Ashaka Cement tops losers’ chart, sheds 9.96%

Bya897204973

Updated Tue, 30 Dec 2014 10:12:26 GMT

Cement Maker, Ashaka Cement, fell short of investors’ expectation this Yuletide after shaving N2.45 or 9.96 per cent in three trading days.

According to the weekly report issued by the Nigerian Stock Exchange (NSE) for the week ended December 24,2014, the share price  which opened trading for the week at N24.60 dropped to N22.15.

This decline was coming barely few weeks after Lafarge Africa got approval from Nigeria’s Securities and Exchange Commission (SEC) to acquire additional 41.39 per cent minority stakes in Ashaka Cement from the 58.6 per cent, which it had previously in the company.

More so, the company was reported to have witnessed incessant attacks from the notorious Boko Haram insurgents at its plants, raising concerns among stakeholders of the security of their investment.

Again in the preceding week, the stock was enlisted among the companies that may be exiting the list of 30 highly capitalized equities listed on the Nigerian bourse (NSE 30 Index).

Analysts are of the view that these speculations and reactions may have impacted negatively on the appetite of investors for the stock, which resulted in the decline.

According to Mr Tony Mordi, a Senior Stockbroker with APT Securities, “The compulsory tender offer and acquisition doesn’t really mean anything. The question is: who owns Ashaka Cement? Lafarge Africa still has controlling stakes in Ashaka Cement.”

“What is happening to them could be mere market reaction. Normally, the price of the stock is supposed to appreciate, if you compare it to what happens to other companies that undertook similar exercise. For instance, what happened between Flour Mills and Bag-co, where the share price of BagCo appreciated following the announcement of the acquisition exercise? The insecurity issue at the plant in Gombe might also be contributory,” he continued.

Reacting, the chairman of the Progressive Shareholders’ Association, Boniface Okezie also pointed the issue of insurgence at the plant in Gombe as a major concern to investors/stakeholders who are jittery that it might impact negatively on the earnings of the company, thereby affecting their financials subsequently.

“The insecurity may obstruct production activities thereby impacting on the earnings of the companies, some shareholders may be considering the implication of that on their books,” he stated.

However, he said that the acquisition of Ashaka Cement by Lafarge would enable the company strengthen its position in the African continent as well as avail Nigerians the opportunity of earning more shares in Lafarge Africa.

Another reason he posited was that there is a likelihood that Ashaka Cement may cease to exist as an independent company listed on the Exchange, thus market players might be dumping the shares for other stocks.

He said: “People already know what they are going to get in Lafarge. They are looking at how much will acrue to them in terms of dividends and share appreciation if they remain in Ashaka compared to Lafarge. A lot of shareholders are selling-off. Ashaka may end up not existing.”

A peep at key indicators of company on the NSE shows that the  Earnings per share (EPS), which is the portion of the company’s distributable profit which is allocated to each outstanding equity share (common share), closed at 80 kobo, shedding 11 kobo from the 91 kobo that was recorded in the preceding week, which is quite low compared to its peers in the industry.

Earnings per share is a very good indicator of the profitability of any organization.