₦airaland Forum

yodiyokun:
Temmie,

But Flour mills does not have the same sentiments attached to dangote flour mills.

The current market price of flour mill does not help matters- the possiblity of dangote appreciating 25 % is higher than Flour mills.

That is my own view? However, you can expand further on your reasons.

As i stated in my earlier post, the high price for dangote looks like the premium which is being paid for the name, the sentiments, the demand of investors.

Have a look at my own analysis:
Dangote is being offered at a trailing pe of 35.7 and a forward pe(07) of 27.2, then a huge leap and a further forward pe of 10 in 2008.

Flour Mills is trading at trailing pe of 15.86 and a forward pe of 12.

Summary
the figures are not what really support dangote, its the sentiment and the demand. these are not always stable.
NASCON had more demand than supply, it had good sentiment, it had the dangote name and it has not been a runaway success by any means.
Having said that i expect both to do well, in easimoni's word's "i can only tell you what the figures tell me"

Just as in any business, no stockbroker wants you to pack your things and run away overnight so they will not be the most helpful when you attempt to move. So its good to apply wisdom and move gradually. Just a hint.
Yes pp will send a certificate.

@Shigidi
About the stockbroking capitalisation.
Even in a case where your brokers do not meet the capitalisation, you money is not going to be locked-in or anything.
To be safe tho, you might want to consider having an account elsewhere and gradually migrate your holdings.
Migrating everything immediately can have undesired effects.
There is possibility of preferential allotment in pp, but most pp's are nowhere near full subscription.
Frank has a a good point about liquidity though. Union Diagnostics seems long term at best.
Oga Frank, more health to your body o.

@Tmoni
thing is i hav no idea when the po will be so i wouldnt know if its either too early or late to take position BUT Zenith is definitely planning a BIG 250BN naira po.
@Jehosaphat
Actually, when i went thru dangote prospectus, it made me realied how cheap Flour Mills was in comparison , Funny huh?

@Akinnin NC
HOLD you flour mills and wapco for at least one mo year. HOLDDDDDD!!!!

@Jehosaphat
Long time, how body?
Dangote Flour:, its not cheap but if you are ready to buy and hold for a while, you'll make money. But the fact that there could be allotment woes doesn't help. Final decision is up to you

@WindyWendy
I like what you have done considering the forecasts are really too good to be true, making a conservative projection based on established previous performance.
PAT for 2006 is 52.179m (page 18 of prospectus) so i would expect a PAT of higher than 42.6m in 2007.
I tried something similar by using PAT growth rate of 25% in 07, 30% in 08, 20% in 09.
This gives a pe of 24 in 2009 BUT even this is assuming the company meets 20% of its proposed target which is very conservative.

It all boils down to the company's prospects and difficulty of analyzing a growth stock as opposed to value stocks. In any case, i think union diagnostic is a touch and go investment. Its one of those that COULD. I wouldn't think to invest a lot but if the company goes anywhere near its forecast, we'll be smiling all the way. The fact that they are listing very soon also helps.

@diva4eva, i think u need to take the form to cashcraft
@goldenson, its possible

windywendy:
Temmie10, Frankiriri and the rest of the gang that seem to like the Union diagnostics PP:

I have used Frank's spreadsheet to do some reasonableness analysis on the forecast P&L figures for this company -- see attached spreadsheet and take a look at rows number 6 to 9. The 2007 figures look over-optimistic and somewhat out of whack. What is your opinion as regards the forecast sales growth and profit growth and the profit margins? What could have happened in the year 2007 that could have led to such growth? Do you guys think (or know if) the figures are reasonable -- at least we're in the last quarter of 2007 now, so there should be some knowledge on what the actual figures to august 31 are, and then what projections for the remaining 4months could be.

Also, seeing that the company hasn't paid any dividends in the last five years, and that they plan to use the offer proceeds to fund working capital and business expansion, I'm wondering where they're going to get the N200m cash to pay dividends in 2007 and the other funds for proposed dividends in 2008 and 2009. It's a pity we don't have either the cashflow statement or the asset side of the balance sheet to give us an idea of how liquid this company is (I wonder why such crucial info would be omitted from a prospectus though). Any takers on this view point? Please share if you have further info

I took notice of that myself. 1 thing stands out though, Every company that raises money will obviously generate more money in that year, insurance companies' profits jumped literally 6 months after capitalisation. It is also possible that the company is working towards end of year in March 08 like a lot of companies do. In any case, it is highly unlikely that they will not meet 2007 forecast, they are listing on the NSE shortly and a misfiring or not meeting targets this early would be disastrous for them.

On Dividends, the company did a bonus issue of 2 for 1, for those that bought the pp 2 years ago, If expansion has been the motive in the past 2 years, the bonus might make sense. To get the other details like balance sheet and cashflow, you'd have to go to cashcraft. I myself have enquired if those who buy this pp will be eligible for 2007 dividends and i'll have an answer tomoro

You should comment more regularly windywendy,

@ess
the form is on cashcraft website, www.cashcraft.com

@leqez, you are welcome

Easimoni, The insurance companies are still nowhere near where they where back in May, so as you said, the development is very interesting.

yodiyokun:
Hmm you have talked correct - It reminds me of the 29,000 I used to buy 1000 units of AP shares long ago - It was sooooo oversubscribed that they used quota system to apportion it. My money was returned with 400 naira interest after 2 years! By that time the market price was way over N50 per share.


This is Nigeria, just hope and pray you get a reasonable allotment

After 2 years? Only God go help person

@easimoni
nor be me o, , i been jus talk my own o

windywendy:
Thanks Temmie10. It's so sad that the information on Union Diagnostics is very scanty. Isn't the prospectus available electronically.

I have some further questions on this, Temmie10, so please oblige me. What exactly does Union Diagnostics do? Is it a medical lab? Also, who's the major competitor in Nigeria? I like the idea that 70% of the PP proceeds would be spent on ramping up the business! Can you please provide the name of the overseas partner -- perhaps I can start my research from there. If only the prospectus was available electronically . . . _aarrghh

This should give you some answers: http://cashcraft.com/uniondiagnosticpropectus.pdf

@abocana

emmaachille posted the application form here:
https://www.nairaland.com/nigeria/topic-75581.0.html

@WindyWendy

Interestingly enough, the situation in Nigeria has played into the hands of the private sector.
Hospitals are grossly under-equipped, and health is not negotiable as you know, ppl want their families to have good health, its one of those inelastic services, ppl will always need it,
A 50m naira med equipment was installed last year (can't remember what it was) in a private clinic in otta. OBJ was there to launch it. Its the only one of its kind in naija, its just 50m naira and no govt clinic has it in the whole country, doctors and nurses go on strike in spurts. Its annoying but we're talking about profit here.

Union Diagnostic has referrals from over 1000 hospitals every month. Its very close to a monopoly in terms of the equipments they have. Their monopoly spreads a bit to West Africa. They have a partner firm overseas and with 700m out of the 1b to be spent on med equipment, the task is on the management to deliver.

Union diagnostic seems to me a growth stock with very real (not absolute) opportunities to outperform,
. About 1/3 of the company is still being held by the same doctor who started it a few years ago and the money is for expansion as opposed to going to the pockets of the owner a la dangote

I think its worth the try,

@easimoni,
If that money is released, on average, almost every company in that sector will have extra 3 billion naira, the likes of mbenefits, cornerstone and lasaco will have about 4 billion and 6 billion. That money can change the life of any balance sheet o.
Needless to say i like crusader too, they are flying even without the extra cash yet.


@enurayce
union diagnostic looks very promising, 12 branches, more coming, eps of 17k, listing this year, i like it.
But i would advise you not to buy too much, take a limited position so that you leave room for the unexpected BUT generally i really like it. projected eps of 0.39 by 2009, it could trade around 8 naira by then, and dividend payout also looks very healthy

shigidi:
@temmie10, ure right, there seems to be an unexplained boom nin the insurance sector because there are no fundamentals to support this.
personally, i wanted to wait till christmas before taking position in mbenefits and putting more in crusader,
do u think thats a good time to wait because im not sure this bull run is going to last

To give you a fully fledged answer would be tantamount to predicting the future
In any case, year ends for most insurance companies in march so now is actually a good time to take position (6 months).
MBenefits should be paying some interim dividends now or december, can't remember.

Right now its risky tho because i am not sure whats happening exactly,
market is hard to call in very short terms, its been depressed for about a month and those are the times when buy decisions are easiest and most obvious as far as i am concerned but people dun see it that way, when they start moving up, buy becomes a more difficult decision

@all
union diagnostic prospectus is here: http://cashcraft.com/uniondiagnosticpropectus.pdf

@enurayce
the gist is that union diagnostic will be listed before the end of this year.
http://www.thisdayonline.com/nview.php?id=87957

When will u get the certs?, depends on the company, you can ask your broker

And about share construction,
As long as its you are in a good position i.e. you buy at a bargain, pre or post reconstruction, you will profit, if you are in a bad position (buy at an overvalued price), then you can lose either way too

@Shigidi, stanchuks n all

Dangote's Flour should do well, especially with scarcity and sentiment on its side
However, it is not fantastic when we consider the fundamentals.
The current eps is 0.55 which means if it was on the floor, it would trade at a fair price of 11-13.3 naira (pe of 20-24).
So it is not being offered at a discount to its current value (today's value), rather at a premium, maybe thats why sec had issues with pricing initially, who knows?
If a company trading at 12 naira wanted to come to market at 15 naira, would you buy?

However the 3 naira premium is for projected eps of 1.49, the aliko dangote name, scarcity, retained profits (07) and speculator rush amid a huge chance of oversubscription so it should do well.

here's the link to prospectus: http://www.zenithsecuritiesng.com/admin/upload/Dangote%20Flour%20Mills%20Plc%20IPO%20Prospectus.pdf

@All

Have you noticed that for for the past 3 days, almost all insurance companies have been clocking 5% upwards, some like cornerstone has gone 5% for 5 days,

I suspect that those recapitalization funds will be released soon,

3:1

Thank God o

ola4u:
Just invest 1000 naira and get 500,000 naira per month.

The balance can be used for your upkeeping b/4 end of the month.

email olawlaegab@yahoo.com for details. It is free.

Na wah o,
This would amount to gaining 6 million naira a year on the initial investment of 1000 naira, for doing what?
and its supposedly free, .Have some mercy,
i would be a big fool to believe this,

I am starting to have a change of mind,
It seems Transcorp will do well afterall

WHY?
They have the most optimistic shareholders ever!
Even when there is no good news, they will create one!

If this freefall continues, i will consider entering at a relatively safe price,

atilla:
As far as I know the private placement closed friday last week.


The prospectus says they will be listed before the end of 2007. they have branches all over Nigeria.

check the application form on http://cashcraft.com/uniondiagnostic.pdf

Can anyone post a link to the prospectus or divulge the more important details?

jdizzy:
Given the pessimistic view on GTB here, I'm keen to have your takes on Zenith Bank

On GTB
i believe GTB probably has more ability to generate real profits than most banks because we can see GTB, their quality of service, huge customer base and customer satisfaction, unlike some other banks that have very little presence nationwide yet declare heaven and earth in their results,
The problem is that right now, GTB has raised a lot of cash mostly thru offer for new shares, so its going to take a while to gain significantly on GTB. For me, its a HOLD in the short term but a BUY for long termers.

Zenith
zenith is a good one, the more important question is what price do you want to enter?, its on a high now, you could have bought last week for 42, There's a BIG po coming soon too

easimoni:
Do you mean Design Union? If so, a link to the prospectus was posted on a thread a week or 2 ago. The earnings forecast looks really good (then again, don't they all?) 11k EPS after FY 2008. BUT, it won't be listed on the NSE till 2010 or so.

No its union diagnostic private placement, its a clinical dignostic company
The pp is being handled by cashcraft asset mgmt
It looks good because they have a fundamentally sound business even with customers from outside naija,
Now they are thinking of mris and other medical equipment as well as expansion
i know they have a few brranches in nigeria already,

But about valuation, i dun think the electronic prospectus is available, you'd have to go to cashcraft to get the prospectus
so i am not sure about the valuation of 1.85,
They plan to list in october in nse but thats highly unlikely given nse protocols,
If you are really interested, you'd have to ask a broker in cashcraft or go there yourself

dodochi42:
Please how good is Union diagnostic and clinical services prvate placement?Is it long term or short term?

the pp is being handled by cashcraft,
they are aiming to list by october but thats highly unlikely given nse protocols
As a business, it has a good market, prospects and record, they even have customers coming from outside naija
however, if you want to know if the valuation of 1.85 makes sense, you need to grab the prospectus and have a look,
unfortunatley i have not seen the prospectus myself but i understand its available at cashcraft,
hope this helps

between 24 months ago and now, almost every stock on that exchange looks like a champion, 98% of all insurance companies have outperformed wapco easily in that period, almost all banks too have outperformed wapco in that period

Wapco is still cheap, just not short term,

Wapco is like the classic value stock, its had good indicators all year but it has remained at the same level,
its a good stock but by no means, short term

It is a bit premature to say the market is recovering so i would still be a bit cautious and stick to fundamentally sound stocks
However, if enough people leap on the enthusiasm and keep buying and sell less, of course the indices will go up again.

@enurayce
I have not seen anything about Int'l breweries yet.
its 0.94 on the floor. IF you can, thats better than the PO (there was only 1 deal today).
Get a prospectus or sth, then more informed advice can be given.

@alliednetw
There are some winners on your list for sure.
But i wouldn't place my honor on any analysis o, the market no send my honor,
Its been making ibtc folks and other analysts look like complete fools for years

Prison Break any day
Season 3 is out, prison is in Panama

Man Jiro:
@ Temmie10

Thanks a lot for your reply.

Do you think it is better to buy it (international breweries shares) from the floor than buying the public offer?

IF you can get it on the floor, then buy all means buy from the floor,
One question though: "Why are you so keen on international breweries?"

@stanchuks
I am not too keen on banking ipos,
I like my investments to remain as liquid as possible,
so dangote and japaul would seem interesting but prospectus is still the final say,
i am not sure about nahco either, there's definitely no 1000% this time, but make we see prospectus too, i no be soothsayer

@stanchuks,

i go begin charge you o

Don't sell your NGC yet, i expect a rally soon,
wait for 1 or 2 weeks and observe the market,
you might just be able to sell higher than 16.6,

@stanchuks

Considering the prices you bought, here's my 2 cents

For May & Baker, i'd say HOLD, its not a short term but i expect them to bounce back once the bearish trend subsides. earnings are not bad.

For Sterling, i'd say HOLD too, there will be a share reconstruction and public offer very soon so i am cautiously optimistic that you can sell off at a much better price than what it is currently trading,

I know very little about Livestock Feeds so i cannot offer advise on this one