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Investors pick holes in companies’ half-year reports

By William Jimoh & Hanah Isibor

Joseph Okpoye: The half year reports of companies quoted on the Nigerian Stock Exchange, (NSE) is nothing to celebrate about as the recovery recorded in the stock market in the last six months cannot be 100 percent justifiable, most especially, when you consider the fact that some companies have not declared dividend for the past five to six years.

Though this is not to dispute the fact that the market is recovering, everybody can see that, but for us to get to the level of confidence that existed before the melt-down, we still have a whole lot to do about those sectors that have not been living up to the expectation of shareholders and if care is not taken, that may continue for a long time.

For instance, we are here today for the AGM of Consolidated Hallmark Insurance and from all indication, you can see that the insurance stocks have not been doing well and that is a fact.

I don’t know what is really responsible for their bad performance; perhaps, it is due to the fact that the banks have taken over insurance businesses these days. If you look and study the happenings in the market, you will realise that apart from Consolidated Hallmark and one other insurance company that declared dividend above N1 or N1:50 Kobo, you will find out that most insurance companies are not declaring more than 50 kobo, which means that they are not improving and expanding .And I will tell you that contrary to the report that people are growing confidence in the market, it is not the same thing when it comes to insurance sub-sector.

But I think when you talk of banks, conglomerates and travelling companies and other sectors of the market, one can say that they are trying. I think that is what the regulator is referring to when they reported that the market has improved and that investors’ confidence has also improved. If that is the case, I will say those statements are true , but for insurance they are not.

Pastor Williams Adebayo:To be realistic, the insurance stocks have not been doing well enough. Like every other stock, they also experience the crisis that befell the market, but while some other stocks are recovering now, the same cannot be said of insurance stocks.

But still we must be careful in dealing with them. This is because if you look at the latest policy directive of the Central Bank of Nigeria (CBN) on Cash Reserve Ratio (CRR) of banks, you will see that a lot of these insurance companies might soon meet their waterloo.

I think they have also been clever and that is why they are embarking on merger talks. And I think that CBN should be able to help them to consummate their merger talks and then with the influence of foreign investors and the contribution of our legislators, the market will be better and with that we can say they have a brighter future.

Also, like we have it in other countries where foreign investors are been made to list on their stock market, let foreign investors doing business in Nigeria be persuaded to come in, in order to boost the economy. Thank God, the Securities and Exchange Commission (SEC) has been able to increase their participation from 40 per cent to 80 per cent. This I know will help our economy. We have other companies that are not even holding any AGM and what the law says is that whether they make profit or not, they are expected to declare their status in terms of their financials and management issues. (Pastor Williams Adebayo is the President, Greenwich Shareholders Association of Nigeria)

Jasper: There are some of these companies that are investing some money in power, and in expansion of their business which could have made them unable to perform well now. But I believe in the future there must be progress since all these expansion programmes are expected to make them more profitable.

Talking about confidence, I think it will take a longer time and proof to convince some people to come back to the market because of the shock they experienced when they lost money during the downturn. It is only few people that can say they want to stay in the market because they hope things will get better. But it takes a lot of courage to do that. And as we can see those that stayed are to some extent enjoying the fruit of their patience because a good number of the stocks are currently appreciating.


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.