Buy pressure boosts Transcorp Power’s valuation by almost N1trn

Newly listed Transcorp Power Plc has garnered almost N1trillion (N966billion) in just seven days of its listing on the Nigerian Exchange Limited (NGX).

Nigeria’s equities market took off this week on a positive note, rising by 0.70percent at the close of trading on Monday. The market’s benchmark performance indicator furthered its movement across the 100,000 mark to 102,044.88 points.

The 155-member Nigerian market stock has risen this year by 36.47 percent, while this month it is up by 2.06percent, according to trading data.

Read also: Vetiva acts as financial adviser on Transcorp Power listings on NGX

Transcorp Power Plc listed its 7.5billion shares by introduction on Monday March 4 at N240 per share, but the company share price has risen to N368.8 at the close of trading on Monday March 11. Since its listing, slightly above 200million units have been traded.

On the day of its listing, the company added about N1.8trillion to the entire market capitalisation, but after one week, its value has increased N2.77trillion.

CardinalStone Research analysts on Monday March 11 attributed the underperformance of their Model Equity Portfolio (MEP) {returned 34.22percent versus the NGX-ASI’s return of 35.52percent} to the absence of NGX’s latest inductee, Transcorp Power from the portfolio.

“The ticker was listed by introduction last week Monday and has gained 46.38percent since. Elsewhere, in line with our expectations, the listing of Transcorp Power drove increased investor interest in Transcorp, which contributed an additional 41 basis points (bps) to the portfolio.

“Given the weight and sustained positive sentiment in the Transcorp Power, we would begin building a market weight in line with market liquidity,” the analysts said.

On March 4, investors exchanged 40million units of Transcorp Power at N264 per share. On March 5, investors also traded 87.486million units of Transcorp Power shares at N290.4.

Demand pressure on the stock continued on March 6, pushing the price to N319.4 as investors exchanged 36.892million units.

Also, investors on March 7 traded 11.141million shares at N351.3, while on March 8, 30.506billion units of Transcorp Power were traded at N351.3. Transcorp power’s 16.513million units were traded on Monday March 11 at N368.8 per share.

Transcorp Power was listed under the utilities sector (sub-sector: Electric Power Generation). Transcorp Power Plc undertook the listing by introduction to: provide a platform through which new investors can participate in the Company’s capital and future growth prospects, thereby diversifying existing shareholder base.

Read also: NGX Group reports N5.2bn full year 2023 profit, to pay N1.5bn as final dividend

It listing also positions the Company for access to an increased variety of capital raising options; as well as further enhance its corporate visibility and awareness. The listing of Transcorp Power also contributes to the growth of the NGX and the Nigerian capital markets.

In the trading week to Friday March 8, the Nigerian Exchange Limited (NGX) All Share Index (ASI) year-to-date (YtD) return stood at 35.52epercent.

“The positive performance of the market was largely driven by the listing of Transcorp Power on the first trading day of the week, coupled with gains recorded in key stocks such as Transcorp, MTN, PZ Cussons, and Flourmill,” Futureview Research said their March 11 note.

Before the listing, the company’s shareholding structure was as follows: Transcorp Plc (51.6percent), Rich Point Limited (33.3percent), Woodrock Energy Resources Limited (7.4percent), and Others (7.7percent).

“Boosted by the newcomer (Transcorp Power) and rebound in MTNN, the bulls took centre stage last week, as the ASI closed in the green all through the week. We expect a cautious trading week, as investors look for other opportunities in the market,” equity research analysts at Lagos-based Vetiva said on Monday March 11.

The listing of Transcorp Power by introduction implies that existing shareholders in the Company are offering a portion of their ordinary shares in order to create liquidity in the market and enable institutional investors and members of the investing public to acquire shares in the Company. Post-listing, the company’s shareholding structure will reflect the ongoing trading pattern of its shares between existing shareholders and new investors, as transacted on the NGX.

In their recent stock recommendation, Lagos-based Meristem research analysts who said they anticipate a less upbeat mood in the equities market compared to the previous week, expect “the positive momentum observed in the previous week, fuelled majorly by buying interest in some bellwether tickers and the frenzy surrounding the newly listed ticker (Transcorp Power), to gradually wane during the week. Additionally, we expect investors to take profit on some stocks that have realised significant gains”.

Read also: Transcorp Power listing adds N1.8trn to NGX capitalisation

This listing by introduction does not represent any change in management or strategy and that Transcorp Power remains a full member and subsidiary of Transcorp Group. Transcorp Group shareholders will continue to benefit from the growth prospects of Transcorp Power through their existing participation in Transcorp Group.