₦airaland Forum

wanaj0:
An offer that is 80% underwritten is not likely to have a problem. The underwritters are expected to cough out 80% of the offer if the 'public' refuse not to subscribe to it. That way, the underwritters will ahve to do a lot of marketting or else they will be left with 'bad shares'. Just ask IBTC. They are 'forced' to own Presco and First Aluminium shares just because of this.

What I mean is that Bank PBH should be able to secure underwriters ready to cover this amount,

ladon:
GUYS SHOULD SHARPEN DRE EYES.THEY SHOULD NOT APPROACH THE JAPAUL DISCOUNT SIMPLY.REMEMBER IF You BUY AT THE PO AT N4 THE PROFIT IS PAPER PROFIT TILL You VERIFY OR You GET THE PO OFFER IN UR CSCS.ALSO D SUSPENSION WOULD BE LIFTED WELL BEFORE TAT TIME.D QUESTION IS CAN IT HOLD AND EVEN GO BEYOND THE N6 LEVEL 4 You TO GET UR MONEY.
PERSONALLY AM WEARY OF EXCESSIVE DISCOUNT, REMEMBER DUNLOP OFFER EARLY THIS YEAR ,ALMOST 100%,WHERE IS DUNLOP NOW.AND CCNN RECENTLY.
ALSO THE PO MONEY WOULD BE USE FOR PROJECT TAT WOULD BE COMPLETED ,THE LEAST BEING 2YRS.TAT MEANS THE PO MONEY MAY BE TURNING IN ANY PROFIT FOR THE COY TILL AFTER 2YRS.
SOME ONE IN ONE OF THE EARLIER THREAD ASK HOW INFLATION OR DEFLATION AFFECT SHARE PRICE.SIMPLY PUT IF DRE IS INFLATION SHARE PRICES INCREASES IF DRE IS DEFLATION SHARE PRISES DECREASES.IT WORKS DIS WAY BECAUSE IF DRE IS INFLATION THE COY INCREASES D PRICES OF GOODS AND SERVICES,TURN OVER OR PREMIUM ETC INCREASES,DIVEDEND INCREASES,OVER TIME SHARE PRICES INCREASES AND VIZ VERSA FOR DEFLATION
SO TAT IS WHY DEY SAY TO BEAT INFLATION HANDS DOWN INVEST IN SHARES, SHINE UR EYES[color=#000099][/color]

The Japaul discount may be because bonus shares will be declared for existing shareholders and this will reduce the percieved discount for buyers from the PO.

Regarding inflation and share prices it is not so simple. Since someone asked the question a couple of days ago and I could not answer it I decided to do some research on it.

See an extract from The Economic times:

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How does rising inflation affect the stock market?

To tame inflation, the government usually hikes interest rates. This tends to make debt instruments attractive relative to equities as the former carry a lower risk (small savings instruments are risk free as they are guaranteed by the government). This results in some amount of investments shifting from equity to debt.However, high inflation is not always bad and low inflation need not always be good for equity markets, as the impact will differ for companies and sectors across different time horizons. The first thing to consider is the items where prices are rising. For example a rise in oil prices will impact a wide range of items from food products to those that require transportation.
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We saw the CBN raise interest rates recently due to fear of rising inflation during the festive season. If interest rates are not raised and inflation rise unabated , then I suppose your theory will hold because there will also be more demand for stocks than debt.

netotse:
@all quick question,
read in the papers that PHB shareholders want the coy to increase the PO from 100bn to 200bn, isnt that very stupid? because i dnt think they can pull a stunt like that(getting full subscription for 200bn)and since it has to be 80% underwritten so how does this affect things because i was thinking of picking up some shares on the sec market before the PO.

plus can one open cscs acc at cashcraft for 100k?

I won't call it stupid so quickly. The plan is to cater for oversubscription if they go for 100B. In this case the maximum that can be raised is 125B. With the new plans even if they only get 150B this is more than they would have been able to raise. In this case, it will be undersubscribed but they are able to raise more.

I don't see a problem with the offer being underwritten up to 160B.

Platinum is already on TS and I don't see the guarantee the price will rise immediately after lifting the TS. In recent times, stocks are just not responding to this. Maybe maybe not. It's up to you, but I don't think an additional 100B added to the offer makes a difference right now. If the offer is undersubscribed it might affect investor sentiments but this won't be known till next year.

tonyjon
Posts: 9

Offline

  Re: Stock Market Tips For Nigerians
« #3404 on: Today at 05:49:00 AM » 

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OGA PUMPING 777 YOU SOUND VERY INTERESTING.

PLEASE, I WILL LIKE TO KNOW WHAT YOU HAVE TO SAY ABOUT CASHCRAFT ASSET MANAGEMENT'S MUTUAL AND EQUITY BASED FUND. THE IPO IS CURRENTLY IN THE MARKET.

DO YOU THINK IS A VIABLE INVESTMENT?.

TONYJON.

DO YOU THINK

Yes, it is a viable investment but I think you also want to know about the projected returns.

It is viable because cashcraft has a good track record when it comes to investing and I believe they can achieve the projections in the prospectus. The return on the funds ranges between 21 and 25% annually over the next 3 years. It is up to you if this rate of return is okay.

The returns minus any dividends will be re-invested so your investment will be compounded with the potential to grow even faster so if you are into the long term like 3 years and above you can do even better over time. If you like to play it safe then this can also be an option for you since you have others who should be experienced investing on your behalf.

Note: The fund may do better than the forecast which means even greater returns but I can't make any assumptions. Bear in mind that the portfolio of recommended stocks from Cashcraft for 2007 has done over 80% to date so they can do much better than 21 - 25% annually even after deducting the costs of managing the funds. If the market does very well the funds will should do very well too.

wanaj0:
Your right expires after a certain number of years. Not sure if it is 12 years again.

Thanks, you are right. I just checked and CAMA has it as 12 years.

esco399:
Incorrect statement, and could be very costly. No gains have been actualised/realised until sold (not counting dividends etc,  which may still not be a gain),  A position to sell does not guarantee gains. To sell, someone must be willing to buy. If noone is willing to buy at that price, then that sale position you are proud of means nothing, and you could even see the position erode to a point of loss. A lot of people think this way, but luckily they are trading in the NSE where there is a little protection,  If that way of thinking is applied in other developed markets, the consequences could be very dire ( but thats why they have calls & puts and other instruments to help protect them). I believe Ericsson recently lost 25% in a day just a few days ago,  Enron lost over 90% in a day when that issue happened, (a lot of people's "perceived gians" wiped away in one trading session),  No cause for alarm though,  these are very rare & the NSE is somewhat investor friendly,

You are spot on.  

Just to re-emphasise the misnomer you highlighted above which many  people have about the restriction that a share can only drop by 5% daily.

Even if a stock is liquid, if the stock is on net offer, you may not be able to sell your stock until it has lost multiples of 5%. This can be very costly. So while you won't lose 50% overnight you may still end up losing as much because there aren't enough bids for the stock compared to the offers.

frankiriri:
Dividend warrants, like all other cheques, have a life span of 6 months after which they become stale and would have to be revalidated.

Yes, the warrant will expire but what I mean is that you will still be entitled to the dividend. Your right to the dividend does not expire with the expiration of the warrant.

I

Rob-roy:
Oga Pumping,
Could you please answer my question on Bank PHB vs FCMB? Also, did you say that FCMB PO buyers will participate in the dividends/bonus?
THANKS,

- I can't comment on Bank PHB because I have not seen the prospectus. I have digested FCMB prospectus and I consider it a good deal if the bank can meet up with projections. The projections are realistic and if these are met the earning potential is very good. The quarterly results so far indicate that the projections can indeed be met but there is no guarantee of this.

- Yes, with FCMB you will particpate in dividend and bonus issues for the financial year end in April, 2008.

- For me, I think you can spread if you have enough. I usually will not recommend facing only one sector. If I had only one choice right now though, I will go with Insurance. The prices are good at the moment and the quarterly results we are seeing are good, I think this is where the money will be next, You already mentioned 3 of my favourites, MBenefit, Crusader and Lawunion. Do you own analysis to determine which ones to go for even if it to confirm what others have said.


If you have long term investment plans for part or all your portfolio you can consider FCMB all the same. It's one of the better offers in the last few months,

IBTC Chartered, hmm, very tempting, well you should know this is not an indication of what is going on in the banking sector right now. IBTC is peculiar because of the merger with Stanbic. The way all these bank are coming out to raise funds, it won't be a surprise in the near future when they start swallowing themselves up and this will mean mega bucks for owners of the stocks,

The dividend warrant in the form of a cheque should be posted to the address the registrars have for you. It can also be credited to the bank account you specified when buying the PO for example. Ensure the registrar has your current address or that you can retrieve mails at the address the registar has for you.

This is payment money so it can't really go to your CSCS account. It is bonus shares that can be automatically credited to your CSCS account.

Some answers,

1. Both attract dividends and bonus. With the primary market you may not be entitled to bonus or dividends or bonus the very next time it is declared. This varies from offer to offer. Eg. FCMB will be paying dividends and on bonus on new shares from its PO.
2 . The company decides. There is no limitation.
3.You need to buy the stock at least 3 days before the closure of the company's register or if you already own the stock, you must not sell until at least 2 days before closure of the company's register.
4. If you qualify for the dividend or bonus as in 3 above, it does not expire. If you are missing yours you should contact the registrer for the company.
5. I'm not sure of what you  mean here. Inflation reduces the value of your stocks. If you mean how stocks will respond to inflation I don't know really. The tendency may be for the price of stocks to rise generally. I'm not sure about this theory though.
6. I don't have this information at hand. Just note that this is on paper. Companies are not meeting up.
7. If you need your money back soon stick to the secondary market if soon. I don't know what soon means for you but I am assuming you are talking of less than 6 months. If you get paper certificates verification will take it's time too and you will be stuck if you need the money before this is completed.

akyn:
right now one of the best shares to buy now is japaul oil it's under maritime.their shares has been discounted from#6 to #4,which means as soon as their public offer closes it automatically jumps back to #6(meaning on a unit u av gained #2).
and as for u people that needs broker i suggest cashcraft.

I'm for Japaul but thread carefully with your analysis.

1. When TS is lifted you will not have anything to sell if you bought from the PO. You gain nothing until you are in a position to sell (even if you don't).

2. The "discount" is huge. I suspect strongly that Japaul will issue bonus shares and those that bought from PO will not be entitled to them. So the "discount" may be watered down.

Mr. Risky:
hI WanajO,
With all due respect, if AIICO was giving BONUSES when they were not doing well profitably, it confirms my statement that they are GENEROUS. Unless you are saying the word GENEROUS has suddenly changed in meaning. If they were doing well and were giving bonus that would be a different thing. Here they were not doing well, according to you, and yet they were giving their shareholders bonuses. Are you saying if they return to profitability, they will withdraw those bonuses? I don't think so, hence I MAINTAIN that AIICO is GENEROUS. Regards

A company does not really need to be doing so well to issue bonus shares. This can be an acid test for a company that declares dividends but not for bonus shares. At least a company must be making real profit to declare dividends since there is a pay out that comes with it.

Issuing bonus shares should indicate that a company is growing but this may not always be the case.

Issuing bonus shares can also mean a company has mostly paper profit and does not have the cash to back it up yet. Yes, we made profit but we have nothing to give you yet. A company that gives bonus should be able to give dividends except the company is growing at such an alarming rate that it needs the shareholders funds to keep up.

For instance think of a company that is heavily owed by debtors. If some of these payments go bad, then the bottom line is no longer the same as the declared profit will never be realized.

shigidi:
its amazing how the market can act sometimes.
access was on net bid fo two months,at 19 naira and after all the excitement with the ts been lifted ,it moves a bit and goes straight back to 19. i hope no one here bought at a premium. to think we were all saying it should hit 25naira this week. my bad.
still, at 19 naira, it looks very good going forward, would advise people to take position now, because it looks relatively cheap at this price.
and whats with intecontinentals sudden run.

I believe Access was on net offer during the TS because some investors wanted to sell their current holdings to buy the PO at a "discount".

After the offer closed, the attraction was no longer there. With the current dip in price some of these investors may now decide to sell all the same,

MT:
I understand summarily from Buttyelele's post that :

- the MPS (Market Price ) is the relative bench mark to the EPS and PE

- IF the PE of a company is too low continuosly over a period of time, then the company is not doing well

- If the gap between the EPS and the MPS is too wide, then the share is not regarded as being ok


Now the twist is this, according to the principle of mathematics,

since PE = MPS divided by EPS , therefore, in order to get a high value for PE then EPS MUST be low (ie the denominator must be very low comared to the numerator before very high value could be gotten. For instance 10 divided by 5 will give you 2 while 10 divided by 2 will give u 5)

What I'm driving at is that , I think there's a bit of contradiction because if we want the PE to be high (which indicates good performance), then I think the EPS has to be really lower compared to the MPS, and this again indicates wide margin between the EPS and MPS which in turn lead to non-performance.

It's logical and seems contradictory ( my own thought ooo)if carefully followed. Please can you make clarifications on this logic?

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I believe there is some misunderstanding here and you got this by identifying the contradiction above.

1. The PE ratio should be as low a possible!!! PE is Price divided by earnings. We want price to be low and earnings high. This gives us a low number which is very desirable. More returns for less investment.

2. There is no need measuring the gap between the stock Price and EPS. Use the PE ratio instead. You want this be as low a possible but be realistic and know that the PE of most companies will be higher than 15. This is the relative ratio that allows the comparison of different stocks because the price is factored in reviewing the earnings.

Enjoy.

Pumping.

Quote
hi again mt, u see ratio is all about comparison. PE ratio means price earning ratio, by definition it is regarded as an indicator of future performance, that is if u follow the trend. to derive PE ratio u dvide the market price by the EPS, the actual comparisom is between the market price and EPs, so if the mps is 100 and the eps is 20, that coy is not dong well as the margin is way too high.The market is more or less the benchmark if the market price is a certain figure, your coys EPS should be close to the market price, and from this i.e MPS and EPS we derive the Price earning ratio.

if you look at the trend and a coys PE ratio is low continously for a period u can determine where the coy is going, u cannot seperate EPS and PE ratio, if your EPS is low it will affect your PE ratio and vice versa, low and high EPS And PEratio is however relative i.e to the asking price in the market i.e MPS
End Quote
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I disagree with part of the analysis above.

A stock with a price of 100 Naira that earns 20 Naira per stock is an excellent stock ignoring all other factors. This translates to a PE of 5!!! I don't know any stock that is achieving this anywhere in the world at that. Most stocks on the NSE have PE of between 15 and 50. 5 Ke? Based on what we have now a stock that costs 100 Naira will have an EPS that is less than 8 Naira.

The higher your EPS the better but it will never be anywhere close to the price of the stock. The PE is a measure of how many years it will take you to recoup your investment from buying a stock. Expect EPS that is around 8% or less of the price of the stock.

Enjoy.

Pumping

Diluted EPS or DPS

Diluted EPS or DPS is calculated by factoring in additional shares of the company that are due to be listed or for instance new shares due to bonus issue. This will bring down the EPS and DPS values since the division of earnings or dividends is now done with a larger number of total outstanding shares.