FLOURMILL stock hits new low   
Nov 8 (Lagos) - Shares of Flourmills of Nigeria Plc ( FLOURMILL ) fell almost 10% today on heavy volumes and hit a new one year low price of N 15.25 per unit. 

It is a far cry from the high of N 38 that the stock hit earlier this year when the market went through an unexpected rally. 

Flourmills of Nigeria is one of the biggest food manufacturing Companies of Nigeria but their recent result failed to inspire investors who dumped the stock. Add to that the general super bearish sentiment prevailing in Nigerian capital markets and you get this kind of price action.

The result was bad but it did not deserve this kind of sell-off. 

The problem with this stock is that the Company keeps on going for rights issues every few years. While their dividend is not rising, it is actually falling on EPS basis because of those rights issues. 

Also they claim a lot of agriculture investments but in reality those are all projections and we may be surprised to look behind the facade see the ground reality of those projects. 

So in our opinion, the stock has been rightfully punished for the Management decision to keep on doing rights issues after rights issues. We should not be surprised if the management decide to take the Company private in the near future because if these shares fall more from here say another 20%, it will be better for them to buy all the outstanding float and go private. The book value of these shares is around N 36 per unit so smart investors keep an eye on this one. Another 20% down and this should be become very interesting. 

reporting for easykobo.com on Thursday, Nov 8 2018 from Lagos, Nigeria
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