The Nation Newspaper

Category: Investors

  • Stock Exchange lifts suspension on Resort Savings & Loans

    •Posts N44m loss

    The Nigerian Stock Exchange (NSE) has lifted suspension on trading in the shares of Resort Savings & Loans Plc, after the mortgage banker submitted its relevant financial statements to the Exchange.

    The NSE had on July 5, 2017 suspended trading in shares of Resort Savings and 16 other companies for failing to adhere to best corporate governance and extant post-listing requirements that quoted companies submit their periodic financial statements and reports within stipulated timelines.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

    Not less than 83 per cent of quoted companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31. While March 31 is usually the deadline for submission of annual report for companies with Gregorian calendar business year, the deadline for the quarterly report is a month after the quarter.

    The NSE stated that Resort Savings has submitted its outstanding audited and interim financial statements to the Exchange.

    Key extracts of the interim report and accounts of Resort Savings for the nine-month period ended September 30, 2018 showed that the company recorded considerable growths in earnings. Turnover rose by 51 per cent from N350.13 million in 2017 to N529.95 million in 2018. Interest income increased by 67 per cent from N314.35 million to N525.46 million. Loss before and after tax reduced from N152.24 million in 2017 to N43.56 million in 2018.

    Milost Global Inc-an American private equity firm, had recently appointed a Nigerian escrow agent and placed funds in escrow account to back up its investment in Resort Savings & Loans. Milost had indicated it plans to invest $250 million, about N76.5 billion, on Resort Savings & Loans. Milost, combining its traditional equity and debt approach, would be staking $100 million as equity capital and $150 million as debt capital.

     

  • NSE employees donate to charities

    As part of its Employee Give-Back initiative aimed at extending a hand of care to the less privileged during festive seasons, employees of the Nigerian Stock Exchange (NSE) pooled resources during the year-end festivities to fund specific needs in Bethesda Home for the Blind, Lagos and Children of Promise Orphanage, Ibadan.

    The two charities emerged from a ballot, following employees’ nomination of deserving charities. The Give-Back initiative is in alignment with the Exchange’s Corporate Social Responsibility strategy.

    NSE Head, Corporate Communications, Mr Olumide Orojimi, presented cash to Bethesda Home  to buy cane sticks for 25 visually impaired students who gained admission into the university, and other food items made available through funds donated by NSE employees.

    Orojimi said the gesture was part of the yearly employee give-back initiative of the NSE, noting that giving money, time and other essentials to the less-privileged is a culture at the NSE.

    “Just as the Exchange promotes the welfare of people in its host communities, our employees are always very willing to do the same. We are very happy to support Bethesda Home and we congratulate you on the admission of 25 of your children into the university.  We feel particularly honoured to provide these cane sticks for these great students at this time as we believe the canes will aid their movement as they go on their new academic pursuit at the university,” Orojimi said.

    Branch Manager, Ibadan Branch, Nigerian Stock Exchange (NSE), Mr. Kayode Ogun, presented food items and other essential toiletries and toys to Children of Promise Orphanage, Ibadan.

    He noted that the NSE is creating robust programmes to reach out to the often neglected in the communities where it does business.

    According to him, the Give-back initiative is employee-driven and it is a testament that employees share the NSE culture on an individual level, and this shared culture has culminated in the organisational CSR strategy.

     

  • Investors in last-minute rush as SAHCO’s N1.89b IPO closes

    Application for subscription to the N1.89 billion initial public offering (IPO) by Skyway Aviation Handling Company (SAHCO) Plc closes today.

    Stockbroking firms and other receiving agents are expected to collate and forward subscriptions to the issuing houses within the next two weeks. Discerning investors could still use the two-week window to submit their applications to their stockbrokers.

    Receiving agents have reported a quantum leap in the number of submitted applications in recent days as the IPO heads to its formal closure.

    SAHCO is offering 406.074 million ordinary shares of 50 kobo each through an IPO at N4.65 per share.  Application list for the N1.89 billion IPO, which opened on November 12, 2018, closes today, Wednesday, January 09, 2019. Ten per cent of the shares being offered for sale would be reserved for staff of SAHCO under an Employee Stock Ownership Plan to be set up and administered by a Trustee.

    Minimum subscription to the IPO is 500 shares and thereafter in multiple of 100 shares. This implies that any Nigerian with N2, 325 will be able to be part of owners of the company, thus realising one of the objectives of privatisation of creating and distributing wealth to Nigerians.

    SAHCO was privatised by the Federal Government in 2009. Sifax Group acquired the entire share capital of the company, but the Share Sale Purchase Agreement (SSPA) mandated the majority core investor to partially divest the shares of the company to the general Nigerian investing public.

    Many analysts said SAHCO has potential to deliver significant capital appreciation and dividend over the years. Analysts at leading investment firms including Vetiva Capital Management Limited and Cordros Capital Limited said the post-IPO performance would create values for shareholders.

    Analysts at Cordros Securities Limited stated that SAHCO has strong potential to sustain growth in the years ahead given its exposure to long-term expansion of air traffic, improvement in macro environment, relatively under-geared balance sheet and its competitiveness enhanced by IATA Safety Audit for Ground Operations (ISAGO) registration.

    According to the investment analysis, a valuation shows a target price of N5.97 per share for SAHCO in the immediate future, representing an upside of 28.44 per cent on its IPO price of N4.65 per share.

    “We have valued SAHCO using a pure-Discounted Cash Flow (DCF) valuation methodology, evaluating the company’s assets across its ramp and cargo handling business, in addition to future investments. Our positive investment case for SAHCO centres on the fact that the company represents a long-term play on air traffic and aviation industry growth and benefits from high barriers to entry,” Cordros Securities stated.

    The report noted that SAHCO has become somewhat of the ‘poster-child’ for privatisation, stemming from its incredible turnaround in performance in a short period since the government’s divestment.

    According to the report, management of SAHCO has stated its intention of sustaining the company’s impressive post-privatisation performance, listing key strategic goals to include expansion of revenue, cost control and reduction, customer satisfaction and stability and sustainability.

    The report pointed out that SAHCO has a positive long-term growth outlook citing the transformation in the market, which appears to be promising for SAHCO.

     

     

    According to the report, Nigeria’s aviation market is the third largest in Africa. Although relatively cyclical, the sector has a recorded a 10-year GDP CAGR of 9.0 per cent, almost double the national GDP CAGR of 5.0 per cent. Nigeria has huge potential to become an aviation hub for Africa, using its natural advantages such as its central location on the continent, huge population and a growing middle class.

    “As the second largest aviation ground handling service provider in Nigeria, SAHCO is well positioned to benefit from the expected long-term expansion of air traffic growth and demand for travel to, from and over Nigeria and the West African region. With respect to Nigeria air traffic trends, growth is expected to rebound after a more depressed period reflective of macroeconomic development,” the report stated.

    The Nigerian Bureau of Statistics (NBS) expects air traffic growth of 20 per cent for 2018 compared to 2017, on the back of improving business confidence, positive policy reforms – ease of doing business, visa on arrival – as well as development of infrastructure.

    “In our view, the Nigerian market is transitioning, from an economic standpoint – following three challenging years – and 2018 and beyond appear to be promising years for SAHCO to take advantage of. Firstly, we see economic growth benefitting from higher government and private sector spending, both riding on improved revenues from crude oil. Secondly, improved oil earnings should further improve FX liquidity and sustain stability, after the volatile era,” Cordros stated.

     

  • First-tier banks meet over dividend payment

    The boards of directors of three of Nigeria’s leading commercial banks – United Bank for Africa (UBA) Plc, Zenith Bank Plc and Access Bank Plc – have scheduled meetings later this month to approve the audited financial statement and accounts for the year ended December 31, 2018. The meetings will among others consider dividend recommendation to be made to shareholders.

    In separate regulatory filings, the three leading banks indicated that their directors would be meeting to review and approve the earnings report and accounts for the 2018 business year, preparatory to sending the accounts to the Central Bank of Nigeria (CBN) for the apex bank’s approval before release to the investing public through the Nigerian Stock Exchange (NSE).

    Financial services companies, including banks and insurance companies, are statutorily required to submit approved audited results to their primary regulators for clearance before release to the NSE and the investing public.

    The board of Zenith Bank would be meeting next week while the boards of Access Bank and UBA will meet same day in the last week of this month.

    Under NSE rules, quoted companies are expected to submit their yearly audited account to the Exchange not later than 90 calendar days after the relevant year end, and publish same in at least two national daily newspapers not later than 21 calendar days before the date of the annual general meeting. They are also required to post same on their websites with the web address disclosed in the newspaper publications. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the publication.

    Most quoted companies, including banks, insurance companies, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year. The business year thus terminates on December 31.

    NSE’s regulatory filing calendar indicates that the deadline for submission of annual report for companies with Gregorian calendar business year ended December 31, 2018 is March 31, 2019. However, Friday, March 29, 2019 is the last working day for the period, thus effectively the deadline for submission of the reports, in line with the traditional practice at the Exchange.

    Directors of the banks are expected to determine final cash dividend payable to shareholders based on the full-year audited reports. The three banks had paid interim dividends, in line with twice-a-year dividend policy being operated by the banks. Many analysts expected the banks to increase their dividend payouts, citing similar steady improvements in earnings.

    UBA paid N6.84 billion to shareholders as interim dividend for the first half of 2018, representing an interim dividend per share of 20 kobo. It had paid a total dividend per share of 85 kobo for the 2017 business year, consisting of a final dividend per share of 65 kobo in addition to interim dividend of 20 kobo earlier paid after the first-half results. The total payout for 2017 represented a 13 per cent growth on a dividend per share of 75 kobo paid for the 2016 financial year.

    Access Bank distributed N7.23 billion to its shareholders as interim dividend for the first half of 2018. Shareholders received interim dividend per share of 25 kobo. The bank had distributed N18.8 billion as cash dividend for the 2017 business year. Shareholders received a final dividend of 40 kobo, in addition to interim dividend of 25 kobo, bringing the total dividend per share for 2017 to 65 kobo.

    Zenith Bank had distributed N9.42 billion to shareholders as interim dividend for the half-year ended June 30, 2018. The breakdown of the interim dividend indicated a dividend per share of 30 kobo, 20 per cent above 25 kobo paid as interim dividend for the first half of 2017. The bank had distributed N7.5 billion as interim dividend for the first half of 2017.

    Zenith Bank had distributed N84.8 billion to shareholders as cash dividend for the 2017 business year, representing 33.7 per cent increase on N63.42 billion paid for the 2016 business year. Shareholders received a final dividend per share of N2.45, in addition to an interim dividend of 25 kobo, bringing total dividend per share to N2.70 for the 2017 business year. The bank had distributed N63.42 billion to shareholders for the 2016 business year, representing a dividend per share of N2.02. The increase in dividend payout underlined the improvement in the performance of the bank in 2017.

  • CCNN becomes 12th biggest company

    Cement Company of Northern Nigeria (CCNN) Plc has concluded its business combination with Kalambaina Cement Company Limited with the listing of the scheme shares that arose from the merger on the Nigerian Stock Exchange (NSE).

    The supplementary listing lifted CCNN to the 12th most capitalised company at the stock market, with a market value of N254.98 billion at the close of trading on December 31, 2018.

    CCNN on Monday listed 11.887 billion ordinary shares of 50 kobo each on the Daily Official List of the Exchange, raising the cement company’s total issued and fully paid up shares from 1.257 billion ordinary shares of 50 kobo each to 13.143 billion ordinary shares of 50 kobo each.

    CCNN and Kalambaina Cement Company, a wholly-owned subsidiary of BUA Cement Company Limited, had merged to strengthen CCNN as Northwest Nigeria’s largest cement company. Both CCNN and Kalambaina Cement are based in Sokoto.

    CCNN has a 500,000-metric tonne per year cement plant while Kalambaina Cement has a 1.5 million metric tonnes per year plant, making a combined capacity of  two million metric tonnes per year. Kalambaina Cement plant uses alternative fuel, such as coal, heavy oils and gas, and it is expected to help solve the power problem with limited downtime and further opportunities for growth and expansion.

    CCNN and Kalambaina Cement Company have related core investor. Damnaz Cement Company Limited holds 50.7 per cent majority equity stake in CCNN. Alhaji Abdul Samad Rabiu holds the majority equity stake in Damnaz while his company, BUA International Limited holds the remaining minority stake in Damnaz.

  • ‘2019 comes with many risks, opportunities’

    Mr Adewale Adeyipo became the acting Chief Executive Officer, CWG Plc, on January 1, 2019. In this interview with Taofik Salako, the former Executive Director for Sales and Marketing at CWG speaks on the outlook for 2019, CWG and preparedness to take the company to greater heights

    What does 2019 portend for companies and the economy?

    The year, 2019 will be another interesting year for us as a country. Some of the events are way beyond us as an organisation. With it comes a lot of anticipations and uncertainties; one major one is the general elections. If anybody tells you they don’t have fears, then they probably don’t give it their all. We all know the risks and exposures these events bring; yet in the midst of all these are also many opportunities. So, the best we could do as an organisation is to understand our strengths, create scenarios for varying outcomes, good or bad and be prepared for it. So, it is not so much of fear, but more of being better prepared for any economic ups and downs. I think as an organisation we have been on this road many times before and we clearly know what needs to be done in a time like this. I am sure CWG is prepared to weather all outcomes that the year will bring.

    Looking back, how would you say CWG has fared in the industry?

    I dare say we have not done badly, though we can do better. It also depends on who is asking and what you are measuring and with what yardstick. Looking at the global products and services scale, CWG has been able to rekindle the market in the last 12 months with some of the developmental initiatives that had been brewing in the last three years.

    I think 2018 was a very successful year. We had more products in the market; some other products had gotten into their maturity state where we can start to earn revenue; whilst we have had a whole bouquet of products that had been in research and development for 18 months, in 2018 alone, we had four to five of these products successfully launched into the market.

    An example is our Smart Metering Utilities Solution, which is our 4G WIFI-enabled metering solution; the one we have worked on launching with other key stakeholders in alliance with the Office of the Vice President, to provide Independent Power Plants with our Smart Utility Systems in some strategic markets in Nigeria. A few weeks ago, we joined the inauguration of the Sura-Market Metering Project in Lagos Island; that was one major and successful project we achieved in 2018. Our Enterprise Resources Planning (ERP) platform which we call SMERP is also one major successful platform, which had been previously launched, but with key features for the logistics industry launched during the year. These and many more projects, which had been on for over 18 months, but gained major traction during the year made 2018 a momentous year for us and give us confidence to push on for greater achievements; to set the tone as the major player in that field in 2019.

    You were until yesterday the Executive Director for Sales and Marketing Development. What did your job schedule entail?

    I took over as the Executive Director, Sales and Marketing early 2018. This position required me to be responsible for the entire sales operations and engagement for existing  and new product development; which ranges from conceptualisation to market research, product development, go-to market strategy and if necessary, partnership with other stake holders to achieve the end result of generating incremental revenue and profit for the organisation.

    I would say identifying opportunities and ensuring delivery to achieve speed-to-market was the biggest challenge so far. With the traditional way of doing business, deploying new platforms timely requires a major cultural change in the delivery timeline. We have successfully dealt with that and we are doing very well right now.

    As the acting CEO of the company, how well prepared are you for this?

    I assumed the role of the Acting CEO on January 1, 2019 as a successor to our former CEO, Mr James Agada, whose tenure ended on December 31, 2018. The board of CWG appointed me to take over the executive leadership and that speaks to the confidence the company has in me.

    I have been around for a while, and I have been in CWG for over 10 years, so I will be working with individuals that I know very well. People that I have had daily interactions with as a regular staff and delivered several projects and initiatives as a team. So, from where I stand now, I would tell you I have overwhelming support to achieve this new mandate. CWG is like one very big family. There will be some tough times, but we are all matured enough to know the demands of each other’s roles, appreciate the deadlines and work with the organisation’s key values in mind. I am very confident about the team here at CWG and of their support in ensuring that we deliver to the highest standards we preach and achieve a more profitable organisation.

    My education, training and association have also prepared me for this role. I am a proficient technology enthusiast and business executive with extensive experience in strategy, management and leadership. A proven tactician, I began my journey into professional consultative sales and management at Discount Microcredit Finance House in 2004.

    I am known for my knack in proffering diverse angles on innovation and aggressive drive for new ideas, revenue generation, and market penetration. Over the years in CWG and other engagements, my achievements range from identifying opportunities to sustaining and growing businesses and revenue streams. I have utilised my extensive leadership, business, and strategic planning experience to identify and build teams responsible for developing businesses through both short and long-term initiatives.

    I hold a BSc in Computer Science from University of Ilorin, and I am also an alumnus of other prestigious institutions, including Lagos Business School (LBS), Business School, Netherlands; Massachusetts Institute of Technology (MIT) and  London Business School.

    I had held several leadership positions in CWG, including Business Sector Director for the telecommunications arm in 2010 and Business Director for PAN Africa Initiatives in 2014. The PAN Africa Initiatives was a brainchild set to produce CWG’s strategic delivery partnerships in 23 African operations. Elsewhere, I had also served as a director in consultative sales and managed services engagements for telecommunication companies.

    I belong to several organisations responsible for social needs and welfare of young adults, a passion I have nurtured through direct mentorship, scholarships, sponsorships, interventions and training across Nigeria. I am the co-convener of the New National Initiative ‘Train a Child’ and also serve as a Facilitator at the CWG Academy set to further groom young technology-savvy professionals.

    What about family support given that the new task may be more demanding?

    There are some things you get immediately and there are some other things you get as you progress. With my family, support is definite; but I cannot tell you yet if they clearly understand what this entails. I, however, have a very supportive wife. I mean, she has been a very constant and strong pillar over the years. I am sure she is capable and I could say that, yes, I have her support and backing when it comes to this.

     

  • NSE suspends trading in Continental Reinsurance

    The Nigerian Stock Exchange (NSE) has suspended trading in the shares of Continental Reinsurance Plc. With effect from Monday, December 31, 2018, there will be no trading and price movement in the shares of the reinsurance company.

    A circular on the suspension indicated that the suspension was at the instance of the stockbroker to the reinsurance company,Chapel Hill Denham Securities Limited.

    The suspension was necessary to determine the shareholders that will qualify to receive the scheme consideration following the resolutions passed by the shareholders of Continental Reinsurance at the court-ordered meeting held two weeks ago in Lagos.

    Shareholders had at the meeting approved a takeover bid launched by the majority core investor in the reinsurance company to buy out retail minority shareholders and turn Continental Reinsurance into a wholly-owned subsidiary.

    The board of Continental Reinsurance announced that it had received an offer from CRe African Investments Limited (CRe Investments), a major investor in the company to acquire all the outstanding and issued shares of Continental Reinsurance.

    According to the board, CRe Investments is making the offer to initiate a much-needed restructuring  for Continental Reinsurance, to consolidate its operations and repositioning it for enhanced competitiveness in the global insurance market.

    The acquisition is being executed through a Scheme of Arrangement under Section 539 of the Companies & Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004 and other applicable rules and regulations.

    Continental Reinsurance Acting Company Secretary Ms Patricia Ifewulu reported that at the conclusion of the poll voting at the meeting, 92.66 per cent of the votes were in favour of the resolution approving the scheme of arrangement.

    CRe Investments had offered N2.04 per share for the 10,372,744,314 ordinary shares of 50 kobo each or one ordinary shares of $1 each in the capital of CRe Investments for every 176 ordinary share of 50 kobo each held in Continental Reinsurance.

    However, the scheme consideration was revised upwards from N2.04 to N2.10 per share, with the new price representing 51.08 per cent premium on the share price of Continental Reinsurance as at the close of trading on October 5, 2018, which was the last business day prior to the date on which the proposal was received from CRe African Investments Limited.

    She said an application has been submitted for the final approval of the Securities & Exchange Commission (SEC), subsequent to which an application will be submitted to the Federal High Court for the sanction of the scheme.

    The effective date of the scheme will be the date on which the court sanction is filed at the Corporate Affairs Commission (CAC); which, as stated in the scheme document, is scheduled to occur on January 4, 2019.

     

  • CCNN doubles net profit to N4b in third quarter

    Cement Company of Northern Nigeria (CCNN) Plc has doubled its bottom-line in the third quarter. The Sokoto-based company rode on the back of strong growth in sales and improved cost management to increase returns to shareholders.

    Key extracts from the nine-month report for the period ended September 30, 2018, showed that the cement firm grew its profit before tax from N2.86 billion in third quarter 2017 to N5.73 billion in third quarter 2018. After taxes, net profit also doubled from N2.04 billion to N4.10 billion. Earnings per share thus doubled from N1.62 to N3.19 per share.

    Total turnover had grown from N13.63 billion in third quarter 2017 to N19.57 billion in third quarter 2018. Cost of sale increased from N8.40 billion to N10.94 billion. With these, gross profit had risen from N5.23 billion in 2017 to N8.63 billion in 2018.

    The third quarter results triggered a rally in the share price of the cement company on Monday. CCNN’s share price rose by 9.24 per cent to N17.15 per share, almost on the 10 per cent daily ceiling for price change at the Nigerian Stock Exchange (NSE).

    The CCNN had distributed N1.57 billion to shareholders as cash dividend for the 2017 business year as its net profit grew by 157 per cent. Shareholders received a dividend per share of N1.25 for the 2017 business year. The firm did not pay dividend for the 2016 business year.

    Key extracts of the audited report and accounts of CCNN for the year ended December 31, 2017 had shown significant growths in sales and profitability. Turnover rose by 39 per cent from N14.09 billion in 2016 to N19.59 billion in 2017. Gross profit nearly doubled from N4.94 billion in 2016 to N7.61 billion in 2017, representing an increase of 94 per cent. Profit before tax jumped by 141 per cent from N1.74 billion in 2016 to N4.20 billion in 2017. After taxes, net profit also leapt by 157 per cent to N3.22 billion in 2017 as against N1.25 billion in 2016. Earnings per share thus improved correspondingly from N1 in 2016 to N2.57 in 2017.

    CCNN and Kalambaina Cement Company- a wholly-owned subsidiary of BUA Cement Company Limited, recently concluded a business combination that strengthened the CCNN as Northwest Nigeria’s largest cement firm.  Both the CCNN and Kalambaina Cement are based in Sokoto. The CCNN has a 500,000 metric tonnes per annum cement plant, while Kalambaina Cement has a 1.5 million metric tonnes per annum plant, making a combined capacity of 2.0 million metric tonnes per annum. Kalambaina Cement plant uses alternative fuel such as coal, heavy oils and gas and it is expected to help solve the power problem with limited downtime and further opportunities for growth and expansion.

    The CCNN and Kalambaina Cement Company have related core investor. Damnaz Cement Company Limited holds 50.7 per cent majority equity stake in the CCNN. Alhaji Abdul Samad Rabiu holds the majority equity stake in Damnaz, while his company-BUA International Limited, holds the remaining minority stake in Damnaz.

    The CCNN Managing Director,  Yusuf Binji, an engineer, said the merger would position the CCNN for better competitiveness within its home market and also enable it to utilise the more modern plant and equipment of the Kalambaina Cement to boost its market penetration and export potential.

    According to him, the merger provides a compelling opportunity to capture significant synergies and create value for the benefit of shareholders of both firms in the form of stronger competitive position of the enlarged company, economies of scale, enhanced operations and administrative efficiencies, which are expected to accrue.

  • Continental Re shareholders meet to approve take-over bid

    Continental Reinsurance Plc shareholders are scheduled to meet tomorrow to consider a take-over bid launched by the majority core investor to buy out retail minority shareholders and turn the firm into a wholly-owned subsidiary.

    At the court-ordered meeting, scheduled for Lagos, shareholders are expected to vote on sub-joined resolutions to approve the take-over.

    The board of Continental Reinsurance had announced that it had received an offer from CRe African Investments Limited (CRe Investments), a major investor in the Nigerian firm, to acquire all the outstanding and issued shares of Continental Reinsurance.

    According to the board, CRe Investments is making the offer in order to initiate a much needed restructuring exercise for Continental Reinsurance, with a view to consolidating its operations and reposition it for enhanced competitiveness in the global insurance market.

    The acquisition will be executed through a Scheme of Arrangement under Section 539 of the Companies & Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004, and other applicable rules and regulations.

    CRe Investments is offering N2.04 per share for the 10,372,744,314 ordinary shares of 50 kobo each or one ordinary shares of $1 each in the capital of CRe Investments for every 176 ordinary share of 50 kobo each held in Continental Reinsurance.

    The proposed price of N2.04 represented a 46.76 per cent premium to the last traded share price of Continental Reinsurance on October 5, 2018, being the last business day prior to the date the proposal was received from CRe Investments and a 36 per cent premium on the trading price as at close of last business day on November 19, 2018.

    The court-ordered meeting followed approval of the scheme by the Securities & Exchange Commission (SEC). At the meeting, shareholders are expected to vote on the exchange of the scheme shares for CRe African Investments Ltd’s shares while holders of the scheme shares, who do not wish to exchange their shares, be paid a cash consideration as defined in the scheme document by CRe African Investments Ltd.

    The meeting is expected to mandate the board of Continental Reinsurance to appoint a nominee firm for the purpose of aggregating and representing the holders of scheme shares in CRe African Investments Ltd.

    The appointed nominee firm shall aggregate and represent the beneficial interest in CRe African Investments Ltd of the holders of scheme shares, who hold less than 3.0 per cent of the total scheme shares each and opt to receive the share consideration.

    The appointed nominee firm shall be the shareholder of record in CRe African Investments Ltd.

     

  • SAHCO extends N1.89b IPO amid low demand

    Skyway Aviation Handling Company (SAHCO) Plc has ex-tended its initial public offering (IPO) by 12 working days, as concerns over valuation and slowdown in the equities market appeared to have weakened demand for the shares of the ground handling company.

    SAHCO is offering 406.074 million ordinary shares of 50 kobo each through an IPO at N4.65 per share. The IPO is an offer for sale, implying that the net proceeds will go to the majority core investor, which is divesting partially to allow retail minority ownerships.

    Application list for the N1.89 billion IPO, which was scheduled to close on December 19, 2018, has now been extended till January 09, 2019. The extension of the IPO was approved by the Securities and Exchange Commission (SEC).

    Market sources said the extension might not be unconnected with the perceived low demand for the IPO.

    A receiving agent, who spoke under condition of anonymity, said the demand for the IPO has been modest with investors unwilling to commit to large subscriptions.

    Sources said investors were concerned that the IPO price of N4.65 might be unattractive, considering the depreciation in the stock market and valuations of other related stocks.

    SAHCO was privatised by the Federal Government in 2009. Sifax Group acquired the entire share capital of the firm. The Share Sale Purchase Agreement (SSPA), however, mandates the majority core investor to divest 49 per cent of the shares of the firm to the Nigerian investing public.

    Nigerian Aviation Handling Company (Nahco) Plc, an older and bigger competitor, closed on Monday at N3.37 per share. Nahco has traded in the past one year between a high of N4.90 and a low of N3.18 per share.

    Nahco controls more than two-thirds of the more lucrative international airlines segment of the ground handling market and almost at par with Sahco in local airlines segment. While SAHCO is nimbler, Nahco has more extensive facilities and network with operations in 14 stations and bigger warehouses.

    Market analysts had told The Nation that SAHCO appeared to be carrying a premium that may subject the IPO to peer group pricing pressure, citing other mid-level stocks trading below the offer price.

    An investment analyst, however, said the premium on SAHCO is justifiable as the shares are not commonly available and cannot be subjected to true dynamics of market pricing until when listed.

    A stockbroker with a Lagos-based investment group said the relatively high offer price, expanded shareholders’ base and the fact that the net proceeds of the IPO will not be available for reinvestment in the company may determine the subscription level of the IPO.

    A market analyst noted that investors might be cautious on the post-IPO pricing, citing the recent trend that has seen most share prices falling considerably below recent offer prices.

    Analysts at Cordros Securities Limited, however, said SAHCO has potential to deliver 28.44 per cent capital appreciation of the current price of its IPO and strong potential to sustain growth  in the years ahead, given its exposure to long-term expansion of air traffic, improvement in macro environment, relatively under-geared balance sheet and its competitiveness enhanced by IATA Safety Audit for Ground Operations (ISAGO) registration.

    According to investment analysts, a valuation shows a target price of N5.97 per share for SAHCO in the immediate future, representing an upside of 28.44 per cent on its IPO price of N4.65 per share.

    “We have valued SAHCO, using a pure-Discounted Cash Flow (DCF) valuation methodology, evaluating the company’s assets across its ramp and cargo handling business, in addition to future investments. Our positive investment case for SAHCO centres on the fact that the company represents a long-term play on air traffic and aviation industry growth, and benefits from high barriers to entry,” Cordros Securities stated.

    The report, however, identified key downside risks to include weaker-than-expected macro-economic performance, susceptibility of operations to labour action, revenue downside from potential insolvency of some airline customers and regulatory risk.

    The report noted that SAHCO has become somewhat of the ‘poster-child’ for privatisation, stemming from its incredible turnaround in performance in a short period since the government’s divestment.

    According to the report, management of SAHCO has stated its intention of sustaining the company’s impressive post-privatisation performance, listing key strategic goals to include expansion of revenue, cost control and reduction, customer satisfaction and stability and sustainability.

    The report pointed out that SAHCO has a positive long-term growth outlook, citing the transformation in the Nigerian market, which appears to be promising for SAHCO.

    According to the report, Nigeria’s aviation market is the third largest in Africa. Although relatively cyclical, the sector has recorded a 10-year GDP CAGR of 9.0 per cent, almost double the national GDP CAGR of five per cent. Nigeria has huge potential to become an aviation hub for Africa, using its natural advantages such as its central location on the continent, huge population and a growing middle class.

    “As the second largest aviation ground handling service provider in Nigeria, SAHCO is well positioned to benefit from the expected long-term expansion of air traffic growth and demand for travel to, from and over Nigeria and the West African region. With respect to Nigeria air traffic trends, growth is expected to rebound after a more depressed period reflective of macro-economic development,” the report stated.

    The Nigerian Bureau of Statistics (NBS) expects air traffic growth of 20 per cent for 2018 compared to 2017, on the back of improving business confidence, positive policy reforms – ease of doing business, visa on arrival – as well as development of infrastructure.

    “In our view, the Nigerian market is transitioning, from an economic standpoint – following three challenging years – and 2018 and beyond appear to be promising years for SAHCO to take advantage of. Firstly, we see economic growth benefitting from higher government and private sector spending, both riding on improved revenues from crude oil. Secondly, improved oil earnings should further improve FX liquidity and sustain stability, after the volatile era,” Cordros stated.