FBNH Declines, Trades at 49% Discount to 52-Week High
FBN Holdings market value has plunged by about 50% below its peak market value reached when Femi Otedola and Oba Otudeko ramped up the financial group company shares on the Nigerian Exchange.
The financial services stock plummeted strongly in the second quarter of 2024, extended to the third quarter due to negative investor, and shareholders perceptions.
Data from the local bourse revealed that FBN Holdings Plc stock market valuation plunged below N800 billion, and analysts said the financial services company negative price movement would affects its capital raise plan.
As part of efforts to recapitalize First Bank of Nigeria Limited in line with regulatory requirement, FBN Holdings had announced plan to raise N300 billion via public offering and or private placement.
The huge discount on the group share, while it provides investment opportunity for shareholders to increase their position, it is also expected to affects the offering pricing.
“If FBNH has to put price on its public offer or private placement today, stock market price will be used as benchmark – imagine if the stock trades near or above the peak price, the unit of shares to be offered would have been much lower”, analysts said at MarketForces Africa market discussion at the weekend.
The Marina based elephant branded financial services group has seen significant loss in its market valuation after it became target for profit taking in the second quarter of 2024.
Equities analysts have tagged FBNH Plc as one of the banking sector’s most volatile stocks with the lowest fundamentals among its peers in the market. Investors are still key into banking names with rock solid fundamentals in the Tier-1 category, FBN Holdings is less rated compared with its peers in terms of earnings performance and dividend payments track record.
At 18.34%, FBNH recorded a return on equity that was lower than its peers: Access (28.34%), Zenith (29.13%), UBA (29.93%), and GTCO (36.53%). The financial services group also generated the lowest return on asset (1.83%) versus peers: Zenith (3.32%), UBA (2.94%) GTCO (5.57%) and ACCESS (2.32%).
FBNH market valuation was significantly rerated in the market in 2024 before the financial stock took 360 degree U-turn, now trading at 49.4% discount to its 52-week high. No insiders are currently allowed to trade FBN Holding Plc shares since it closed period began on July 1.
This is expected to stay until twenty-four hours after FBNH releases its unaudited financial statement for the period ending June 30, 2024.
Apel Asset Limited said that with the recent wave of banks raising equity capital by way of right issue and/or public offering, the trend is that the market price of the stock might dip initially for a period and might adjust upwards as the results of the companies are released.
At target price of N35, Atlass Portfolio Limited estimate suggests that FBN Holdings has more than 59.8% upside potential after the stock plunged to N21.90. FBNH Declines, Trades at 49% Discount to 52-Week High Naira Slides as Nigerians Import Appetite Rises
