On Monday, Nigerian Breweries plc resumed on a positive note as price of stock rose by 4 percent to hit an 8-week high level at N83.20 as investors take advantage of low prices despite poor year-on-year financial performance.
This is the highest price the stock has recorded since trading kicked off this year at a negative note shedding 8.4 percent in market value from N85 .50 in December.
As at close of market on Monday, Nigeria breweries emerged as the best daily performing stock with total traded volume of 42.41 million shares which was valued at N3.55 billion.
Year-to-date stock performance of the firm show that NB stock is down 2.69 percent with a current market value of N639.75 billion and a share outstanding of 8 billion units.
Surprisingly, investors have rewarded NB with higher prices against some analysts forecast of a stock dumbing owing to poor fundamentals of the stock.
NB stock price have rebounded by about 10.9 percent after prices slummed 9.64 percent the day it released its financials.
“The rise this week may be due to demand and supply forces for the day, nothing spectacular”, said Paul Uzum, a Lagos based stock broker. “it will not last,” He emphasised.
While y/y financial performance was quite poor, NB recorded a profit after tax of N5 billion in the fourth quarter against a loss of N3.64 billion loss in the third quarter of 2018.
Also revenue improved by 20.6 percent to stand at N86 billion in Q4 as against N71.3 billion in Q3 2018.
Shares of Nigerian Breweries earlier in February hit the lowest in 18 years at N74 per share on stiff competition among beer makers and the declining purchasing power of consumers who sought cheaper alternatives to products of the brewery.
The down trading nature of consumers, going for more cheaper beer alternatives coupled with intense competition in the industry are factors that may pressure down revenue and profit of NB.
“Excise duties imposed by the government are a major factor affecting these brewers as cost cannot in this time transferred to final consumers” Uzum added.
However, analysts are optimistic about the future of NB. “Share of Nigeria Breweries may appear not appealing now according to analysts however with excess capacity of about 40 percent which still remains unutilised coupled with rapid growth in the Nigerian population; prospect in the long term for NB to rebound is high.” An analyst told BusinessDay.
David Ibidapo
