Why is AUSTINLAZ Listed?

Tuesday, April 30, 2019 07:05PM / Abdulazeez Kuranga, Proshare Research

The question why Austin Laz should be listed is far from rhetorical, with the company’s share price barely moving over the one year analysts are increasingly questioning whether the company can rightly be considered an investment store of value. With no capital appreciation investors in the company for now must be trading on hope rather than fundamental operating prospects.

Company Background

Austin Laz and Company Plc's (AUSTINLAZ)  principal activities include the manufacturing of ice making machines, thermoplastics, aluminium and the production of building materials. According to its 2018 financial report, 1,079,860 shares of the company are currently held by 370 Nigerians

Listing Information

On the 29th February, 2012, AUSTINLAZ became the first company to be listed on the Nigerian Stock Exchange (NSE) by way of introduction in 2012 and its 1,079,860,000 ordinary shares of 50kobo each at N2.00 is classified under the industrial goods sector. Its market capitalization stands at 2,256,907,400.00 and it is listed on the Main Board of the NSE.

Source: NSE, Proshare Markets

Share Price Movement

AUSTINLAZ last traded on the NSE on 15th April, 2019 with a share price of N2.09. This denotes a 4.5% increase from the company’s listing share price of N2.00. Data from the NSE shows that the share price of AUSTINLAZ did not change in the last 7 days trades. The price was constant at N2.09 from 20th February, 2019 to 15th April, 2019.

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Graph – Year to Date Share Price Movement 

Financials

The earning profile of AUSTINLAZ at the end of 2018FY reveals a downward slide in turnover growth rate from 43.83% in 2017 to 25.68% in 2018. However, the performance of the company’s turnover growth is commendable when compared with the thrust of -16.71% recorded in 2016.

In 2012, when AUSTINLAZ was listed on the NSE, it recorded a revenue of N686.911mln. However, this decreased marginally by 2.85% in 2013 and further decreased by 7.73% in 2014 to N615.73mln. In 2015, AUSTINLAZ recorded its biggest revenue decline as revenue fell sharply by 57.60% in 2015 from N615.73mln it recorded in 2014 to N261.055mln. This occurred as a result of not recording any sales in the company’s thermoplastic division during the period as against a turnover of N136.99mln recorded in 2014. Also attributed to this was a decline in revenue in the Aluminium division and the ICE plant division compared to the divisions’ turnover in 2014.

In terms of profitability, AUSTINLAZ has recorded a sharp in Profit after Tax (PAT) right from its listing year (2012) to 2018 as the PAT of the company fell from N60.09mln in 2012 to N16.23mln loss in 2018 and this represents a 127% decline in PAT in 6 years.

As at the end of 2018, AUSTINLAZ recorded 5252.38% revenue decline from N0.315mln PAT recorded in 2017 to N16.23mln loss in 2018. As noted, the profitability position of the company in the past 6 years reflects excessive fluctuations in PAT as its profitability is negatively skewed towards losses than on profits. This downward trend in profit performance could be attributed to the rise in production expenses as indicated by the sky-high cost of sales of N299.72mln in 2018 (against N193.66mln in 2017) and finance cost of N23.31mln in 2018 (against N19.36mln in 2017).

Peer Review – Share Price, Financials

AUSTINLAZ Share Performance compared with Peers

The 7 years peer analysis below indicates that although the share price of AUSTINLAZ did not increase significantly over the years, it is still among the top 6 in terms of share performance when compared with its peers in the industrial goods sector as it has a positive 7-years returns of 4.50%. This therefore reveals that half of the companies which include BETAGLAS, CCNN, DANGCEM, BERGER, CUTIX and AUSTINLAZ had positive price growth of 433.33%, 220.75%, 98.69%, 42.14%, 9.59% and 4.50% respectively for the 7 years collectively while the other half recorded negative price growth.

Also, there exist a positive relationship between the share price of AUSTINLAZ and the ASI Returns. This is seen from the table which shows that whenever the ASI return is positive, the share price of AUSTINLAZ will be below it and vice versa. It can also be noted that for the 7 years collectively, AUSTINLAZ outperformed the market as indicated by the company’s 7 years returns of 4.50% which surpassed the NSE-ASI 7-years loss of -112.16%.

AUSTINLAZ Financials compared with Peers

At the end of 2018 financial year, balance-sheet and top-line indicators revealed that AUSTINLAZ has weak market shares when compared with the performance of the companies in the industrial sector as shown by the 7yrs financial summary analysis below.

Total Assets

The table above reveals that a majority of the companies experienced growth of their assets over the 7 years period as against the base year (2012). Further analysis reveals that compared to its peers, AUSTINLAZ experienced a decline (which represents the largest) in the company’s asset growth with a contraction of 26% from N2.24bln in 2009 to N1.66bln as at 31st December, 2018.

Net Assets

In terms of Net Assets growth, AUSTINLAZ only came above PREMPAINTS and VANLEER as it recorded a 19% decline in its net assets growth. Furthermore, when compared with CCNN (which is the company’s peer in the Electrical and Electronics sub-sector, AUSTINLAZ still lags behind as CCNN records an impressive growth of 155% in Net Assets over the 7 years period of analysis.

Inventory Growth

AUSTINLAZ recorded a 9 years decline of 86% in the company’s inventory growth. That is, the inventory of the company decline by 86% from the year of listing to the end of 2018 and this indicates a weak market share when compared with CUTIX (its peer in the Electrical and Electronics products sub-sector) which recorded an impressive growth of 293% in inventory over the 7 years period of analysis.

Cash and Bank Balances

AUSTINLAZ maintains the lead in the growth of cash and bank balances among its peers in the industrial sector as it records an impressive cash and bank balance growth of 4229%. Followed behind are FIRSTALUM, BETAGLAS and CUTIX with cash and bank balance growth of 1006%, 726% and 453% respectively.

Top-line and Bottom-line

Also, the top-line performance revealed AUSTINLAZ 7yr revenue growth rate to be a decline of 43% placing it behind all the companies in the industrial sector.

Further analysis revealed AUSTINLAZ7yr average Profit After Tax (PAT) growth rate to be a decline of 127% placing it behind CUTIX, MEYER, CUTIX, DANGCEM, BETAGLAS, and BERGER PAT growth of 457%, 504%, 379%, 157%, 280%, 67 % respectively and ahead of VANLEER, PREMPAINTS and WAPCO PAT decline of 774%, 172% and 171% respectively.

NB: Of all the companies analysed, only FIRSTALUM and WAPCO are yet to release their 2018 audited financial statements as at the date of writing this article. Therefore, the Q3 2018 results of the companies (FIRSTALUM and WAPCO) were used in place of their 2018 year end results. Furthermore, according to the financials from the NSE, MEYER result starts from 2016 to 2018. Therefore, MEYER financials was compared using 2015 financials in comparison with 2018. All the other company’s financials were compared using their financials from 2012 to 2018.

Conclusion

From the analysis, it has been established that although the share price of AUSTINLAZ has increased by 4.5% since the day it was listed on the NSE, this price has failed to experience a change in the last 1 year as it is seen hovering around N2.09 for the past year till date. Further analysis showed that in comparison with CUTIX, which is its peer in the Electrical and Electronics Sub-sector, AUSTINLAZ has not fared very well as it lags behind in its financials. For instance, while CUTIX has recorded over 200% growth in total asset, AUSTINLAZ is able to record a decline of 26% in asset growth. With the exception of cash and bank balances which AUSTINLAZ recorded an impressive increase, it recorded decline in all other financial metrics used in the peer comparison.

Related News

1.         AUSTINLAZ Declares N8.305m PAT in Q1 2019 Results,(SP:N2.09k)

2.         AUSTINLAZ declares N16.230 mln loss in 2018 Audited Result,(SP:N2.09k)

3.        NSE Lifts Suspension Placed on ACADEMY, AUSTINLAZ and 2 Others

4.         AUSTINLAZ Declares N25.37m Loss in Q3 Results,(SP:N2.09k)

5.         AUSTINLAZ Releases Q1 Result and Announces Victory in Court Case Over BOI

6.         AUSTINLAZ Releases Q1 Result and Announces Victory in Court Case Over BOI

7.         AUSTINLAZ Declares N0.074m PAT in Q1 2018 Results,(SP:N2.09k)

8.         AUSTINLAZ Declares N0.315m PAT in 2017 Audited Results,(SP:N2.09k)

9.         AUSTINLAZ Releases Q1, Q2, Q3''17 Results, Records 69.04% Revenue growth in Q3''17 Result,(SP:N2.09k

10.    AUSTINLAZ Records 16.71% Revenue Decline in 2016 Audited Result,(SP:N2.09k)