Proshare Logo
   Market Date: 02-09-2014   
Agriculture All One Min News Archives Bonds Cap Mkt Sentiments Capital Market CASHLESS NIGERIA Commodities Corporate Earnings Daily & Weekly Market Updates Enterpreneurship ETFs Forex Frauds & Scandals General Global Market Insurance Investors NewsBeat Islamic Finance Mergers & Aquisitions Money Market Mortgage Mutual Funds Nigeria Economy Oil Sector Opinions and Analysis Pensions People Personal Finance Politics Power Products & Services Professionals Property Public Offers Private Placements Regulators REITs Stock PICKS Taxation Telcos Travel & Tours Unlisted OTC MARKET World of Business

Dunlop as we saw it before today - Memory Lane

Category: Investors NewsBeat


  Read (914)
Dunlop as we saw it before today - Memory Lane
Dunlop Nigeria Plc – Buy or Sell?
Posted Friday, December 14, 2007

Upon the conclusion of Dunlop\'s secondary offering on February 2, 2007, the company’s stock price experienced a sharp ascend gaining N4.78k, or 115% through February 26, 2007. However, after the meteoric rise, the stock began a slow but severe decline loosing N6.44k, or 72% during the next 9 months.

Subsequently, the stock began a slow recovery breaking through its 20 day cumulative simple moving average (CSMA) of N2.76k on November 6, 2007, and through its 50 day CSMA of N3.02k on November 11, 2007. This trading pattern was an indication of strong relative strength.

However, on November 15, 2007, after 20 days of positive up trend, the stock closed under its 20 day CSMA indicating a sign of short-term weakness.  As at the close of trading on December 12, 2007, the stock was below its 10 day and 20 day CSMA of N3.29k and N3.38k respectively.  The only encouraging indication is that the stock is above its flat 50 day CSMA of N3.07k.  There appears to be turbulence ahead, because the 20 day CSMA is beginning to trend down. Technically, if the stock slips under the 50 day CSMA, it might be time for short-term holders of the stock to consider selling.

 

Financially, Dunlop Nigeria Plc has performed well below expectation for the most recent five fiscal years as gross earnings have declined or remained flat as shown in the graph below. The only exception of this not so attractive trend was in FY 2002 and FY 2004, when Dunlop experienced some increase in gross earnings. It might do well to boost investors’ confidence if management can provide some reasons to explain why the company has not been able to grow its earnings without a major domestic competition. Since Michelin in early 2007 closed its manufacturing plant in Nigeria because of high operating expenses   stemming primarily from high cost of Energy.
Additionally, a review of the most recent four (4) FYE financials reveals that the company reported pre-tax losses of N276M, N407M, N208M, and N653M respectively. 

 

The pre-tax losses resulted from operating expenses which have increased sharply, while revenue has remained flat. For example, a review of the company\'s financial statements for the first quarter ended March 31, 2007 revealed that  profit before interest & taxes (PBIT) was N28.7 million. However, after adjusting for interest expense of N366.3 million, the company reported a Net Loss before tax (NLBT) of N337.6 million. This basically indicates that the company is debt burdened and unable to service its debt from earnings generated from operation.
 
Conclusion
Fundamentally, we would not recommend adding to existing positions, or taking new positions of the stock at this time. Technically, the stock is barely holding up.
 
- Chuks Biosah


Tags: , 



Comment With Your Facebook or Yahoo! ID


Latest news


News on Investors NewsBeat

About Us

Who We Are
Our Team & Partners
Corporate Governance
Advertise with Us
Subscribe / Unsubscribe
Site Map
News Feed - RSS
Newsletter
Contact Us
Message from CEO
Resources

News & Features
The Analyst / Market Data
Investor Relations Portal
The Regulator
Economy & Politics
WebTV
Training Portal
Events Calendar
NewsStands - Online Reputation

Products and Services

Research & Market Intelligence
Analyst Services
Offers & Rights Support Service
Investor Relations Services
Alert & Subscription Services
Share Support Services
Proshare Consult
Event & Seminar Coverage
Market Directory
File a Complaint
News & Analysis

#1minNews
News from TheANALYST
Video News from WebTV
Money Market Updates
Opinions & Analysis
Nigerian Economy
Market Data
The Regulator
Newsletters
Discussion Forum
Policy

Subscriber Agreement
Privacy Policy
Data Policy
Disclaimer
Copyright Policy
Trademarks
Comments in Site
Advertising Code
Conflict of Interest
Content Partnership
3rd Parties

Online Trading and Execution
Training
Legal Support Services
Web/Technology Services
File a Complaint