Shares of Flour Mill of Nigeria Plc (FMN) tumbled to its lowest level, this week at ₦13.75 since July 2009, depressed by sell pressure as investor apathy in the stock rose.
FMN’s bearish streak began in March this year, and shed 0.36 per cent after Monday’s trading, down 68 per cent since the year-to-date.
The miller underperforms the benchmark index and consumer goods index that have returned negative 3.9 per cent and 16.2 per cent respectively so far in the current year.
Investors’ apathy toward the stock is driven by weak market sentiments and unimpressive earnings scorecards.
General sentiment towards the equity market is weak as investors are yet to see economic-stimulating policies that would resuscitate the bourse.
Analysts maintained that the slow growth of the wider economy and absence of key reforms that center on unifying the multiple exchange rate system, wanes investors’ confidence towards the equity market.
A snapshot of its earnings figure revealed that the food products maker’s top-line shed 6 per cent to ₦400.6 billion in the first nine months of 2018, relative to ₦427.5 billion realized in the previous corresponding period.
This, in addition to elevated operational expenses, adversely affected bottom-line as net income dipped nearly by half to ₦7.9 billion.
Consequently, profit margin of the agro-allied player slowed to 1.97 per cent in the review period, 1.12 percentage points lower than 3.08 per cent a year before.
This implies that FMN retained ₦20 as profit from every thousand naira generated as revenue, relative to ₦31 one year back.
However, given the Nigerian presidency’s directive towards clearing the country’s premier port hub, Apapa, the company might possibly see improvement in top and bottom-line in 2019.
FMN announced plans three months ago to transfer existing assets in Golden Penny Fertilizer to its sole agro-allied segment, Golden Fertilizer Company Limited to boost efficiency and market expansion.
FMN trades at a price-to-book ratio of 0.39 x, compared with Dangote flour (2.6x) and Northern Nigerian Flour Mill (0.76x), implying that the stock is currently undervalued.
