16 February 2017, Lagos – The shares of Forte Oil Plc bounced back to positive territory yesterday after recording losses for 12 consecutive trading sessions. The stock gained 5.0 per cent to close at N56.70 per share as some bargain hunters renewed demand considering its current price attractive.
Forte Oil has suffered significant price decline since its full year results were released, showing a decline of 50 per cent in profit after tax. Disappointed investors have been dumping the shares over the past 12 trading sessions.
The equity had suffered a 32.8 per cent decline since the beginning of the year, falling from N84.22. However, respite came yesterday when bargain hunters saw value in the price and increased their demand. Consequently, the equity ended up among the price gainers for the day.
Analysts at Meristem Securities Limited are projecting a price of N64.09 per for Forte Oil Plc this year.
According to them, Profit after tax (PAT) of Forte Oil for 2016 came in at N2.896 billion, down 50.11 per cent from 2015.
“PAT was largely dragged by the 155.51 per cent growth in finance cost and 24.06 per cent decline in other income in the year. The higher finance cost was due to the additional funds borrowed to finance the overhauling of the Geregu Power Plant in the year.
Going forward, we do not envisage a further decline in other income and finance income for 2017, however, forecast a 23.52 per cent increase in the company’s finance cost in 2017. Hence, we reviewed our 2017 earnings forecast upwards to N4.26bn, which represents a 47.47 per cent increase from 2016 PAT.
Having reviewed our projections to reflect the current economic realities, we arrived at a 2017 target price of N64.09, representing a premium from the current market price at N54.70. We therefore place a “HOLD” recommendation,” they said.
Meanwhile, the market maintained its downward slide, with the Nigerian Stock Exchange (NSE) All-Share Index falling by 0.84 per cent to close at 25,032.17.
The depreciation recorded in the share prices of Access Bank, Nigerian Breweries, Nestle, Zenith Bank and Unilever were mainly responsible for the loss recorded in the NSE ASI. Consequently, the year-to-date decline of the ASI stood at 6.86 per cent yesterday.
The total value of stocks traded was N1.91 billion, up by 38.53 per cent from N1.38 billion recorded the previous day, while total volume of stocks traded was 144.88mn in 2,868 deals.
- This Day