Stock Exchange downgrades Transcorp Hotels to low-priced stock

By Taofik Salako, Deputy Business Editor

Authorities at the Nigerian Stock Exchange (NSE) have downgraded Transcorp Hotels Plc from medium-priced stocks to low-priced stocks following steep depreciation in the share price of the hotel and tourism company.

The Exchange stated that the review of share price of Transcorp Hotels over the most recent six months provided the basis for reclassifying the company from medium-priced stock group to the low-priced stock group.

Transcorp Hotels’ reclassification took effect from Monday. With the reclassification, the tick size for the company will change from five kobo to one kobo, implying that the share price will move slowly going forward.

The NSE classifies quoted companies into three categories-high-priced, medium-priced and low-priced stocks, based on their market price. A company must have traded for at least four out of the most recent six month period within a stock price group’s specified price band to be classified into the category.

The high-priced stocks consist of large-cap equities that are priced at N100 per share or above for at least four of the last six trading months, or new security listings that are priced at N100 or above at the time of listing on the Exchange.

The medium-priced stocks  consist of medium-priced equities that are priced at N5 per share or above but less than N100 per share for at least four of the last six months, or new security listings that are priced at N5 per share or above but less than N100 per share at the time of listing on the Exchange.

The low-priced stocks, where majority of listed companies fall, consist of equities that are priced at one kobo per share or above but below N5 per share for at least four of the last six months, or new security listings that are priced at one kobo per share or above but below N5 per share at the time of listing on the Exchange.

According to the Exchange, Transcorp Hotels’share price dropped below the N5 price level on December 23, 2019 and traded below N5 up till close of business on May 04, indicating that the company’s share price has traded below N5 in the last six months.