Jaiz, Forte Oil, 7up are worst performing stocks half way into the year!

Jaiz, Forte Oil, 7up are worst performing stocks half way into the year!

Nigerian Stocks are on fire this year but these firms are bucking the trend!

STOCK YTD performance
JAIZ BANK PLC -41.60%
FORTE OIL PLC. -40.73%
7 UP BOTTLING COMP. PLC -30.23%
DN MEYER PLC -19.54%
TRIPPLE GEE AND COMPANY PLC -16.18%
UNIVERSITY PRESS PLC -15.80%
STANBIC IBTC ETF30 -14.31%
UNION  DICON SALT  PLC -14.17%
GUINNESS  NIG  PLC -13.91%
TRANS-NATIONWIDE EXPRESS PLC -13.00%
MOBIL OIL NIG PLC -11.11%

Source: Business Day Research

Nigerian stocks are up +19.53 percent this year led by gains in the banking index, industrials like Dangote Cement, and Healthcare stocks like May and Baker and Fidson.

However there are a couple of firms whose stock price have not only underperformed the broad NSE index but also gave negative returns for shareholders half way into 2017.

A screen run by BusinessDay Market Intelligence shows that 33 stocks are down year to date (Friday June 23).

The worst 10 performing stocks and 1 ETF are captured in our table.

They include Jaiz Bank (-41.6%), Forte Oil (-40%), 7up Bottling Company (-30.23%), DN Meyer (-19.54%), Triplee Gee (-16.18%), University Press (-15.80%), Stanbic IBTC ETF-30 (-14.31), Union Dicon Salt (-14.17%), Guinness Nigeria (-13.91%), Trans nationwide express (-13 %), and Mobil Oil (-11.1%).

Foreign Portfolio Inflows to the Nigerian Stock Exchange turned positive on a net basis in April when N14.54 billion of inflows from foreign investors came in compared to N7.91 billion of outflows, according to data from the NSE.

The underperformance means such flows are probably not going to these 10 stocks and this is striking for a couple of firms including Forte Oil, Mobil and the Stanbic IBTC 30 ETF.

Forte Oil Plc which plays in the downstream oil and gas and power generating space recently disclosed plans to raise N20 billion in new capital by way of a share sale.

Forte Oil reported that Group revenues were down year on year, N33 billion in Q1, 2017 compared to N35.6 billion in Q1, 2016.

The company would probably have preferred the share sale to occur in an environment of a rising stock for there to be less share dilution for existing shareholders.

Forte Oil has 1.3 billion shares outstanding and its stock price closed at N50.04 per share on Friday.

BMI calculates that the firm needs to issue 400 million new shares at this price to raise N20 billion.

If Forte Oil was trading close to N100 per share then the firm would have needed to issue just 200 million new shares to raise N20 billion.

Issuing a large amount of new share will reduce reported Earnings Per share especially if there is no corresponding spike in net income in subsequent quarters.

For Stanbic IBTC ETF 30 the head scratching thing about its -14.31 percent return so far this year is that the NSE 30 index is actually +29.42 percent this year to June 16, according to data from the stock exchange.

The dismal tracking error in the Stanbic ETF to its benchmark is a signal that something is not right with it and its sponsors may want to a look to correct the anomaly.

Finally Mobil Oils -11 percent slide this year is also puzzling since there is an offer on the table for minority shareholders to tender their shares for N417 per share.

Mobil closed trading on Friday at N248 per share.

 

PATRICK ATUANYA

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