Nigerian Stock Exchange (NSE) daily official list has revealed that 51 of the listed companies are trading at par value.
The nominal value is the face value of the stock and the shares are not permitted to fall below the par value. It is the value stated in the corporate charter below which shares of that class cannot be sold upon initial offering. In the Nigerian Stock Exchange, the par value of quoted companies is 50 kobo.
It would be recalled that a committee was set up in 2013 to consider the possibility of removing the restriction of not allowing stock to fall below its nominal value. The report was submitted and was agreed that the cap would be removed in 2015.
Looking at the daily official list of equities as at October 30 showed that out of 180 listed companies in the mainboard and Alternative Securities market combined, 51 of it are trading at 50 kobo, which represent 28.3 per cent of the total listed companies on NSE.
Investigation by LEADERSHIP showed that under insurance sub-sector, 23 companies have deteriorated to per value of 50 kobo. While Adwitch, Ainno International and Rak Unity Petroleum had transaction last on August 12, 2013, November 20, 2014 and January 1, 2011 respectively.
The following are trading at 50 kobo, FTN Cocoa, Multi-Trex, Costain, DN Tyre & Rubber, IPWA, First Aluminum, Japaul, Beco Petroleum, Afromedia, C&I Leasing, ABC Transport, MTI, Chams, Secured Electronic Technology, Tantalizer, Daar Communication among others.
Market operators have said that those companies trading at par value are not adding value the market capitalization. They noted that the poor performance of insurance stocks on the floor of the Nigerian Stock Exchange (NSE) has been attributed to lack of returns that accrue to investors from their investment in the sub-sector.
The managing director of Highcap Securities Limited, Mr. David Adonri, said those companies trading at par are not adding significant value to Market Cap, adding that most of them are not making profit and have failed to reward their investors.
Managing director, APT Securities and Funds Limited, Malam Garba Kurfi, said that many insurance companies on the NSE had yet to improve after the financial meltdown.
Kurfi said that there was need for many of the firms to merge instead of groaning under heavy debts. He said that stakeholders in the industry should address the negative public perception and lack of mass participation in insurance products.
Source : Leadership