₦airaland Forum

Agbalowomeri:
They are all a one-off devaluation effect

From 2005 to 2022, how many banks have done 2 baggers in 17 years?

thebargainhunte:
An investment of ₦1,000,000 in GTBank shares at a price of ₦37 per share in 2007 would have yielded 27,027 units. After accounting for all subsequent bonus issues, the total holding would stand at approximately 113,613 units today.

Extending the analysis further back to 2004, when the share price was ₦17, the same ₦1,000,000 investment would have secured 58,823 units. With bonuses included, this position would have grown to approximately 3,676,438 units as of today.

Despite the growth in units, the overall performance does not appear particularly impressive when evaluated against alternative investment opportunities.

NettyNelly:
Pa Emma, I'm Just curious if you would rather take the loan term you explained above, where you pay a lump sum at maturity. Compared to an interest free loan that is ammortized monthly over a year.
If you factor in the TVM and opportunity cost involved in a bull run we currently have.

emmanuelewumi:
Lailai, you are looking at the bonus issued from the public offer of 2001.

When I get home I will share clearer picture that showed the dates the bonuses were issued. Thos who bought in 2007 only enjoyed 2 bonus shares

GTCO stopped giving bonus in 2010 or thereabout

emmanuelewumi:
Lailai, you are looking at the bonus issued from the public offer of 2001.

When I get home I will share clearer picture that showed the dates the bonuses were issued. Thos who bought in 2007 only enjoyed 2 bonus shares

GTCO stopped giving bonus in 2010 or thereabout

thebargainhunte:
Gosh, my bad. I think the bonuses stopped in 2011. They were as follows:
2004 – 1 for 1

2005 – 1 for 1

2006 – 3 for 2

2007 – 1 for 2

2008 – 1 for 4

2009 – 1 for 5

2010 – 1 for 3

2011 – 1 for 4

thebargainhunte:
Gosh, my bad. I think the bonuses stopped in 2011. They were as follows:
2004 – 1 for 1

2005 – 1 for 1

2006 – 3 for 2

2007 – 1 for 2

2008 – 1 for 4

2009 – 1 for 5

2010 – 1 for 3

2011 – 1 for 4

unite4real:
It's like stocks split happened consistently from 2007 to 2011

unite4real:
It's like stocks split happened consistently from 2007 to 2011

emmanuelewumi:
That is the share capitalization history of GTB.

You got bonus of 1 for 4 on two occasions

Growing to shares to about 41,000.

You also know that 2007 was around the time when stocks were at an All Time High prices that their fundamentals could not support

Average PE ratio in the banking sector was over 20

megawealth01:
Avoid taking loans to buy SHARES. Know this and enjoy peace of mind

This is my personal opinion

emmanuelewumi:
10% is not a good one in Nigeria.

The discount rate for Naira denominated asset is 20%


The difference between the ROIC and the discount rate of 20% multiplied by the Invested Capital will give you the Economic Value Advantage

Assuming a stock has equity of N30 billion and debt of N20 billion. The invested capital is N50 billion

If the Net Operating profit after tax is N20 billion...

The ROIC is 40%.

The economic value added or economic profit will be (40%-20%) multiplied by N50 billion

Which will give an economic profit of N10 billion.

If the ROIC is 10% for a Naira denominated asset, it will make a negative economic profit even though it made accounting profit. Thereby destroying value


Long term wealth creation ability of a stock is in the creation of Economic Value Advantage or economic profit

NettyNelly:
Pa Emma, I'm Just curious if you would rather take the loan term you explained above, where you pay a lump sum at maturity. Compared to an interest free loan that is ammortized monthly over a year.
If you factor in the TVM and opportunity cost involved in a bull run we currently have.

emmaodet:
If i get your calculation well, the 20% you deducted (from the 40% - 20%) is the discount for inflation/devaluation?
In that case, it means the company will pay the bank 4b out of the 10b EVA made on an average bank interest rate of 20% from the 20b loan used, while the shareholders, workers (salary) and others share 6b.

megawealth01:
MENTORS WILL SHOW YOU SHORTCUTS THAT YEARS OF HUSTLING WON’T.

emmaodet:
How do someone have access to an interest-free loan?

emmanuelewumi:
I don't understand you

We are considering the total invested capital in generating the return.

20% is the excess return above the discount rate.

Net operating profit after tax: includes the profit after tax and the finance cost

The invested capital is the equity and debt .

emmanuelewumi:
Family and friends

emmaodet:
Your 20% discount is for what? yearly average devaluation or inflation?
Nopat does not include finance cost.
So a ROIC of 40% from your calculation, factoring the 20% discount still need to factor in finance cost from Nopat used in the ROIC calculation to get our real EVA if am right

emmanuelewumi:
Family and friends

megawealth01:
That's if it will be paid back 😔

nosa2:
Past performance is not indictive of future performance.

Nigeria's future will be very different from it's past

emmanuelewumi:
Minimum required return from the investment capital .


NOPAT already has the finance cost in it. That is the major difference between NOPAT and PAT

emmaodet:
How do someone have access to an interest-free loan?

emmanuelewumi:
Check out stocks that have a ROIC that is higher than 20% in the last 20 years, they all beat inflation and currency devaluation

investmentworld:
It's pertinent to know that Saro farms is owned by Olakanmi Rasheed Sarumi and his family who is the Chairman of the Presco. So basically the chairman is selling his farm to his company . Let's be guided

emmanuelewumi:
Excluding finance cost.

Meaning NOPAT includes finance costs

ceelog:
Please which site can give this data?

Can ROE be used as a credible alternative for those 20 years?

emmaodet:
No bro.

Check the break down of how to get PAT from NOPAT and notice finance cost was deducted.