THE NATION TUESDAY, MAY 27, 2014
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EQUITIES
Multiverse in 105m shares cross deal as profit-taking depresses equities
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ULTIVERSE Plc yesterday witnessed a relatively significant change in its shareholdings structure as investors swapped about 2.5 per cent equity stake of the quarry and natural minerals company. The Nigerian equity market opened with a tinge of bearishness with investors seeking to take profits from stocks that had recorded appreciable gains in the previous trading sessions. Against the background of the 2.08 per cent average gain recorded at the stock market last week, declines in share prices of several leading stocks highlighted the propensity of speculative investors to lock in their gains. A cross deal for 105 million ordinary shares of 50 kobo each of Multiverse valued at N52.5 million was the largest deal, by volume, yesterday. Market sources said the single deal on Multiverse was a cross deal, referencing that the buyer and seller had previously agreed on the transfer and merely formalized the transaction at the Nigerian Stock Ex-
Stories by Taofik Salako Capital Market Editor
change (NSE). The deal, which was struck at the nominal price of 50 kobo, implied transfer of 2.46 per cent equity stake of Multiverse. Multiverse had recently entered into a joint quarry production agreement with Unicontinental Engineering Company Limited, an international Chinese quarry company. The long-term joint production agreement involved granite stones in Multiverse’s entire quarry sites. The strategic arrangement covered technical, financial, equipment and production assistance. It was unclear yesterday if the cross deal has anything to do with a new major investor. The overall market situation at the NSE was largely negative, although most equities ended on the upside. Losses recorded by highly capitalised stocks in petroleum-marketing, building materials and manufacturing sectors coloured the overall market situation. While there were 29 advancers to
26 decliners, the All Share Index (ASI), the main index that tracks all quoted equities on the NSE, indicated average decline of 0.19 per cent, equivalent to a loss of N25 billion. The ASI slipped from 39,831.83 points to close at 39,755.47 points. Aggregate market value of all quoted equities dropped from N13.152 trillion to N13.127 trillion. Nestle Nigeria was the highest loser with a drop of N10.01 to close at N1,069.99 per share. Lafarge Cement Wapco Nigeria followed with a loss of N2.44 to close at N110.06. Mobil Oil Nigeria lost N1 to close at N129. Oando dropped by 98 kobo to N19.02. Caverton declined by 68 kobo to close at N6.34. Dangote Cement lost 63 kobo to close at N222.99. Eterna dropped by 35 kobo to N3.26. National Salt Company of Nigeria (Nascon) slipped by 34 kobo to N12.41. Zenith Bank lost 30 kobo to close at N23.11 while Dangote Sugar Refinery dropped by 13 kobo to close at N9.72 per share. Some market analysts said they expected the profit-taking to continue
today, raising prospects of another negative overall market situation. Total turnover stood at 360.03 million shares valued at N6.52 billion in 4,819 deals. Financial services sector was the most active with a turnover of 152.47 million shares worth N1.11 billion in 2,317 deals. Wapic Insurance was the second most active stock with a turnover of 44.35 million shares valued at N34.91 million in 127 deals. Oando followed with a turnover of 35.11 million shares valued at N724.43 million in 563 deals. Meanwhile, Julius Berger Nigeria led the bullish stocks with a gain of N3.49 to close at N75.49. UAC of Nigeria followed with a gain of N2.80 to close at N60.80. Flour Mills Nigeria rose by N2.50 to close at N73. Cadbury Nigeria added N1.47 to close at N75.31. Presco chalked up N1.20 to close at N36.50. Total Nigeria gathered N1.01 to close at N157.01. Guinness Nigeria rose by 50 kobo to N179 while Cement Company of Northern Nigeria garnered 29 kobo to close at N9.99 per share.
Investors place premium on Seven-Up
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NVESTORS are willing to buy Seven-Up Bottling Company (7UP) Plc at above-the-market price as the soft drink bottling company prepares to release its latest audited report and accounts. The Nigerian Stock Exchange (NSE) indicated that two deals worth N250.2 million that were struck on SevenUp in off market trades were struck at about 8.7 per cent above its current market price at the Exchange. According to the NSE, a total of 2.69 million ordinary shares of 7-Up valued at N250.20 million were traded in two off market trades at N93 last Thursday, 8.7 per cent above the company market price of N85.58 per share. Seven-Up’s market price at the NSE remained unchanged at N85.58 per share at the close of trading this Monday, implying that there were no enough volumes to move up the share price. Stocks in Seven-Up’s category require 10,000 shares for any price changes. Seven-Up is expected to release its audited report and accounts for the year ended March 31, 2014 in the next four weeks, according to the corporate governance requirements for stocks listed on the main board of the NSE. Market analysts said the off market trades highlighted investors’ appetite for the soft-drink company and expectations on its impending results. Interim report and accounts of 7Up for the third quarter ended December 31, 2013 showed that it doubled pre and post tax profits, un-
derlining strong top-down growth and efficient sales and financing cost management. The nine-month report showed that the soft drink bottling company optimized appreciable increase in sales with efficient cost management to deliver its strongest growth in recent period. With nine-month earnings per share already 37.4 per cent above full-year earnings per share in the immediate past year, Seven-Up significantly scaled up performance during the period. Turnover rose by 23 per cent while gross profit increased by 32 per cent. Pre and post tax profits jumped by 191 per cent and 180 per cent respectively. The nine-month report under-
lined improvement in the profitability of the company. Gross profit margin increased to 39.42 per cent in 2013 as against 36.65 per cent recorded in comparable period of 2012. Profit before tax margin more than doubled at 9.28 per cent in 2013 compared with 3.91 per cent recorded in 2012. The latest report showed considerable improvement on the last audited report and accounts of the company, which was also hailed as a turning point. Audited report and accounts of the soft-drink company for the year ended March 31, 2013 showed that sales increased by 7.1 per cent but higher margins pushed profit before tax up by 27.5 per cent. Profit after tax rose by 70.3 per cent, underlining the in-
crease in basic earnings per share from N2.62 in 2012 to N4.46 in 2013.The improved bottom-line performance enabled the company to increase cash payout by 10 per cent just as its net assets value rose by 22 per cent. The company increased cash dividends to N1.41 billion in 2013 compared with N1.28 billion distributed for the 2012 business year. This implied a dividend per share of N2.20 in 2013 as against N2 in 2012. Meanwhile, the prospects for future dividend payment was stronger with a dividend cover of 2.0 times in 2013 as against 1.3 times in 2012. Both actual and underlying profit and loss indicators showed appreciable improvement in the profitability of the company.
Emerging stocks fall from 7-month high
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MERGING-MARKET stocks dropped from a seven-month high as industrial and utility shares snapped two days of gains, offsetting an advance in Russian stocks. The MSCI Emerging Markets Index slid 0.1 per cent to 1,041.78 in New York. Naver Corp, which operates South Korea’s most-popular search engine, was the biggest drag on the developing-nation gauge. Russia’s Micex Index advanced to a three-month high and Ukraine’s 2017 Eurobonds rose for a 10th straight day after billionaire Petro Poroshenko won Ukraine’s presidential election. MSCI Inc’s developing-nation gauge reached the highest since October on May 23, boosting the 14-day relative strength index to 72. A reading above 70 indicates to some investors that a security is overbought. “The markets are taking a breather, which is healthy,” Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by e-mail. “The relief rally is continuing in Russia as things haven’t got worse.” The developing-nation gauge has advanced 3.9 percent this year and trades at 10.8 times projected 12-month earnings, almost the highest level since January, according to data compiled by Bloomberg. The MSCI World Index has gained 2.5 percent and is valued at a multiple of 14.9. Six of 10 industry groups in the emerging-markets gauge fell today, led by utility, industrial and energy stocks. Isagen SA tumbled 4.6 per cent in Bogota trading after Oscar Ivan Zuluaga, who opposes the sale of the government’s stake in the power company, led the first round of Colombia’s presidential vote. Naver slumped 4.0 per cent after Daum Communications Corp), which competes with the company in the Internet portal industry, said it will merge with Kakao Corp., South Korea’s largest mobile messaging service provider. Samsung Electronics Co, which has the largest weighting in the emerging-markets index, dropped 0.4 per cent after Apple Inc. sought an order to block the sale of some of the South Korean company’s phones. The Micex advanced 0.7 per cent to the highest level since Feb. 26 as OAO Gazprom and OAO Sberbank rallied more than one per cent. Poroshenko won Ukraine’s presidential election, drawing 54.1 per cent of yesterday’s vote with 81 percent of ballots counted, according to the election commission. Russian President Vladimir Putin, who doesn’t recognize the government in Kiev, has pledged to work with the victor.
Pfizer dumps $117b AstraZeneca takeover bid after rejection
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FIZER Inc yesterday walked away from its effort to buy AstraZeneca Plc for 69.4 billion pounds, about $117 billion, in what would have been the biggest deal ever in the drug industry. The offer represented “full value” for AstraZeneca, the New Yorkbased drugmaker said in a statement yesterday. AstraZeneca said it welcomed “the opportunity to continue building on the momentum we have already demonstrated.” Under United Kingdom (UK) takeover rules, Pfizer had until 5.0 pm London time yesterday to make a firm offer. The regulations require a cooling-off period of at least three months before talks can restart, giving both drugmakers time to figure
out their next move. Pfizer is hoping AstraZeneca investors will pressure the company’s board to come back to the table, while AstraZeneca may seek a revenue-generating acquisition of its own to help it fend off the larger company. “The probability of a future AstraZeneca acquisition is dimmed, but not entirely extinguished,” said Mark Purcell, an analyst with Barclays Plc, in a note to clients. Pfizer, the biggest United States (US. drugmaker, has declined to say if it will try again to buy London-based AstraZeneca after the UK company’s board rejected its last offer of 55 pounds a share. For talks to begin anew after three months, AstraZeneca must invite the discussion. Otherwise, Pfizer
needs to wait six months to make a new bid. “We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us,” Pfizer Chief Executive Officer Ian Read said in the statement. “As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy.” AstraZeneca fell 2.1 per cent to close at the equivalent of 42.51 pounds in Stockholm. Stock markets in the US and the UK were closed yesterday for holidays. Pfizer fell 0.6 per cent to close $29.49 on May 23. “We welcome the opportunity to continue building on the momentum
we have already demonstrated as an independent company,” AstraZeneca Chairman Leif Johansson said in a statement after Pfizer’s announcement. “We have attractive growth prospects and a rapidly progressing pipeline. In the coming months, we anticipate positive news flow across our core therapeutic areas, which underpin our confidence in the long-term prospects of the business.” Both companies set themselves up with massive expectations during a very public debate over the proposed deal. AstraZeneca has predicted sales of $45 billion by 2023, a 75 per cent increase from last year. The company has bet heavily on a new class of cancer drugs that use the body’s immune system to attack tumors, experimental drugs Pfizer has said it covets.