Our stock story today is about NEIMETH INTERNATIONAL PHARMACEUTICALS PLC (NEIMETH). The company is into the business of manufacturing & marketing of pharmaceuticals, animal health products and general healthcare products.
NEIMETH story in the past 1 month is quite interesting, as it has been both Profit and Loss making machine for the shareholders.
The share price of Neimeth jumped from N0.79 per share on 21 May to N2.57 per share on 11 June without a single day of decline. This implies that share price rose by over 225% in just 21 days without investors recording any loss.
To put this in perspective, if you bought the shares of Neimeth with N100,000 on 21 May and sold it on 11 June, you would have made over N225,000 profit. Note that there are buy charges and sell charges, those not withstanding, you would have pocketed over N200,000 profit within 21 days. Interesting right?
Another way to look at this is, all the shareholders or investors did not record any loss through to 11 June. So no matter the price you sell it, you will be in gain until close of market on 11 June irrespective of your buy price.
Now lets look at the other side of the story, the loss making machine. As the share price was rising, investors were happy and grinning with smiles, but that smile was brought to an abrupt end on 15 June when the stock suffered its first decline in 3 weeks.
As the saying goes, what goes up must come down, same applies to the share prices. The downward trend movement hit the share on Monday 15 June as it lost 9.73% of its value, which is the maximum possible loss it can suffer on that day due to the 10% cap on either gain or loss on the floor of NSE.
The losses were extended to Tuesday 16 June and through the week. Neimeth’s share price recorded losses in all the 5 trading days of this week.
On Friday, the share price closed at N1.54 per share. To put this in context, anyone that bought the shares of Neimeth from Thursday 4 June and is still holding it until Friday 19 June is losing some percentage of his/her money.
The question is by how much is person losing? Well it depends on how much the person bought the shares.
I will use investors that purchased at the peak of the rising on 11 June at a Price of N2.57 for example. If the person is still holding the shares until Friday 19 June, he/she is losing over 40% of the investment in just five days.
Using the N100,000 investment for example, the person is losing over N40,000 already. Although there is possibility the person might have sold it 2 or 3 days days ago to cut losses.
But with this scenario, the person will lose money no matter the price he/she sells it. Another thing is, this current price might not be landing point of Neimeth share price.
Recall where it started rising from N0.79 per share one month ago. There is still possibility of it getting there or somewhere close to that territory. If that happens, then you can imagine the losses the shareholders will suffer.
Below is the graph of the price movement of Neimeth share price for your reference.
Data source; NSE
Neimeth 52 week high and 52 week low price is N2.57 and N0.37 respectively.
Bottom line; investors can make huge money on stocks as well as loose huge money on stocks. Thus, it is important to do your due diligence and understand the fundamentals of the stocks you intend to buy as well as establishing the target buy and sell price.
How did we get here with Neimeth, you may ask, well I will say its investor sentiment considering that Neimeth is a Pharmaceutical company, with low value share price compared to other listed Pharmaceutical companies on NSE.
In addition, there will be high demand of these companies products during this Covid-19 pandemic. The Central Bank of Nigeria (CBN) had in March announced a grant for Pharmaceutical companies.
It also emerged in May, that Neimeth is the Financier for Dr Maurice Iwu proposed Covid-19 treatment which has been registered with WHO for clinical trials in Nigeria.
However, the latest financial report released by Neimeth is not that impressive. The company has an accumulated loss of N840.57 million.
Neimeth recorded a N56.60 million profit from a revenue of N1.16 billion for its half year period ended 31 March 2020 compared to N5.44 million profit recorded in the same period in 2019 from a revenue of N975.98 million.
Going forward, we will keep an eye on the shares of Neimeth, and will keep you updated of any dramatic change in prices.
Disclaimer: Any person accessing this information and considering potential investment opportunities featured here should make their own commercial assessment of an investment opportunity after seeking the advice of an appropriately authorized or regulated financial advisor. This information should not be construed as advice or a personal recommendation to any prospective investor.