Deap Capital Management & Trust Plc- Deepening Decline Amid Market Confusion
In its recently released unaudited financial report for Q1 2025, Deap Capital Management & Trust Plc (DEAPCAP) presented another troubling quarter of negative performance across virtually all key financial metrics.
The figures paint a dire picture for the embattled company, further compounding concerns about its long-term viability as a going concern.
Yet, what has puzzled investors and market watchers alike is the apparent disconnect between these dismal numbers and the sporadic upward movement in the company’s stock price on the Nigerian Exchange (NGX).
Deap Capital’s Q1 2025 numbers revealed a cascade of deteriorating financial indicators:
Fee and Commission Income, a modest stream for financial services companies, rose slightly from zero to N1.5 million year-on-year. While this uptick is positive on paper, the amount remains far too small to offset mounting expenses.
Administrative Expenses ballooned to N8.0 million, more than doubling from N3.7 million recorded in the corresponding quarter of 2024. This rise in overheads, against minimal revenue, sharply erodes any prospects of operational break-even.
Finance Costs worsened drastically, climbing from N1 million in Q1 2024 to N10 million in Q1 2025. This tenfold increase suggests possible inefficiencies in managing debt and higher interest obligations—both of which raise red flags.
Profit Before Tax (PBT) sank further into the negative, with a loss of N7.3 million compared to N3.7 million in the same period last year. The trajectory clearly shows a consistent erosion of earnings potential.
Profit After Tax (PAT) mirrored the same loss pattern, also hitting N7.4 million, up from a loss of N3.7 million a year earlier.
Investment Income held steady at N15.9 million, identical to the previous year. While consistent, this figure is not sufficient to offset the rising expenses and losses.
Earnings Per Share (EPS), a critical measure of shareholder value, fell to zero kobo from 1 kobo per share, effectively signaling that shareholders gained nothing from the company’s operations during the quarter of 2025.
Retained Earnings reflected a worsening condition, showing a year-on-year drop from N3.3 million to a loss of N7.4 million—a development that casts serious doubts on the company’s ability to sustain operations.
Total Equity also fell, decreasing from N2.93 billion in Q1 2024 to N2.62 billion in Q1 2025. This decline in shareholder value is another blow to investor confidence.
Interestingly, Borrowings significantly reduced from N2.31 billion to N437.4 million, which may reflect a strategic debt reduction. While this is a positive note in an otherwise grim report, it does little to mask the broader operational weaknesses.
Total Equity and Liabilities declined from N307.6 billion to N302.8 billion, a marginal change but one that reflects the overall contraction of the business.
Despite this avalanche of negative indicators, DEAPCAP’s stock has experienced periods of upward movement. This has sparked widespread speculation and concern among market observers. Is this momentum driven by genuine value creation through investor confidence, or is it the result of insider-driven cross deals and speculative trading?
The latter seems increasingly plausible given the absence of any fundamental justification for such gains. The persistent year-on-year losses and the company’s declining equity value suggest a firm struggling to stay afloat rather than one poised for a rebound.
Investor Sentiment: A Strong “SELL” Recommendation
The cumulative effect of these metrics justifies a stern “SELL” recommendation. DEAPCAP has shown no convincing sign of recovery or potential growth. The sustained erosion of profitability, shareholder value, and retained earnings casts doubt on its ability to operate as a going concern.
Unless a strategic turnaround, capital injection, or substantial restructuring is initiated, investors are advised to avoid exposure to Deap Capital at this time. With no clear growth drivers, poor operational metrics, and a questionable trading pattern, DEAPCAP currently represents a high-risk, low-reward proposition.
On the last note, Q1 2025 underscores the deep structural challenges facing Deap Capital. For regulators, this may also be a wake-up call to investigate unusual trading activities that contradict the company’s financial fundamentals. For investors, the advice is simple: observe with caution and prioritise more fundamentally sound opportunities. #Deap Capital Management & Trust Plc- Deepening Decline Amid Market Confusion BUA Cement Bolsters Earnings; Profit Rises by 351% in Q1
