Wonderful analysis that will definitely guided investment in the stock market.
Plsssss can you analyse the results of Transcorp

STERLING BANK POST N7.5 BILLION PRE-TAX PROFITS - RESULT IS ANYTHING BUT STERLING

"Need a loan? Care to see if you qualify now"? 'You want to own a Kia? Skoda? Pajero? with just 20% deposit your bound to get a finance to help you achieve your desired and you only have to pay in 36months'. These are some of the pronouncements your here from Sterling Bank as it aggressively increases it lending with the hope that bottom line will improve. Has this worked so far? Sterling Bank released its 2012 Audited Accounts with Gross Earnings rising 44% to N68.8billion. Net Interest Income also rose 32% to N23.89billion and other income from commissions and investments adding a nicely N15billion. The bank will go on to post a pre-tax profit of N7.5billion up 33% from N5.6billion posted last year.



Result Overview

Sterling Bank avoided making a loss last year despite having to write off over N6billion in loans impaired. This year they face no such threat, writing back about N243million in recovered loans. Net Interest Margin came out at 44% as the bank earned N44 for every N100 in interest income derived from its lending activities. It will be interesting to know what the break down of the banks interest income was during the period considering that most Nigerian Banks continued to see strong net interest margins on the back of risk free lending. For example, the likes of Zenith and GTB both posted margins in excess of 70%. At 44% the bank must be paying a higher amount on its deposits a factor that limits the spread they can get from their lending. At N23.8billion this year the bank can boast of a 43% rise over the prior year, expected of a bank that is hustling to catch up with the big five.



Operating Expenses for the bank also rose 31.9% at a period when banks have been aggressive at cutting down on expenses. Even though as a percentage of Operating Income expenses faired better than last year one would expect the bank to achieve a opex margin of at-least 20% if it is to stay relevant and competitive. Almost every cost centers increased this year with personnel expenses accounting for N9.3billion (23% of operating income). Depreciation cost rose to N2.5billion (2011: N1.5billion) and Other operating expenses N19.9billion (2011:N12.4billion). Had it posted an operating profit margin of 20%, its pre-tax profits may have been N13.7billion instead of the N7.5billion actually earned.



What should a shareholder be worried or excited about?

As per excitement, one would be happy that the bank is at least still able to post profits which is higher than last year's. One particular aspect that should be looked at is the operating profit which as risen 100% to N7.5billion. It shows that the banks operation has at least improved over the last year despite rising operational cost. My worry however lies with its ability to compete in the coming months as banks consolidate on their improved balance sheets and begin risk lending. The FG is about to double down on borrowing which will surely see banks reallocate assets to lending to businesses. With the big five leveraging on their huge balance sheets to lend to better quality assets, the likes of Sterling may have to be exposed to riskier and rapidly growing retail businesses. For example, whilst the likes of Zenith, GTB and Access bank increased lending 10.4, 10.8 & 4% respectively, Sterling increased theirs by 41%. Thus their loans is about 5x its Net Assets.



A share worth buying?

Sterling Bank share price has risen 197% over the last year and currently trades (April 7,2013) at about N3.05 per share. It also proposed a dividend of 20kobo per share resulting in a yield of about 6.5% based on current share price. Based on this result its share price is about 6.93X its earnings per share and just 1.02x its book value. The share price on the back of its fundamentals is about where it should be even if I wouldn't consider it cheap. Those who rely on its growth potentials may consider buying at this price as a mere 50% rise of its P.E ratio will immediately put the price at N4.55. I won't be surprised if this happens in the next two months going by recent trends in the market and its impressive dividend yield. However, its ability to grow revenues and profit without taking in poor risk assets may determine its trajectory in the coming years.

The Bank MD, Mr Yemi Adeola has been at the helm since 2005 and has guided the bank past the very turbulent years of 2008-2009. However, the remaining 2 years of his reign may well shape the way he is perceived long after he is gone.





Sterling Bank posted its 2012 Audited Accounts on the website of the NSE

AFROMEDIA PLC....IN URGENT NEED OF A LIFELINE TO AVOID GOING UNDER

When a company suddenly drops into steep losses after years of profitability it becomes imperative to read the chairman's statement and see if there is a logical explanation from the arrowhead of the board. The Chairman's report for its 2011 financial year ended up covering about 7 pages of the 71 page annual report with just one full page explaining the reason for the poor results. Back then Afromedia posted a revenues of N3.2billion and Pre-tax loss of N409million. Things have seen gone from bad to worse as it. The company posted a revenue of N1.6billion for the year ended September 2012 and pre-tax loss of N4.4billion. Third quarter 2013 earnings forecast projects a revenue of just N400million not enough to show a sign of an imminent recovery.

Why the decline?

At last year's chairman's report the company blamed declining profitability on the rising cost of concessioning outdoor advertising space from the likes of FAAN and LASAA as well as the drop in price due to budgets cuts from its major customers particularly in the telecoms industry. That surely may have been a reason at the time but the drastic reduction in revenues is one to send shudders down the spine of shareholders and wonder what had happened. Revenues dropped by 50% year on year whilst gross profit margins also dropped to 31.4% from 44% the year before. To add salt to injury, operating expenses rose sharply by 181% to N4.5billion (2011:N1.6billion). It will be interesting to know why they incurred this huge rise in opex even though I might guess they may have written off prepayments and trade debtors which otherwise may no longer materialize.

The company will go on to declare a loss after tax of a whopping N4.4billion nearly wiping put its entire equity. This makes me now postulate in retrospect that the reason for the dividend payout last year and bonus issues may just be a premonition that major losses was to be expected in 2012, a situation that may have created a moral deficit and inability to declare dividends.



Whats the way forward

Afromedia has been in operations since 1928 when it was called West African Publicity Company. It obviously has survived the pre and post colonial era and rode through wars, coups and counter coups. The current result is probably the stiffest test the company faces to remain solvent. The company's external debts of N300million as well as overdrafts of over N1billion is a definite pathway to bankruptcy if its equity raising plans are not pursued with increased urgency. Recent increase in the activity in the stock market may well be the best sign yet that it is time to consider a public offering. It will be foolhardy to suggest a recapitalization alone will solve their problems.



They need to renegotiate advertising concessions with owners to align with the realities of the advertising markets. Companies have since realized fancy billboards and branded bus stops do not necessarily promote brand awareness as well as TV and Radio commercials. Don't be surprised if commuters spend more time glancing at ads in social network sites than they do on the backdrop of billboards on bus stops as they await to board. The company claims to have invested over N133million in exploring potential markets that may provide a source for revenue growth. Well, that investment had better start yielding fruit in 2013. Unfortunately, the first quarter 2013 results suggest that is not the case as revenues have declined further by 44% to N313m (2011:N704million). They forecasted a revenue of over N400million in the third quarter ending June 2013 pitting them at profit of about N5million. Is the loss hemorrhaging receding?



Buy or dump the shares?

The shares has been flat over the last year trading at a rock bottom price of 50kobo. No point looking at the price earnings ratio as as losses make those irrelevant making me look at their price to book ratio. At 50kobo per share their share price is almost 5x its book value!!! By the way, Okomu Oil's's share price is just 1.7x its book value. In other words, Afromedia's share price of 50kobo makes the current price eve flattering and making a "buy" order quite ambitious. For those who own the shares and looking to sell, best of luck.




Afromedia Plc 2012 Audited Accounts is posted on the website of the NSE

@Ugodre, you are too much boss...thanks alot

DIAMOND BANK POST N22BILLION PAT...BUT NEEDS HELP

Sometime in early 2011 I found myself in the middle of an argument between two friends. The argument was about local Nigerian banks preferring to issue debit cards rather than credit cards. To my surprise, I learnt that Diamond Bank indeed issued credit cards provided you can prove to having a steady source of income. That in my view was evident of large scale retail banking on the back of aggressive lending that should increase risk and off course rewards. Diamond Bank released its 2012 Audited Accounts with Gross Earnings rising 34% year on year to N144.1billion. Net Operating Income at the end of the period was N96billion better than the N38billion posted same period last year. The bank will go on to post a profit after tax of N22.1billion coming back to profitability after declaring a loss last year of about N14billion.



How did the turnaround happen?

Diamond Bank's success had more to do with lesser loan losses than it had with revenue. Yes Gross Earnings increased and customer deposits soared but the key factor here was the loan loss suffered in 2011. In fact if you deduct loan losses from both side then last year they may have made a profit of N41billion and this year N39billion. This simply shows how vulnerable bank incomes are are when loans go bad. Diamond bank has lent aggressively over the last twelve months increasing their loans to borrowers by almost 51%. This is at a time when the likes of Zenith and GTB are doing 10%. This trend in aggrieve lending seem to be prevalent with medium sized banks. As at ed of 2012, Sterling Bank had loans that was 5 times its Net Assets just like Diamond.



Any need to be worried?

Much of its loan losses last year arouse from overdrafts or loans which have fallen due but unpaid. It lost about N25billion in impaired overdraft loans compared to N8billion this year. N361billion (67%) of the banks loans are secured by real estate whilst the rest are either unsecured or "otherwise secured". Is there a risk of write offs in the coming years? Surely, as defaults are part of banking anyway. It will not be unwise to look deeper into the quality of their loans in the coming months. Their seemingly low net asset to loans ratio is an obvious sign that things don't look good for the bank. Currently it has a negative of about N15billion from cash generated from operations....a worrying sign.



Do I buy the shares

Diamond Bank currently trades at N6.30 and the shares has rise 148% in the last year. The share price dropped today (9/4/2013) by 10% its biggest one day drop in 8 years. Analyst attribute that to expansion plans that the bank announced will cost $750million to finance expansion and meet CBN capital adequacy ratio. The latter may perhaps have triggered the sell off. It currently trades at less than book value (0.97) making it a candidate for a take over or acquisition. If you wish to buy this stock I suggest you hold on for now as a sell off is currently the order of the day.






Diamond Bank 2012 Audited Accounts was posted on the website of the NSE

@ugodre, do you see a similar fate for FCMB? Particularly with regards to low net asset to loan ratios?

shigidi: @ugodre, do you see a similar fate for FCMB? Particularly with regards to low net asset to loan ratios?

I won't be surprised if that were to be the case too.

@ Ugodre, wonderful analysis.
Thumbs up.

Wow! Great info

Hey there buddy, what's your opinion on Nascon, in terms of dividend payout and price appreciation, considering an investment duration of 2-3 years.

MOBIL OIL PLC POST N2.8BILLION PAT: PROFIT DECLINE CONTINUES FOR THE SECOND YEAR RUNNING

Oil marketing companies have had a turbulent 2012. From the subsidy strikes to the house of rep public hearing to the partial removal of subsidy. So don't be surprised when you see quoted companies in the sector report declining revenues and profits. Mobil Oil Pls released its 2012 audited accounts with revenues rising 30% year on year to N80.8billion. However, cost of sales increased sharply thus reducing Gross Profit year on year by 19% to N8.2billion. Pre-tax profit at the end of the period was N4billion (2011: N5.99billion).



So what's with the result?

Oil marketing companies typically have very low profit margins as most of they incur very high direct cost of sale. Therefore, when margins shrink despite increase in revenues, the worrying signs are that products are just getting too expensive to secure. Mobil oil apparently spend N90 of every N100 in revenues on paying making products available for sale. On a flip side, this actually makes the increase in revenue a whole lot important because if it were just 10% lower the company may have been starring at losses. The rise in revenue can be seen in their ability to turnover inventory 13 times annually a figure that is higher than industry average.

Stock Worth Buying?

Mobil Oil is currently priced at N123 and has declined in value by 12% over the past one year. Their 52% drop in earnings per share surely hurts their market value more even more. At N123 the price is 15x its earnings making expensive in my opinion. It's current and future outlook for increased profitability does not justify this high premium on its earnings. Profit decline began in 2011 after their PAT dropped 3% when compared to the prior year and this year it has gone worse dropping nearly 30%. But its Mobil and lets hope a turn around will emerge this year. For now I await first quarter earnings report to decide whether to buy.



Mobil Oil Plc result was posted on the website of the NSE

ETRANZACT INT. PLC POST N128MILLION PAT: NEED TO DO MORE


Businessday headline yesterday (10/4/2013) read "Mobile money struggles despite N1.1trillion market potential". Etranzact International Plc is a major player in the mobile money market in Nigeria owning products such as 'Pocket Moni" the e payment platform. They released their 2012 audited results with revenues rising 36% year on year to N3billion. Gross Profit also rose during the year to N939million (2011: N756million). The company will proceed to post a profit after tax of N128million up from 57% from last year's result.

Is the Result flattering?

Despite over 100million Nigerians GSM subscribers Mobile money in Nigeria have so far failed to gain traction. As such Etranzact result can either be viewed as half empty or half full. I will examine their results as half empty to help put into perspective the relative lack of growth in their bottom line. This year they very well grew PAT by 57% to N128billion. In fact PAT has grown at a CAGR (compounding growth rate) of about 20% in the last five years whilst revenue also grew on a CAGR of 38%. But these impressive growth rate is flattery and meaningless if it doesn't translate to value accretion. For example, the company in the last five years have posted profits and losses which if set off against each other will result in a net gain of only N18.7million (without factoring in inflation) !! Meaning only N18.7million has been added to bottom line in the last five years despite posting revenues of about N7.7billion.

The company's achilles heel obviously lies in its inability to cut down operating expenses. Just imagine, Selling General and Admin Expenses (S,G&A) was a whopping 95% of Gross Profit in 2012 and was 90% the year before. Operating profit margin was just 1.5% even lower than 3.6% posted in 2011 meaning that the increase in PAT had little to do with its operational efficiency. It basically made profitability this year because of the N132million in other income.



Will I invest at the moment?

When Etranzact was listed on the NSE at an entry price of N4.80. It traded today (11/4/2013) at N3.47 and has lost over 22% of its value in the last one year. Its share price has remained flat in the last month with neither an increase or decrease. Currently it trades at a high price to book value of 5.5x making the current share price unattractive. A stock with an earnings per share of 3kobo should be trading at 50kobo tops (which by the way is a P.E of 16.6X). The company is very well positioned to benefit from the mobile payment revolution that is bound to happen in Nigeria. Whilst that is not a flattery assertion, management has not demonstrated a consistent ability to grow organically. Till I see a sign of that happening, its a no for me.





Etranzact 2012 Audited Accounts was posted on the website of the NSE

ugodre:

[b]Stock Worth Buying?

Mobil Oil is currently priced at N123 and has declined in value by 12% over the past one year. Their 52% drop in earnings per share surely hurts their market value more even more. At N123 the price is 15x its earnings making expensive in my opinion.

@ugodre, my question to you is...what P/E ratio is considered expensive and what is considered cheap? Please do you have an idea of the historical AP/E ratios in the NSE? Afterall, Nestle continues to be steady at 28, whereas Diamond struggles to even maintain a P/E of 4.

Good day sir, kindly advice me, If I can raised some money @ intrenst of 8% for a period of 36 months, can I find the stock investment or other security that will guarantee 100% return on investment, plus 8% intrenst and other cost of invenstment within this period of 36 months, i.e arround 40% per anum, Thank you!. Alli Adebowale

@ysalli: No. The only guaranteed investments in Nigeria are FGN securities (bonds & tbills) and they yield only about 10% per annum.

shigidi:

@ugodre, my question to you is...what P/E ratio is considered expensive and what is considered cheap? Please do you have an idea of the historical AP/E ratios in the NSE? Afterall, Nestle continues to be steady at 28, whereas Diamond struggles to even maintain a P/E of 4.

P.E ratios to me just reveals what kind of premium you are willing to pay for a stock. It is just one of those metrics you look at when you want to buy a stock. A stock could have a very low P.E ratio but may still be unattractive. In your example Diamond has a low p.e ratio because its fundamentals are currently weak. Nestle has a high p.e ratio today because the fundamentals,are high and so people are willing to pay high premium to own the stock.

If a company has good fundamentals and a low P.E ratio that is below 10 then it certainly is a cheap stock by any standards. I could make a case to purchase a stock with a high p.e because the stock has a very high growth potential. That is not the case for Nestle

I wrote this article on my blog about a year ago and is a prelude to my next review of Tantalizers Plc.

IS IT TIME TO DUMP MY INVESTMENT IN FAST FOOD COMPANIES?

In almost every street corner in Lagos and major cities in Nigeria, there is fast food restaurant. From Mr Biggs to Sweet Sensation to KFC to Chicken Republic etc they are everywhere. Just walk into any of them at peak periods between 12noon to 2pm and you may not get a sit. Go back a few hours later at 8pm and you may not get food to eat because the shelves are empty. Certainly, this guys are getting a lot of patronage which ultimately result to cash. But does this cash transcend to Profit??

The only way one can know if these guys make profit for their shareholders is to look at their financial statements. Unfortunately, only a handful of them are quoted companies making it difficult to analyse them in their entirety. The quoted ones should however serve as a guide as to whether they are making money or not at least theoretically. Like a opined in an earlier blog post, the food business in Nigeria is highly competitive as the barrier to new entrants is quite low. The Fastfood business also face this same problem.

A look at Tantalizers Annual Report for 2008-2011 reveal a startling idea of just how unprofitable these businesses are. Tantalizers for example have made revenues of not less that N4.5b over the years. However, most of it is eaten up by huge cost of sales and admin expenses both taking an average 54% and 45% from revenue respectively . This leave’s the company with little or no operational profit before interest and tax making the business model a cyclical drag on profits. Bigtreat also share a similar trait with an even worse result. In 2009, cost of sale of N2.5b took a huge chunk out of their Revenue of N4.2b with operation cost and interest eating up the rest, leaving a loss position of N441m. Even UAC the owners of Mr Biggs show very low profit margins. Their 2010 revenue of N34b only yielded profit before tax of about N2b (less than 10%).

Could it just be competition ripping into their profits or is just the inability of their management to reign down on cost? Tantalizers for example have a staff strength of over 2000 with salaries and wages taken up about N693m and N648m for 2009 and 2010 respectively. Another cause may also be the huge depreciation cost that these companies incur year after year. With some of them owning Fixed Assets with book values of over N6b its not inconceivable to understand why their depreciation cost can go as high as N400m every year alone, a whopping 10% of their revenue. Thats probably why interest on loans isn’t so much of an issue as these cost are only accounting profit so do not represent cash payments. A look at their operating cashflows buttresses just that. Tantalizers in 2010 had Operating Cashflows of N654m alone in that year. However, it purchased fixed assets of over N700m in that same year. As such they will have to write off huge depreciation cost year after year from their profits before paying dividends.

Ironically, the little money these fast food companies make come mostly from business not directly associated with the selling food. For example, Big Treat made N34m from rental of its properties in 2008 and another N16m from other sources. UAC made a profit of N4b on its Real Estate business in 2010 alone. Tantalizers, the only one of them with a currently released financials has mostly relied on other income to remain profitable. it made N159m and N140m in 2009 and 2010 respectively on other income with rent making up N130m and N114m of that revenue in 2009 and 2010 respectively. 2011 is also not any difference as they made N113m in other income.

This sadly, doesn’t offer comfort to any serious shareholder as increased returns on shareholders funds is no more than a pipe dream. Tantalizers have in the last couple of years declared a paltry 2kobo only on a nominal share price of 50kobo only, a meagre 4% compared to other sectors that yield over 100% of nominal price. Would I hold on to the shares if I had one? My answer surely is anything but in the affirmative as I do not see any trend suggesting a concrete plan to reduce cost.

hi guys, don't know if anyone here can help me. I've got some stocks managed my stock broker. sometimes i get to peep on cashcraft.com to check the market prices and how the stocks are doing but recently, i noticed the segment of that website where you get to see the list as been removed and they have a pop up that says they apologize, that its a new policy from NSE, really don't know why...but just want to know if there is any other means online i can get daily prices of stocks so i can still continue to monitor my stocks. thanks.

Aseye: hi guys, don't know if anyone here can help me. I've got some stocks managed my stock broker. sometimes i get to peep on cashcraft.com to check the market prices and how the stocks are doing but recently, i noticed the segment of that website where you get to see the list as been removed and they have a pop up that says they apologize, that its a new policy from NSE, really don't know why...but just want to know if there is any other means online i can get daily prices of stocks so i can still continue to monitor my stocks. thanks.

Bloomberg is the best. See link http://www.bloomberg.com/quote/FBNH:NL Once youre there just go to the search bar and type any stock you wish

TANTALIZERS PLC 2012 AUDITED ACCOUNTS- LOSS MAKING, LOST GLORY?

At their peak in 2008, Tantalizers was one of the foremost fast food company in Nigeria known for rapid branch expansion all over Lagos. They were a perfect competition for Mr Biggs who back then (and till now) had a larger share of the market. Things were so good back then, Tantalizers launched an IPO and went on to declare a profit after tax of about N305.4million at the end of its financial year in 2008. What will ensue afterwards was a stock market crash that coincided with a drop in profits for the company from its peak in 2008.

Tantalizers released its 2012 audited account with Revenue dropping slightly by 8.8% to N4.19billion. The drop in cost of sale was not able to provide improved efficiency as Gross Profit fell 11.5% year on year to N1.9billion. The company for the first time in its operation as a publicly quoted one will go on to post a loss after tax of N303million.



Why are they loosing money?

Tantalizers ironically have consistently maintained a steady stream of revenue over the last five years averaging N4.7billion per year. But as revenue has remained pretty much flat (at a CAGR of -2%) earnings have gone south and Net Assets have hit a bumpy ride. In the current year under review Tantalizers spiraling cost that over the years finally caught up with the revenues as SG&A was 12% higher than gross profits and other income. So despite being able to post revenues in excess of N4billion, the 8% drop in revenue this year to N4.19billion was weak enough to throw the company into a loss. By the way total cost and operational expenses was N4.5billion in 2012 less than N4.6billion in 2011. The result is a loss in operational profit and by the time interest takes its share of cost a loss of N303million was posted.

I always wondered why fast food restaurants find it hard to deal with rising operational expenses. A look at their expense profile probably throws more light into this. After deducting cost of sale and amount paid to suppliers the resultant value added, a sum of N1.1billion was left in 2011. Out of that amount salaries and wages chalked off 47% and depreciation and asset replacement sliced another 43.66%. These figures will rise to 61.56% and 63% for salaries and depreciation respectively in 2012 as value added declined to N918million from N1.1billion in 2011. In a previous blogpost about fast food companies I noted that Tantalizers had over 2300 staff on their payroll taking staff cost per head to about N282,000 per annum. Sure this has dropped from prior years (assuming the staff count is the same), these are still high expense numbers for a company this size.

Tantalizers also has long term debts of about N1.1billion or 33% its equity. Whilst that is not too much debt my surprise however is how low their interest payments have been over the last two years, N16million in 2011 and N35million in 2012 (averaging 3% interest rate in 2012). This seem unrealistic in this economic environment so I am hoping a breakdown will explain why.



Take the risk and buy or just scamper?

In 2011, Tantalizers forfeited N330.8billion of its revenue reserves earned between 2004-2009 to the Federal Inland Revenue following the outcome of back duty investigation (back dated tax investigations). This reduced their Revenue reserve to N91million in 2011 and with the current loss of N303million, dividend payments and additional tax adjustments, revenue reserves are now a negative N328million. Dividend payment for this company is years away from occurring. The market recognizes this and so the company's share price has been sitting at a rock bottom price of 50kobo with no inkling that it will rise. The 30day average trade volume is 2,510 an inconsequential amount for intending buyers or sellers.

I must add though that its Net Assets Per share of N1.04 makes the company a candidate for a take over someday. The company has consistently increased its investments on property plants and equipments (PP&E), Investing about N1.4billon between 2011 and 2012 alone. A change of business model, drastic cut down in expenses is what a revamped management could bring to the table if they are to stall the rise and expansion of the likes of KFC. For now, this is wishful thinking, so I might as well just keep my money in pocket.





Tantalizers 2012 Audited Accounts is posted on the website of the NSE

Whats your take on Transcorp

Please i need your analysis on Oando , and transcorp , also Unitybank

what are u forcasting as the final EPS for skyebank and japaul oil and maritime services?

DIAMOND BANK Q1 2012 - FOLLOW UP REVIEW

I reviewed Diamond Bank 2012 results already on this thread and had identified my concerns. They have now released their 2013 first quarter results which gives us an insight into their outlook going forward. Remember their share price was panned upon release of their 2012 Audited accounts but in typical bullish fashion has increased on the back of their 2013 Q1 earnings report.

So what has changed?

Net Interest Income rose 21% to N24.5billion (2013: N20billion) for the first quarter of 2013. Whilst this looked good on the surface, Net interest margins dropped to 72.4% (2012: 81%) as it cost more to lend. Operating profits increased also from N7.8billion in 2012Q1 to N8.7billion in 2013 Q1 but as mentioned earlier operating expenses sliced of 68% of Operating income this quarter compared to 65% in the prior period. At the end of the period pre-tax profits rose 11.3% to N6.2billion. Good to know the bank is still making profit and far more comforting that its lost loans was just 13.3% of Net Interest Income compared to 23% in the prior year.

What next?

There indeed is progress in the underlying results even though efficiency continues to posse a threat. The bank is also at cross roads as it continues to lend more (1.25% higher than lending in December 2012 already) making it vulnerable to structural defaults. Expectedly, the banks still needs to shore up its capital adequacy ratio as Net Assets is just 19% of its loans to customers, not much change from December 2012. As such, its impressive 5.6% return on equity is expected to drop in the coming quarters as the introduction of new equity will surely reduce earnings per share at least in the short term.

Should I then buy?

I could understand the bullish sentiments out there as their share price is intrinsically low trading at 84% its book value. It rose 2.7% to N6.31 today. Their ability to demonstrate that they can indeed raise badly needed funds is a metric for me to invest. But for now, I'd pass.

Some have requested that I review Transcorp Results. I will do that once they release it officially on the NSE. But for now here is a flash back comment I posted following their 2012 Q3 earnings report.

TRANSCORP 2012 Q3 EARNINGS REVIEW

Transcorp Plc posted a revenue of N1.13b down 39.5% from the N1.87b posted in the same period last year. This followed the 36% drop posted at the end of the first half of the year compared to last year as well.

The result also fails to beat the company’s forecast of N2.6b in income for the period. Operating profit dropped 32% to N753m for the period. However, the company has continued to reign in on cost churning an operating profit margin of 66% compared to 58% posted same period last year. Being a Holding company, much of Transcorp’s revenue come from dividend and investment income in companies and securities respectively.

They continued to rely on net interest income to boost pre-tax earnings posting N1.6b at the end of the period.

ugodre: Some have requested that I review Transcorp Results. I will do that once they release it officially on the NSE. But for now here is a flash back comment I posted following their 2012 Q3 earnings report.

TRANSCORP 2012 Q3 EARNINGS REVIEW

Transcorp Plc posted a revenue of N1.13b down 39.5% from the N1.87b posted in the same period last year. This followed the 36% drop posted at the end of the first half of the year compared to last year as well.

The result also fails to beat the company’s forecast of N2.6b in income for the period. Operating profit dropped 32% to N753m for the period. However, the company has continued to reign in on cost churning an operating profit margin of 66% compared to 58% posted same period last year. Being a Holding company, much of Transcorp’s revenue come from dividend and investment income in companies and securities respectively.

They continued to rely on net interest income to boost pre-tax earnings posting N1.6b at the end of the period.

ON PLANS FOR NEW ISSUE


The Transnational Corporation of Nigeria, Transcorp, announced today that it plans to increase its authorized share capital from N18billion to N22.5billion. It also plans to approve for its directors to issue 13billion ordinary new shares of 50kobo each by way of a rights issue. Transcorp shares price as at the day of announcement (25/2/2013) was N1.65.

If they were to announce a rights issue today, the company will be raising about N21.4billion ($138.3million). Transcorp currently has a negative working capital of about N20b which I believe they plan to crash against their share premium. The new equity they plan to raise will help the company fund its major expansion programs especially in the area of Power, where they just won one a bid to acquire a stake in the Power Generation Companies.

The proportion for which the rights issue will be made has yet to be announced, however my bet is that it may be one new share for every four held in the company.

ugodre: Some have requested that I review Transcorp Results. I will do that once they release it officially on the NSE. But for now here is a flash back comment I posted following their 2012 Q3 earnings report.

TRANSCORP 2012 Q3 EARNINGS REVIEW

Transcorp Plc posted a revenue of N1.13b down 39.5% from the N1.87b posted in the same period last year. This followed the 36% drop posted at the end of the first half of the year compared to last year as well.

The result also fails to beat the company’s forecast of N2.6b in income for the period. Operating profit dropped 32% to N753m for the period. However, the company has continued to reign in on cost churning an operating profit margin of 66% compared to 58% posted same period last year. Being a Holding company, much of Transcorp’s revenue come from dividend and investment income in companies and securities respectively.

They continued to rely on net interest income to boost pre-tax earnings posting N1.6b at the end of the period.

[size=18pt]are these post your original analysis or you're copying and pasting from another site?[/size]

pls d person posting this analisis.. pls i would like to contact u.. my email kennetheganyomake@gmail.com... pls drop ur numb.. plsss 08164421812

walcolm:



[size=18pt]are these post your original analysis or you're copying and pasting from another site?[/size]

lol. They are mine and they also appear on my blog. Tnx

Kennyfancy: pls d person posting this analisis.. pls i would like to contact u.. my email kennetheganyomake@gmail.com... pls drop ur numb.. plsss 08164421812

You can send me an email on ugodre@yahoo.com cheers

@ugodre. Nice analysis, pls I would like to know how Skye bank stock is doing. This thread is very interesting but would appreciate it if its shorter @ least to accomodate those of us who are not friends with math (except for money calculation). Following you all the way bro. Thanks once again