The rout on the Nigerian equity market has pushed a number of stocks to fresh lows, and Chemical & Allied Product ( Plc) is no exception, as its stock is trading at its lowest price since July 2014.
Stock of the Lagos based paint maker traded flat at N24.75 on Wednesday after losing the maximum allowable limit of 10 percent a day earlier.
The paint manufacturer has declined some 29 percent yearlong, which translates to a monetary loss of about N7 billion. The stock also unde rperforms the industrial goods index which has lost 15 percent.
Analysts say the stock has taken a beating on the back of negative sentiments of investors towards the equity market over inability of the current administration to provide clarity in its policy direction.
Moreover, the tardiness of the 77- year old former military leader to hit the ground running by appointing cabinet members is taking a toll on equities that is down some 11 percent since the start of the year.
“Investors’ confidence is very low in the market right now” said Emeka Nwagwu, analyst at Axe Capital Limited. “It is only when the Federal Government is able to initiate policies that investors deem business friendly that’s when market can move”
Review of 2019’s first quarter scorecard showed revenue grew 8 percent to N2.12 billion from N1.96 billion in similar quarter last year, while net income climbed 8 percent to N499 million.
The company’s operating margin slowed to 29 percent in the review quarter, from 31 percent in the previous corresponding quarter, as operating profit grew more slowly than revenue.
Net margin stayed flat at 23 percent in the first three months of 2019. This implies that the paint maker retained N230 from every thousand naira realized as revenue after settling variable cost, interest and tax.
The company retained cost margin at 51 percent, implying that production cost accounted for about half of revenue.
The Board of Directors is scheduled to meet Wednesday, July 24, to consider the mid- year financial reports of the company.
The stock’s price movement is hinged on market performance and half-year earnings result. However, in the absence of positive catalyst, CAP could slide further especially if the first- six months results turn out unimpressive.
CAP manufactures and distributes paints, personal and household products, crop protection and public health products. Foremost conglomerate, United Africa Company of Nigeria has 50 percent shareholding in the paint maker.
