CHI shareholders retain shares despite negative industry sentiment

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Stanley Opara

Shareholders of Consolidated Hallmark Insurance Plc have continued to keep their shares despite the bearish sentiment that has pervaded insurance stocks in recent times.

The negative trend followed the recent removal of the price cap by the Nigerian Stock Exchange, which consequently led to the fall in the share price of some stocks, especially in the insurance industry.

Generally, it is expected that some shareholders may begin to dump their shares for fear of losing value.

CHI, in a report, said it had demonstrated consistent ability to deliver returns to its shareholders over the years, and an analysis of its financials showed strong positive fundamentals.

“Majority of the company’s shareholders have therefore continued to hold on tightly to their stocks, not willing to sell, while others are beginning to take positions now that the cap has been lifted, thereby providing more liquidity for the stocks,” the insurer said.

The firm said the confidence of the company’s shareholders in its performance was further reaffirmed during the first phase of its capital raising exercise, in which it offered N500m  in the form of one new share for every six held by its existing shareholders in a 1,000,000,000 units rights issue, which was oversubscribed.

An analysis of the deals on the trading floor of the NSE in the past few weeks indicated improved activities on the stock of the company, with increasing transaction volumes; but only 32 million units (a paltry one per cent), out of the seven billion shares outstanding have been made available for purchase on the floor of the Exchange, showing a low unwillingness by investors to sell off their stock.

The insurer is currently trading at a 12-month price to earnings ratio of 8.9, price to book ratio of 0.39 and a dividend yield of 6.9 per cent. In addition, its nine-month financials as at 2017 showed a profitable insurance business, with an underwriting profit of N836m and retained earnings of N114m. It has also grown its total assets value to N8.14bn from N4.65bn in 2007.

Commenting on the recent developments, the Managing Director/Chief Executive Officer of the company who is also the Chairman of the Nigerian Insurers Association, Mr. Eddie Efekoha, expressed his confidence that discerning investors would rather scramble to take position on the stock at a bargain price now rather than sell their valuable stocks that have consistently made returns for them via growth in assets and dividend payments over the years.”

He said the intrinsic book value of the stock was presently over 70kobo, and with its current liquidity levels in the market, more market players were now gearing up to take position while expecting an upside in price especially against the backdrop of the expected 2017 year end financials.

The CEO, thus, assured shareholders of the company to expect more returns in the nearest future as recent capacity expansion and growth initiatives such as the establishment of new subsidiaries such as its health management organisation to focus on identified growth markets, launching of a revamped website with retail customer and broker interphase, reinvigoration of the retail network and deployment of latest technology to help further grow revenue.

Efekoha said strategies have been put in place to improve on the bottom line through cost-cutting initiatives in management expenses.

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