United Capital Plc (Ticker: UCAP) earlier today released its un-audited financial report for the three months ended 31st March 2020. A review of the report by Investogist Analysts showed that the Group grew its Gross Earnings by 32.23% to NGN1.91bn (Q1 2019: NGN1.45bn). Though it’s earnings from investment income declined by 15.83%, it was adequately compensated by growth in other earning streams; Fee and commission income, Net trading income and Net interest margin (222.64%).
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Although the Total Expenses increased by 8.50%, the financial services company was able to demonstrate a high level of operational efficiency to achieve a profit margin of 51.66% (Q1 2019: 44.39%). It’s Profit after tax increased to NGN991.28mn (Q1 2018: NGN664.16mn), a growth of 53.89%.
A closer look at the company’s statement of financial position shows Investors handing in a big amount of funds to the company to manage; this was evident in the 60.75% increase in it’s Managed funds (Q1 2020: NGN116.35bn Q1 2019: NGN72.37bn).
Another interesting number was observed by our Analysts in the company’s consolidated statement of cash flows for the period. At the same period in 2019, the company purchased financial instruments worth NGN5.32bn, but in this year’s report, it appear not to have recorded an investment in financial instruments, but rather it reported a NGN221.27mn as proceeds from the disposal of financial instruments.
United Capital Plc (Previously UBA Capital Plc) was incorporated in Nigeria, as a Public Liability Company, on 3 August 2012 to act as the ultimate holding company for the United Capital Group. The company was listed on 17 January, 2013. The Company changed its name to United Capital Plc following the approval of the resolution by shareholders on the 16th December 2014.
The principal activities of the Group are mainly the provision of investment banking services, portfolio management services, securities trading and trusteeship.
UCAP has 6,000,000,000 shares outstanding and a market capitalization of NGN13.2BN.
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United Capital Plc is one of the low CAP high performance stocks listed on the Nigerian Stock Exchange, it’s financial performances as well as the dividend history has always been consistent. An analysis of it’s Full Year Financial Statement for the period ended 31st December 2019, placed it’s fair value between NGN2.50 and NGN3.10.
At the end of trading today, the stock price was NGN2.20, well below our estimate of it’s fair price; hence this stock has a BUY rating in our books.
The prevailing economic conditions and the Covid-19 Pandemic may create a situation where the share price declines further, a depreciation of the market price does not change our rating as it does not affect it’s fundamental values, it rather makes it even more attractive to accumulate the stock.
Written by:
Basil Maduakor
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