in 2012. Cost of sales however rose by 16.4 per cent from N9.34 billion to N10.87 billion. Gross profit thus inched up by 6.3 per cent from N5.14 billion to N5.47 billion. Total operating expenses rose by 9.8 per cent to N4.34 billion as against N3.95 billion in previous year. Distribution cost had increased from N945.19 million in 2012 to N955.83 million in 2013 while administrative expenses rose from N3.0 billion to N3.38 billion. Non-core business income increased by 13 per cent from N146 million to N165 million. However, finance expenses jumped by 39.7 per cent to N661 million as against N473 million in previous year. With these, profit before tax dropped by 22.5 per cent from N813 million to N630 million. After taxes, net profit dropped by 18.2 per cent to N410 million in 2013 compared with N502 million in 2012.

    Notwithstanding the decline in net profit, the board of the company has recommended distribution of N246 million as cash dividends for 2013, the same amount distributed annually over the past three years. This implied a dividend per share of 30 kobo. Earnings per share had dropped from 61 kobo in 2012 to 50 kobo in 2013. Meanwhile, net assets per share improved slightly from N3.56 to N3.80.

    Underlying ratios showed similar outlook. Gross profit margin dropped to 33.5 per cent as against 35.5 per cent in 2012. Profit before tax margin also dipped to 3.9 per cent compared with 5.6 per cent in previous year. Average return on total assets declined from 7.9 per cent to 6.3 per cent while average return on equity dropped from 17.2 per cent to 13.2 per cent.

     

    Liquidity

    The liquidity position of the company improved marginally during the period with better financial coverage and working capital. Current ratio, which relates easily available finances to similar liabilities, inched up to 1.08 times in 2013 as against 1.06 times in 2012. The proportion of working capital to total sales notched 2.9 per cent as against 2.8 per cent. Debtors/creditors ratio stood at 74.6 per cent in 2013 compared with 54.4 per cent in 2012.

     

    Governance and structures

    Incorporated on August 4, 1962 and listed on the Nigerian Stock Exchange (NSE) in November 1978, Vitafoam Nigeria is Nigeria’s leading foam-manufacturing group. Now a wholly Nigerian-owned company with a highly diversified shareholding structure, Vitafoam engages in manufacturing and distribution of flexible, reconstituted and rigid foams, all in various forms and designs that make the group a one-stop cushion supermarket. With subsidiaries in Ghana and Sierra Leone, Vitafoam Group includes four other subsidiaries in Nigeria including Vita Blom, Vita Visco, Vitapur and Vono Products Plc. Like Vitafoam, Vono is also quoted on the NSE and was Vitafoam’s long-standing competitor until Vitafoam bought the controlling equity stake.

    There were no changes in the board and management of the company. Mr. Bamidele Makanjuola remains the chairman while Mr Joel Ajiga still leads the executive management as managing director. The company broadly complies with the code of corporate governance for public companies.

     

    Analyst’s opinion

    The latest audited report further underlined the need for Vitafoam to restructure its balance sheet in order to ensure that the gains of its commendable focus on growth and expansion in recent years trickle down to the shareholders. The apparent financial mismatch, orchestrated by the banking crisis and the capital market meltdown, is evidently a limiting factor in the overall performance of the group. While its modest sales growth is commendable, the interest-dominated midline remained a major hurdle.

    Directors and other major shareholders in Vitafoam need to summon the courage to conclude the N4 billion new capital issue, which the shareholders of the company approved in the third quarter of last year. No doubt, recent capital investments and expansionary drives have created huge growth potential, which could further insulate the company from extreme shock from a market segment, but the gains of such investments are being stifled by the high financial leverage and resultant interest expense. Given its historic performance and steady fundamentals, Vitafoam stands a good chance of raising additional equity funds either from existing shareholders or other new investors. And an equity issue to shareholders, even at huge discount, will still be better than the continuing suffocation from financing charges. It’s time Vitafoam addresses the midline discomfort.

  • Bearish trend worsens as equities lose N208b

    The simmering downtrend at the Nigerian stock market boiled over into major burns for investors yesterday at the Nigerian Stock Exchange (NSE) with losses totaling N208 billion over 4006 deals.

    With nearly seven out of every eight price changes ending in the negative, aggregate market value of all equities on the NSE dropped by N208 billion from N12.576 trillion to N12.368 trillion. While a total of 121 stocks were traded, there were only seven gainers as against 48 losers, a situation that further depressed the overall market return.

    The All Share Index (ASI), the common value-based index that tracks prices of all quoted equities, indicated a day-on-day decline of 1.65 per cent, nudging the average year-to-date return to -6.84 per cent. The ASI slipped below the 39,000 mark to close at 38,503.65 points as against its opening index of 39,150.30 points.

    Market analysts attributed the steep decline to significant selling pressures from profit-takers and speculative investors, who were desirous of locking in their gains against expected lull in the post-earnings period.

    Guinness Nigeria topped the losers’ list with a loss of N6.40 to close at N166.75. Dangote Cement followed with a loss of N3.98 to close at N235. Nigerian Breweries recorded a loss of N2.55 to close at N145.50. Mobil Oil Nigeria dropped by N1.10 to close at N120.90. Presco slipped by N1 to close at N43. International Breweries lost 98 kobo to close at N27.01. UACN Property Development Company declined by 96 kobo to close at N20.10. Oando dropped by 95 kobo to N16.63. Guaranty Trust Bank lost 70 kobo to close at N24.30 while Union Bank of Nigeria dropped by 63 kobo to close at N10.05 per share.

    Total turnover stood at 367.19 million shares valued at N1.82 billion in 4,006 deals. Financial services sector accounted for 271.62 million shares worth N945.64 million in 2,318 deals. African Alliance Insurance was the most active with a turnover of 150 million shares valued at N75 million in four deals. Market sources said the deals on African Alliance Insurance were cross deals, implying that the buying and selling sides had been matched ahead of the final closure through the market.

  • Wema Bank, UBA harp on financial literacy for kids

    Wema Bank and United Bank for Africa (UBA) Plc yesterday called for all-inclusive approach by parents and the general society in teaching children how to save, plan and invest their money to ensure financial freedom in future.

    Managing directors of Wema Bank and UBA yesterday participated in teaching school children about finance and investment as part of activities to mark the Global Money Week.

    Group managing director, United Bank for Africa (UBA) Plc, Mr. Phillips Oduoza, called on parents to ensure that their children become financially smart at an early age noting that financially smart kids will become financially smart and wealthier adults.

    Oduoza taught students of Crowther Memorial College , Lokoja, Kogi State, basics of savings, budgeting, pensions, insurance and investments. He also took time after his lecture to answer questions from the students. Students asked different questions on different aspects of finance including savings, the difference between needs and wants, pensions, how to better manage their pocket money.

    “When we were growing up, no one thought us about money. We were thought biology, physics chemistry, economics, but nothing about money. Yet we all grow up realizing money is something we have to deal with everyday. That is why the Banker’s Committee, with the Central Bank of Nigeria, decided to embark on this initiative,” Oduoza said.

    Oduoza also explained that UBA decided to come all the way to Lokoja to carry out its financial literacy training because it realizes such education should not be restricted to students in the big cities only. He advised the students to take an interest in knowing about money as it will make them better adults in future.

    Governor of Kogi State, Captain Idris Wada, commended Oduoza for taking time off his very busy schedule to personally come to teach the students financial literacy skills.

    “There is no doubt that this initiative will create a generation of adults who will have a better understanding of money, how to make money and most importantly, how to manage it, “ Wada said.

    He said that he personally attended the training because of the priority his government places on education noting that the three priorities of his government are education, education, education.

    He commended UBA’s contribution to education development in the state and called on other financial institutions in the state to contribute to the economic development of the state.

    In the same vein, managing director, Wema Bank Plc, Mr. Segun Oloketuyi, taught pupils of Maryland Convent Primary School, Ikeja, Lagos on basics of finance and investments.

    He noted that it is the responsibility of the larger society and not just the family alone, to teach and mentor young people on the right way to live by showing them how to save and manage their resources. According to him, proper financial literacy will help to create the right environment for a secure future for the children, communities and the nation as a whole.

    In her remarks, the Head Teacher of the school, Reverend Sis. Gladys Osagie, thanked Wema Bank for bringing the timely initiative to the school.

    She said the initiative would go a long way in moulding the character of her pupils. Wema Bank also presented financial literacy materials to the school library on behalf of the Central Bank of Nigeria (CBN).

    The initiative was sponsored by the Royal Kiddies Account from Wema Bank. The Royal Kiddies Account from Wema Bank is open to young people from ages 0 to 13years whilst Purple Account is targeted at young adults from ages 13 – 24 years. Royal Kiddies Account offers life assurance as much as 10 times the account balance subject to a maximum of N10million in case of accidental death or permanent disability of the parent or account administrator. The Royal Kiddies Account holder is also eligible for an e-purse electronic wallet. On the other hand, the Purple Account gives its holder access to various electronic and mobile banking platforms as well as other opportunities tailored to their needs.

     

  • SEC pushes for regulations on greater women directors

    Securities and Exchange Commission (SEC) will champion the cause of rules and legislations that will encourage companies to appoint more women unto their boards in order to achieve gender diversity and inclusive growth.

    Director General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, who spoke at the annual lecture series of the Women in Management, Business and Public Service (Wimbiz) yesterday in Lagos, said there was need to address gender inequality in board appointments.

    According to her, women must be given more important roles at the highest levels of business governance because it makes economic sense to do so and SEC as the custodian of the code of corporate governance in Nigeria is interested in seeing companies pay more attention to gender diversity at board and senior management levels.

    “This issue has to be addressed. We are going to work with sister regulators to set guidelines that encourage companies to pay more attention to gender diversity on their boards. We will work with the Corporate Affairs Commission (CAC) where necessary to craft legislation that requires companies to apply some form of gender representation quotas on their boards,” Oteh said.

    She added that there is also the need for legislative and administrative reforms to set up effective enforcement machineries to support women in exercising their rights of equal access to economic resources including the right to inheritance and ownership of land and property.

    She noted that there are several opportunities for women to source funds from the capital market pointing out that the meritocratic system of assessment in the capital market provides equal opportunities for all fund raisers.

    According to her, the assessment of companies seeking to raise funds in the capital market is gender-neutral as the focus is on the fundamentals of the company not the promoter.

    She outlined that when a company is accessing the capital market to raise funds, approvals are given based on the soundness of the company and predetermined rules not based on the characteristics of its promoters noting that the best ideas or projects in the capital market usually attract the right level of long term funding at cheaper cost regardless of the gender of the sponsors.

    “Since access to funding is a key challenge for women entrepreneurs, capital market is an important part of the solution. There are multitudes of ways by which capital markets facilitate fundraising whether through equity or debt instruments,” Oteh said.

    She urged women entrepreneurs to list their companies on the Nigerian Stock Exchange (NSE) noting that listing unlocks access to cheaper long term capital for growth and expansion while the companies will also benefit from higher corporate governance standards expected from quoted companies.

  • Dangote Sugar promises better returns, jobs

    Dangote Sugar Refinery (DSR) Plc’s strategic sugar master plan would enhance returns to shareholders and create massive jobs and opportunities for the Nigerian citizenry, the management of the company has assured.

    Speaking during introductory visit to the Nigerian Stock Exchange (NSE) yesterday in Lagos, the newly appointed managing director of Dangote Sugar Refinery, Mr. Graham Clark, said that the company has embarked on implementation of strategic initiatives to enhance returns to shareholders and widen opportunities for the people.

    Clark, who has served most recently as the Managing Director of Illovo Sugar Limited – Africa’s biggest sugar producers with operations in six African countries, assured that he would collaborate with the board and management of the company to increase its market share and sustain its leadership position.

    According to him, DSR will stimulate rural economy of Nigeria through its backward integration programme and create many jobs. The backward integration will reintroduce sugar production to Nigeria and ultimately make the product sufficient and stable in the market.

    He pointed out that the in furtherance of the backward integration, the company recently acquired farm machinery worth $35 million from Panafrican Equipment noting that acquisition was in demonstration of the company’s faith in the backward integration policy of the Federal Government and National Sugar Development Council (NSDC).

    He said that the DSR’s sugar master plan would lead to production of 1.5 million metric tonnes of sugar per annum locally adding that the company would increase its capacity significantly.

    “We are bringing agriculture back to rural Nigeria, we will bring new skills to rural Nigeria and employ many people, we would play our part in stimulating the sugar industry in Nigeria. Our plan is to consolidate what we have and build on the plans to continue to reinforce DSR as the leading player in sugar in Nigeria,” Clark said.

    Clark, who has over 30 years of experience in African sugar industry, said Dangote Sugar has commenced the acquisition of additional hectares of land across Nigeria for the massive sugar plantation projects.

    According to him, there will be exciting things taking place in the next few years as the company’s sugar development story effectively moves from now through a period of five to 10 years, when it will develop new sugar plantations and new sugar factories across the country.

    “We will embrace Nigerian farmers to join us in the production of our raw material, which is sugar cane. We will stimulate considerable economic activities in the rural communities,” Clark said.

    Dangote Sugar is actively pursuing a backward integration master plan with a target of producing a total of 1.5 million tons of sugar locally per annum. The subsidiary, Savannah Sugar Company Limited, Numan, Adamawa State is geared to meet this target. Savannah Sugar is located on 32,000 hectares of land with a 50,000 MT/PA sugar production capacity. Currently, the company has 5,000 hectares on cane which is now being harvested for sugar production. Additional locations are being acquired in Sokoto, Kebbi, Kogi, Kwara, Jigawa, Taraba States amongst others.

  • GlaxoSmithKline declares N1.24b dividend

    The board of GlaxoSmithKline Consumer Nigeria (GSK) Plc has announced dividend recommendation of about N1.24 billion for the 2013 business year as investors await the full audited report and accounts of the healthcare company.

    An investors’ notice obtained by The Nation indicated that shareholders would receive a dividend per share of N1.30 for the immediate past year ended December 31, 2013. The dividend will be paid on June 12 subject to approval of the recommendation by the annual general meeting of the company on May 11. GSK is the first healthcare company to declare dividend.

    GlaxoSmithKline United Kingdom (UK), the core investors in GSK Nigeria had recently withdrew its bid to acquire additional shares from Nigerian shareholders to increase its controlling equity to 75 per cent following intense resistance from other investors.

    GSK UK was seeking to acquire 273.46 million ordinary shares out of the Nigerian shareholders’ holdings to add 28.58 per cent to push its post-acquisition holding to 75 per cent. It had retained a below-the-market price of N48 per share, in spite of substantial rally since the deal was first announced.

    Chairman, GlaxoSmithKline Consumer Nigeria (GSK Nigeria) Plc, Chief Olusegun Osunkeye, said GSK decided to step down the acquisition bid to consider appropriate amendments that will make the offer more acceptable to shareholders.

    Osunkeye said GSK UK and GSK Nigeria were ready to renegotiate everything and come up with a win-win transaction that would be beneficial to all stakeholders.

    According to him, the company will go back to the drawing board to work out a fair and persuasive deal that offers better price and remove element of compulsory purchase of shareholders’ holdings.

    “We withdrew in order to further consultations, we believe further consultations and arrangements are necessary before we come back,” Osunkeye said.

  • Equities turn negative on speculative sales

    After a three-session uptrend, Nigerian equities yesterday came under intense pressures from speculators as massive open-market sale orders overwhelmed the market situation and reversed the overall market position to negative.

    With three decliners to one advancer, the muted bearishness that started to build up on Tuesday came into full swing yesterday, shaving off 0.30 per cent or N38 billion from market capitalisation. Average year-to-date return at the Nigerian Stock Exchange (NSE) was further depressed at -5.27 per cent.

    Aggregate market value of all quoted equities dipped to N12.576 trillion as against its opening value of N12.614 trillion. The All Share Index (ASI), the common index that serves as value benchmark for the stock market, also slipped from 39,269.40 points to 39,150.30 points.

    Market analysts attributed the significant gap between losers and gainers to unrestricted sale orders by profit-takers, who wanted to close their deal irrespective of the market situation.

    While 121 stocks were traded, 41 stocks depreciated while 14 stocks appreciated. Volume of activities also fell below recent average.

    Guinness Nigeria topped the losers’ list with a loss of N6.85 to close at N173.15. Flour Mills of Nigeria followed with a loss of N2 to close at N76. Dangote Cement dropped by N1.02 to close at N238.98. Mobil Oil Nigeria, PZ Cussons Nigeria and Stanbic IBTC Holdings lost N1 each to close at N122, N34 and N20.25 respectively. UAC of Nigeria dropped by 50 kobo to N65. Nigerian Breweries slipped by 45 kobo to N148.05. Beta Glass lost 43 kobo to close at N19.02 while Oando declined by 42 kobo to close at N17.58 per share.

    Meanwhile, expectations of good dividend yields continued to stimulate many share prices. Seven-Up Bottling Company played the chief contrarian stock with the lead gain of N4.13 to close at N86.77. Conoil followed with a gain of N1.90 to close at N51.90. Lafarge Cement Wapco Nigeria, which has scheduled a board meeting on earnings and dividend recommendation, chalked up N1.50 to close at N112.50. Zenith Bank, which declared a dividend per share of N1.75 on Tuesday, rallied 58 kobo to close at N22.57. Union Bank of Nigeria added 50 kobo to close at N10.68 while Okomu Oil Palm garnered 45 kobo to close at N42 per share.

    Overall turnover was below recent average with the exchange of 281.64 million shares valued at N3.12 billion in 4,508 deals. Financial services sector remained the most active with a turnover of 215.4 million shares valued at N2.02 billion in 2,722 deals.

    Access Bank was the most active stock with a turnover of 47.19 million shares worth N361.26 million in 177 deals. Transnational Corporation of Nigeria (Transcorp) followed with 27.69 million shares worth N113.58 million in 265 deals. Guaranty Trust Bank placed third with 25.97 million shares valued at N649.75 million in 240 deals.