Chemical and Allied Products Plc (NSE TICKER: CAP) earlier today published its financial statements for the period ended 31 March 2020 on the Nigerian Stock Exchange.
The paint manufacturer posted a Revenue of N2.31bn from the sale of its paint products in Nigeria, a 10% growth from the N2.09bn reported for the same period in 2019.
The company despite posting a 10% growth in revenue reported a 9% drop in profit for the year; N456.27mn down from N498.93mn reported for the same period in 2019. The Earnings per Share dropped from N0.71 to N0.65.
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The drop in profit can be attributed to the increase in the Administrative, Selling & Marketing expenses. While the Administrative expenses increased from N276.81mn to N422.97mn, the Selling and Marketing expenses increased from N163.22mn to N174.00mn.
Chemical and Allied Products Plc (‘the Company’) is a company incorporated in Nigeria. The Company is involved in the manufacturing and sale of paint. The address of the registered office is 2 Adeniyi Jones Avenue, Ikeja Lagos. The company is a public limited company, which is listed on the Nigerian Stock Exchange domiciled in Nigeria.
The Directors in the report when it came to going concern said, “Nothing has come to the attention of the directors to indicate that the Company will not remain a going concern for at least twelve months from the date of this financial statement”.
CAP has 700,000,000 outstanding shares, and a Market Capitalization of N14.63bn.
Views of Analysts @Investogist
Although a low liquidity stock, and not prominent on the stock exchange, CAP is a fundamentally strong stock, with consistent dividend payout history. Unfortunately due to the Coronavirus Pandemic and the economic uncertainty it brings, the company suspended the payment of dividend for the 2019 financial year.
An analysis of the full year financial statement for the period ended 31st December 2019, gave us a fair value price between N6.95 – N10.40. At the end of trading today on the stock exchange, the stock depreciated by 9.91% to close at N20.90, significantly higher than the upper range of our estimated fair price.
Rating of this stock is not as straight forward as other stocks because of the way they pay dividend, in recent years, the Board of Directors had approved dividends of N2.90 for 2018 financial year, N2.05 for 2017, N2.20 for 2016, and N1.20 for 2015. These represent over 90% of the total profit made in those years, and it therefore put their Dividend Yield to be on par with the best stocks in the market.
We wouldn’t put a direct rating on this stock, as the decision to buy the stock will depend on the availability of other fundamentally strong stocks at attractive prices, and the prevailing market and economic conditions at that time.
However, should the stock prices fall within its fair value range, then a strong BUY recommendation will be placed on it.
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