The Nation Newspaper

Tag: Shares

  • Shanghai shares end week almost 8% lower as markets recover

    Chinese shares ended the week almost eight per cent lower after volatile trading that started on Monday with shock losses and spread fear to global markets.

    On Friday, the mainland’s benchmark Shanghai Composite closed up 4.8 per cent at 3,232 points.

    China’s second bourse, the Shenzhen Composite, closed up 5.4 per cent to 1,846 points, but ended the week 9.4 per cent lower.

    Other stock markets in Asia also continued their rebound, helped by a strong finish for US shares.

    Japan’s benchmark Nikkei 225 closed up three per cent at 19,136 points, but the Hang Seng index in Hong Kong reversed earlier gains to close down one per cent. The Hang Seng ended the week 3.6 per cent lower – its sixth consecutive weekly fall.

    Dominic Chan, analyst at GF Securities in Hong Kong, said: “Investor confidence remains shaky. Some took profit as they think the rally is not sustainable.”

    Angus Nicholson, an IG Markets analyst, said investors remained concerned about China and when the Federal Reserve will raise US interest rates. In London, the FTSE 100 also turned negative, after initially rising, to be down slightly at 6,186 points.

    Some argue, it is a typical August market flap, and calm was always going to return when the grown-ups are back from their holidays. Well, maybe. But this episode is a reminder of how important China is to the global economy and of the fact that it is slowing down.

    The rest of us really do need China to achieve a smooth transition to a slower and more sustainable growth rate. Two figures to underline the need for more moderate growth: the average over the last three decades was 10 per cent, and investment has been more than 45per cent of national income, or GDP, every year since 2009.

    The rise in Tokyo extended the previous day’s recovery for Asia’s largest stock market after its sharp losses earlier this week.

    Investors were also digesting new data showing that Japanese inflation fell back to zero in July, raising speculation that the central bank would launch a fresh round of stimulus.

    In Sydney, the ASX 200 finished 0.6 per cent higher at 5,263 points.

    Marking the end of a week of corporate results, the supermarket Woolworths reported a 12.5 per cent drop in full-year profit – its first fall in almost two decades.

    However, Woolworths’ shares closed 1.5 per cent higher after the retailer announced a new chief executive in a bid to revive its fortunes.

    South Korea’s Kospi index finished 1.6 per cent higher at 1,937 points.

    The recovery across Asia took its cue partly from China’s recovery, but also the strong sentiment from the US.

    Shares on Wall Street rose overnight and oil prices jumped sharply after revised figures showed the US economy expanded far more than originally thought in the three months to June.

  • Flour Mills to raise N30b from 1.1b rights shares

    •Acquires five subsidiaries

    Flour Mills of Nigeria Plc plans to raise N30.25 billion through a proposed rights issue as it moves to beef up capital base and streamline operations to mitigate macro-economic headwinds.

    The company  would be offering 1.09 billion ordinary shares of 50 kobo each to existing shareholders at N27.50 per share.

    A rights application filed by the  company at the Nigerian Stock Exchange (NSE) indicated that shareholders on register of the company as at the close of business last Wednesday would be pre-allotted five new ordinary shares of 50 kobo each for every 12 ordinary shares of 50 kobo each held.

    Chairman, Flour Mills of Nigeria, Mr. John Coumantaros, said the company would use the net proceeds to cushion the adverse effect of the sudden slump in global crude oil prices, which has resulted in major devaluation of the naira and caused increases in import costs and financial charges.

    Shareholders of the company last month approved resolutions authorising the company to increase its authorised share capital and raise about N40 billion new equity funds from existing shareholders.

    The extraordinary general meeting of shareholders increased the company’s authorised share capital from N2 billion to N2.5 billion through the creation of additional 1.0 billion ordinary shares of 50 kobo each. In the event of under-subscription, the board also received shareholders’ mandate to allocate unsubscribed rights’ shares to interested investors. Shareholders also empowered the board of directors to use net proceeds of the rights issue to meet the funding requirements of the company.

    In a related development, Flour Mills has received the approval-in-principle of the Securities and Exchange Commission (SEC) to acquire five of its subsidiaries in a major restructuring aimed at reducing costs.

    The five wholly-owned subsidiaries included Golden Noodles Nigeria Limited, Golden Transport Company Limited, FMN Cement Industries (Nigeria) Limited, New Horizon Flour Mills Limited and Quilvest Properties Limited. They will be merged with Flour Mills of Nigeria Plc. The restructuring is expected to be concluded in October 2015.

    Group Managing Director, Flour Mills of Nigeria, Mr. Paul Gbededo said the group was undertaking the restructuring to streamline its operations, reduce administrative costs, improve operating efficiency and derive full benefits of synergy in line with the company’s long term strategic thrust.

    According to him, after the completion of the restructuring, the enlarged company would be able to eliminate transfer costs of materials and operate at a higher level of efficiency, which will drive down costs, make product pricing more competitive, improve profitability and enhance the bottom line for the benefit of all stakeholders.

    Company Secretary, Flour Mills of Nigeria Plc, Alhaji Olalekan Saliu, said the management of the various companies had jointly obtained an order of the Federal High Court directing that a court ordered meeting of their respective shareholders be held on Wednesday, September 9, 2015 for the purpose of approving the restructuring.

    The company noted that where the shareholders give the requisite approval, the final approval of SEC would be sought and the Federal High Court will thereafter be approached to sanction the merger.

    Flour Mills distributed N5.51 billion, about 65.13 per cent of the company’s net profit, as cash dividends to shareholders for the immediate past year ended March 31, 2015. Shareholders received a dividend per share of N2.10 after proceeds from disposal of assets and tax gains helped the bottom-line to a positive close.

    Key extracts of the audited report and accounts of Flour Mills for the year ended March 31, 2015 showed visible decline in the operational performance of the company, but tax earnings boosted the net profit for the year.

    Total sales dropped to N308.76 billion in 2015 as against N325.79 billion in 2014. Gross profit also declined from N37.30 billion in 2014 to N35.37 billion in 2015. Operating profit slumped to N10.22 billion in 2015 compared with N19.38 billion in 2014. With decline in investment income from N5.03 billion to N2.3 billion and increase in interest expense from N16.10 billion to N18.70 billion, Flour Mills was primed for a loss during the year.

    However, the company’s bottom-line was mitigated by a N14.29 billion gain from disposal of investment from an associate company and a N738.3 million tax income gain. Profit before tax still closed lower at N7.72 billion in 2015 as against N8.23 billion in 2014. With the tax gain, profit after tax rose from N5.37 billion to N8.46 billion. Earnings per share thus stood at N3.47 in 2015 as against N1.93 in 2014.

    Flour Mills had recently embarked on group restructuring, strategic business acquisitions and investment in its core food business and backward integration programmes. It commissioned 750,000 metric tons per annual sugar refinery built at a cost of $250 million in April 2013.

    It has also continued to strategically invest in large scale commercial farming to support its food processing units with locally produced raw materials. The group had invested about N41 billion in capital projects in recent period including key projects such as flour capacity expansion in its Apapa mills, completion of Golden Snacks facility in Agbara, completion of Golden Sugar Refinery, establishment of new flour mill in Calabar, expansion of pasta & noodles lines and many major agro allied projects such as investments in Sunti Golden Sugar Estates and new animal feed mill and acquisition and development of large scale commercial farming.

  • ‘Why Intel Corp shares slumped’

    Shares of chip giant Intel tumbled 11.7 per cent in June, according to S&P Capital IQ data, driven by a number of analyst downgrades, the announcement of the largest acquisition in the company’s history, and continued weakness in the PC market.

    On June 1, Intel confirmed it would pay $54 per share, or about $16.7 billion, to acquire FPGA designer Altera. This deal will increase Intel’s debt load, which has grown by more than a factor of six over the past five years.

    A BMO analyst was pessimistic regarding the acquisition, citing its high cost, aggressive growth assumptions on the part of Intel, and the increase in debt. BMO cut its price target for the stock from $40 per share to $33 per share.

    On the PC market, May sales from Taiwanese PC contract manufacturers came in weaker than expected last month, and Micron, a leading manufacturer of DRAM, provided soft guidance when it reported its fiscal third-quarter earnings.

    This all came after Intel provided weak guidance of its own in April when it reported lackluster second-quarter earnings.

    These signs of weakness led analysts at Deutsche Bank and other institutions to cut their earnings targets for Intel. Goldman Sachs slapped a pessimistic $23 price target on the shares.  Most analysts expect the PC situation to improve later this year with the launch of Windows 10 and Intel’s Skylake.

    Intel is still heavily dependent on the PC market, despite the strong growth of its data centre business and its aggressive entry into the mobile market, so any weakness in personal computers certainly warrants concern. IDC expects global PC shipments to decline by 6.2 percent in 2015; while it does expect growth to eventually pick back up, it  predicts a compound annual growth rate of just 0.4percent over the next five years.

    Intel anticipates flat revenue this year, with data centre growth counteracting weakness in the PC market.

     

    The company also cut its outlook for full-year capital spending when it announced its first-quarter earnings, suggesting it doesn’t expect lackluster demand for PCs to improve in the near future.

    The longer-term outlook for Intel appears a bit better as the company slowly decreases its dependence on the PC.

    Progress is being made in the mobile market, the Internet of Things is in its infancy, and demand for server chips is growing. At the moment, though, the PC accounts for the majority of Intel’s profits, and weak demand will continue to weigh on the company’s results.

     

     

  • Woolworths shares up by 5%

    Woolworths is Australia’s largest supermarket chain but faces stiff competition from discount rivals

    Shares in Australia’s biggest supermarket chain Woolworths have risen as much as 5% in Sydney on media reports of a possible takeover.

    The Australian newspaper reported fresh rumours that United States private equity giant KKR had a bid that could be “almost ready” for consideration.

    It would be one of the biggest deal in Australia’s corporate history, the newspaper said.

    The news comes amid turbulent times for the supermarket chain.

    Woolworths’ media team made no comment in relation to the takeover rumours, while KKR’s media team in Australia was unavailable for comment.

    Woolworths is Australia’s largest supermarket chain but faces stiff competition from discount rivals

    Earlier this month, Woolworths announced that its chief executive, Grant O’Brien, was stepping down after nearly four years.

    The firm also said it had plans to cut about 1,200 jobs. The changes are aimed at cutting millions of dollars in costs and improving sales after Woolworths’ first-half profits fell.

    The retail giant has been up against rivals such as Coles and Aldi and it has been trying to win more customers with improved stores and competitive pricing.

    Woolworths recently cut its profit guidance for the year to June 2015.

     

  • Shares in SA’s Naspers break key level as Tencent bet pays off

    Shares in Naspers Ltd, South Africa’s biggest firm by value, surged past 2,000 rand ($165) for the first time lifted by the rising fortunes of China’s Tencent Holdings in which it holds a minority stake.

    Shares in the media and e-commerce firm jumped 3.3 percent to a record 2,029 rand, having gained about 90 percent over the last 12 months tracking gains in money-spinner Tencent whose stock has rocketed 52 percent so far this year.

    Naspers holds a 34 percent stake in Tencent – one of China’s largest internet companies – that is worth nearly the entire 800 billion rand market value of the South African company.

    “What you’re seeing in Naspers is, the majority of it, about what is happening to the Tencent stock,” said Owen Nkomo from Inkunzi Investments.

    Some analysts said the share price could make the stock illiquid, locking out retail investors.

    For its part, Tencent for the first time hit a market cap of more than $200 billion, rising 5.38 percent to close at HK$170.50 ($22) as Hong Kong stocks hit fresh seven-year highs as mutual funds piled into stocks.

    Some investors said Naspers could lose steam because Tencent, which accounted for the bulk of its recent half-year earnings, was over valued.

    “You’ll need a lot of growth from Tencent to justify Naspers valuation,” said Victor von Reiche, Senior Investment Analyst at Cannon Asset Managers. “We don’t think there’s enough margin for safety, given that Tencent looks over valued itself.”

    Tencent should drop by about 60 percent to what Thomson Reuters StarMine estimates as its intrinsic value or what StarMine believes the stock should trade at based on its most likely growth trajectory over the next five years.

    On trailing price to earnings basis, Naspers is the most expensive stock on the Johannesburg bourse, trading at 68 times, well above an average of 20 times on the JSE Top-40 index.

    Naspers also has a highly lucrative pay-television business across South Africa and much of Africa, and stakes in newspapers and magazines in South Africa and other emerging markets.

    Founded in 1915 as Nasionale Pers, or “National Press”, Naspers was widely seen as the mouthpiece for the white minority government of the time. It began its overseas push following the end of apartheid in 1994.

  • South Africa banks lobbied for preference shares

    A South African money manager is leading a drive to form blocks of investors holding preference shares in the country’s biggest banks to persuade the lenders to redeem the securities at the highest-possible prices.

    About 22 billion rand ($1.8 billion) of the shares were issued a decade ago by banks including Standard Bank Group Ltd., Africa’s largest lender by assets, and FirstRand Ltd. mostly to expand share ownership in the country. Grouping the shareholders into voting pools will strengthen their bargaining power, said Greg Saffy, head of Johannesburg-based Cast Iron Capital, which has partnered with Exchange Sponsors Ltd. in the program.

    A change in capital rules is prompting the banks to review the status of the preference shares, which typically have priority in the payment of dividends. The stocks, issued by the banks between 2004 and 2006, are known as non-cumulative, non-redeemable perpetual preference shares. Under Basel III regulations, they are no longer defined as core Tier-1 capital. As lenders try to boost their capital levels to meet the new benchmarks, they can buy back and cancel the shares or swap them for new instruments.

    “Banks may have to do buybacks or replacements, but we’re going to lobby the banks for those shares,” Saffy said in an interview. By setting up the voting pool, Cast Iron Capital and Exchange Sponsors, an investment adviser, will form a market place where the shares can be traded, with the two firms earning performance fees for transactions, he said.

    Framework Needed

    While FirstRand is waiting for the central bank to publish a final framework before discussing its stance on the preference shares, according to spokeswoman Sam Moss. Nedbank Group Ltd. “will in principle offer a fair alternative,” said Mike Davis, the lender’s executive for balance-sheet management.

    “At this stage in our capital planning we are considering various options as part of our current and ongoing capital plans,” Davis said. Options include a buyback, or swapping into either a new pre or post-tax instrument.

    Investec Ltd. and Standard Bank weren’t immediately able to comment on the shares. Barclays Africa Group Ltd. declined to comment.

    The South African Reserve Bank has been issuing capital framework guidelines for the lenders so as to ensure their compliance with Basel III rules.

    Investors are able to start organizing themselves into the voting groups Monday, by visiting a website that Saffy and Exchange Sponsors have set up, or by calling the firms.

    Six preference-share instruments from lenders including Investec, Nedbank and Barclays Africa are being targeted. Pooling the investors will enable them to negotiate with the banks for a cash payout at “an acceptable level,” Saffy said on the website.

    “We’ve canvassed some of the institutional investors and there is keen interest and support for our initiative,” Saffy said. “We are in the process of collecting the votes from all holders and custodians of the instruments.”

  • Mike Ezuruonye shares social media accounts

    Mike Ezuruonye shares social media accounts

    In a bid to authenticate his social media accounts and prevent his fans from falling into the hands of fraudsters, popular Nollywood actor, Mike Ezuruonye, over the weekend, took to his Instagram to reveal his official accounts.

    “Time for fraudsters who pose as me to take a hike,” Ezuruonye wrote. “Am back on Facebook and here are my real/true handles….And now I say to you my friends. Let our communication extend on true grounds and know no impostor.”

    In the picture posted by the actor, he is seen carrying a placard which displays the names of his accounts on Twitter, Instagram and Facebook. Going by the placard, the actor could be reached via @realmikeezu on Twitter, @mikeezu on Instagram and @mikeezuOfficial on Facebook.

    Fraudsters have often laid siege on social media accounts of entertainers.

    Yemi Alade’s Instagram account was hacked into recently. Also, Reekado Banks, who is signed to Mavin Records, had someone impersonating his Facebook account recently. The fake Facebook account holder had asked his fans to send their details in order to win some television sets, phones and laptops.

  • SEC cancels ‘black market’ for shares, bonds

    SEC cancels ‘black market’ for shares, bonds

    Nigeria’s capital mar-ket regulator, the Se-curities and Exchange Commission (SEC), has proscribed underhand trading in the shares and other securities of unlisted public limited liability companies.

    A document on new rules and regulations approved by SEC obtained at the weekend indicated that there shall be no trading on shares, bonds and other securities of unlisted public limited liability companies outside the platform of a registered securities exchange established and registered by SEC for the purpose of facilitating over-the-counter (OTC) trading of securities.

    The new rules and regulations will have the force of law as they were made pursuant to section 313, subsection one of the Investments and Securities Act (ISA) 2007, which empowers the Commission to, from time to time, make rules and regulations for the purpose of giving effect to the Act as well as amend and revoke rules and regulations so made. ISA is the main body of law for the capital market.

    According to the new rules, all securities of unlisted public companies shall be bought, sold or transferred only by means of a system approved by the Commission and under such terms and conditions as the Commission may prescribe from time to time.

    “No person shall buy, sell or otherwise transfer securities of an unlisted public company except through the platform of a registered securities exchange established for the purpose of facilitating over-the-counter trading of securities,” the rules stated.

    Any unlisted public company, director, company secretary, registrar, broker, dealer or such other persons who facilitate the buying, selling or transfers of the securities of an unlisted public company other than through the platform of a duly registered securities exchange, shall be liable to a penalty of not less than N100, 000 in the first instance and not more than N5, 000 for every day of default.

    The Commission stated that the aim of the new rules and regulations is to ensure that all securities of unlisted public companies are traded within securities exchanges that are registered with the Commission.

    The new rule effectively cancels ‘black market’ trading on the shares of several unlisted Plcs including companies such as Fan Milk Plc and Cappa & D’Alberto Plc among others.

    The Nation had earlier exclusively reported that SEC was considering proscribing unregulated trading in shares of public limited liability companies.

    The new rules now effectively concentrates trading on the shares and other securities of unlisted Plcs on the only registered OTC platform, the National Association of Securities Dealers (NASD)  Plc.

    NASD is a registered OTC trading platform for unquoted securities including equities and bonds. Owned by several investment and financial institutions as well as strategic investors, it is registered by SEC as an organised trading platform for unlisted securities.

    NASD started trading on unlisted securities in July 2013. All investment instruments approved by SEC could be traded on the NASD including shares of unlisted multinational companies. After the initial formative period, the NASD plans to trade on commercial papers and then other complex instruments like derivatives and options.

    As an OTC market, NASD does not have a trading floor like the traditional exchange but trades through the internet and a hosted platform leased from the NSE. To facilitate its trading, the company had developed an integrated market system made up of the Central Securities Clearing System (CSCS), six settlement banks and some registrars to ensure smooth operations.

     

     

  • Unilever moves to acquire more shares in subsidiary

    Unilever Overseas Holdings, the United Kingdom-based foreign core investor in Unilever Nigeria Plc, has launched a bid to acquire additional equity stake in the Nigerian subsidiary in a transaction valued at about N43 billion or £144.5 million.

    Unilever Overseas Holdings has already approached the board of directors of Unilever Nigeria Plc about its intention to make an offer to increase its equity stake in the Nigerian company from 50.04 per cent up to a maximum of 75 per cent. The foreign core investor promises to maintain Unilever Nigeria’s listing on the Nigerian Stock Exchange.

    Unilever Overseas Holdings has appointed Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited as its financial advisers on the proposed transaction.

    A regulatory filing obtained yesterday by The Nation indicated that Unilever Overseas Holdings proposes to acquire about 944.47 million ordinary shares in Unilever Nigeria at an intended offer price of N45.50 per share in cash. Unilever Nigeria opens today at the NSE at N34 per share.

    The proposed offer price represents a premium of 33.8 per cent on the company’s opening price today and a premium of 33.2 per cent on the three-month volume weighted average share price. It is intended that the proposal would be effected by way of a tender offer, by giving any shareholder who elects to sell some or all of their shares in Unilever Nigeria the opportunity to do so.

    The proposed acquisition is however still subject to the prior approval of the Nigerian Stock Exchange and the Securities and Exchange Commission (SEC).

    While noting that it has not reached any definitive agreement to proceed with the proposal, Unilever Nigeria has indicated that the formal offer documentation will be posted to shareholders as soon as the approvals of all the regulators are obtained.

    Unilever Overseas reserves the right not to proceed with the proposal or to vary the terms of the proposal in any way and no binding offer will be made in respect of any securities until Unilever Nigeria has announced its final results for the year ended December 31, 2014 to the general public.

    Unilever Nigeria distributed N5.30 billion as cash dividends in 2014, the same amount it paid in the previous year. Shareholders received a dividend per share of N2.65. Unilever Nigeria has been struggling with depressed bottom-line.

    Audited report and accounts of Unilever Nigeria for the year ended December 31, 2013 showed that sales rose by 8.0 per cent from N55.55 billion in 2012 to N60.0 billion in 2013. Profit before tax however declined by 16 per cent from N8.19 billion in 2012 to N6.91 billion in 2013. Profit after tax also dropped by 14 per cent from N5.60 billion to N4.81 billion. Earnings per share thus dropped from N1.48 to N1.27.

    The company has however stated that it has been strategic investments and changes that would enhance its long-term competitiveness and profitability, although the immediate impact of these initiatives might constrain returns in the meantime.

    At its last annual general meeting, it unveiled a growth plan to shareholders. While noting the depressed bottom-line in recent years, the conglomerate outlined strategic growth initiatives aimed at strengthening its consumer-centric advantage and ensured it is better placed to provide competitive products through efficient and wide channels at the right prices, irrespective of the changes in the operating environment.

    It noted that shareholders might have to sacrifice short-term gains for long-term returns as the conglomerate seeks to strengthen its fundamentals.

     

  • Unilever moves to acquire more shares in Unilever Nigeria

    Unilever moves to acquire more shares in Unilever Nigeria

    Unilever Overseas Holdings, the United Kingdom-based foreign core investor in Unilever Nigeria Plc, has launched a bid to acquire additional equity stake in the Nigerian subsidiary in a transaction valued at about N43 billion or £144.5 million.

    Unilever Overseas Holdings has already approached the board of directors of Unilever Nigeria Plc about its intention to make an offer to increase its equity stake in the Nigerian company from 50.04 per cent up to a maximum of 75 per cent. The foreign core investor promises to maintain Unilever Nigeria’s listing on the Nigerian Stock Exchange.

    Unilever Overseas Holdings has appointed Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited as its financial advisers on the proposed transaction.

    A regulatory filing obtained yesterday by The Nation indicated that Unilever Overseas Holdings proposes to acquire about 944.47 million ordinary shares in Unilever Nigeria at an intended offer price of N45.50 per share in cash. Unilever Nigeria opens today at the NSE at N34 per share.

    The proposed offer price represents a premium of 33.8 per cent on the company’s opening price today and a premium of 33.2 per cent on the three-month volume weighted average share price. It is intended that the proposal would be effected by way of a tender offer, by giving any shareholder who elects to sell some or all of their shares in Unilever Nigeria the opportunity to do so.

    The proposed acquisition is however still subject to the prior approval of the Nigerian Stock Exchange and the Securities and Exchange Commission (SEC).