Twenty-five chief executive officers (CEOs) of companies listed on the Nigerian Stock Exchange (NSE) led their companies to increase market capitalisation to the tune of N2.88trillion in 2013, BusinessDay Research and Intelligence Unit (BRIU) can authoritatively reveal.
The discovery was made in the course of selecting the Top 25 CEOs for last year. The Top 25 CEOs is a yearly publication of BRIU in which CEOs of listed companies who contributed to the growth of the Nigerian capital market are selected and celebrated. The selected CEOs led companies which collectively accounted for 68 percent of the N4.25 trillion gains in market capitalisation that all the listed equities recorded in 2013.
The maiden edition of the Top 25 CEOs came out in 2013 for the transactions that were carried out on the NSE in the 2012 financial year. The second edition, which is about to be published, uses a mix of share price appreciation and a growth in second or third quarter profit after tax (PAT) in 2013. This is an improvement over the first edition in which share price appreciation was the sole parameter used in the selection process.
To be selected as one of the CEOs, a company’s share price should have outperformed the NSE’s All Share Index (ASI), while a steady growth must be recorded in either Q2 or Q3 PAT in 2013. 
The consumer goods subsector has the highest number of CEOs accounting for 24 percent of the CEOs selected. The CEOs of Cadbury, Dangote Sugar, NASCON, Mcnichols, Nestle and 7-Up made the list as they beat the ASI which closed the year at 47 percent.
Cadbury’s share price appreciated by 103.48 percent; Dangote Sugar, 95 percent; NASCON, 87.38 percent; Mcnichols, 85.19 percent; Nestle, 71.43 percent, while 7-Up recorded a share price appreciation to the tune of 70 percent.
In addition, Cadbury’s Q3 PAT rose by 83 percent to N3.85 billion, from N2.11 billion realised by the end of similar period in 2012. Dangote Sugar’s Q3 PAT improved by 38 percent to N11.3 billion, up from N8.17 billion in comparable period in 2012, while National Salt Company plc (NASCON), another company from the Dangote Group, recorded a point increase in its Q3 PAT, which rose to N2.06 billion from N2.05 billion made in corresponding period in 2012.
Interestingly, 7-Up’s Q3 PAT rose a record 180 percent to N3.92 billion from N1.40 billion that was realised by the end of December 2012.
The increase in the number of consumer goods companies is a manifestation of the rise in middle class and consumer spending in Nigeria.
The building materials and banking subsectors have three CEOs each, while the conglomerates, health, insurance and oil and gas subsectors have two CEOs each. Stanbic-IBTC, UBA Capital and African Prudential Registrars are the institutions that qualified from the financial services subsector.
Furthermore, the agriculture, breweries, chemical and paints, construction and real estate subsectors have just one CEO each. The Platinum Group, which is the group for the CEOs that beat the index back to back (2012 and 2013), comprises the CEOs of International Breweries, Cadbury and NASCON plc. Others are the CEOs of GSK, CAP, Livestock Feeds, Transcorp and Nestle Nigeria plc.
Compared with 2012 list, the 2013 list reveals some interesting facts. One of these is the presence of fewer banks on the Top 25 CEOs list, unlike in 2012 when eight banks were selected. General opinions suggest that policies such as the reduction in COT, increase in CRR on public sector fund from 12 percent to 50 percent, as well as increased sinking funds provision to AMCON have had considerable impact on bank earnings in 2013.
“Most of the banking stocks did not appear on the 2013 list due to poor earnings forecast. This was as a result of the regulatory policies that were put in place in the year,” says Fatai Asimi, an industry analyst.
BusinessDay in-house analysts add that the mandate by the Central Bank of Nigeria (CBN) to commercial banks to increase their savings deposit rates to about 3.5 percent further reduced banks’ earnings last year. They also attribute the success of Stanbic-IBTC to its business model.
Only eight penny stocks feature on the 2013 list compared with about 15 of such stocks on the 2012 list.
Explaining why this is so, Asimi says: “Over thirty (30) stocks trailed the average market PE of 13x in 2013. Typically, we would assume that the cheapness of these stocks and prospects of future gains would attract bargain hunters. However, the trend in 2013 was characterised by factors such as general flight to safety by investors to high cap and high PE stocks, the desire for modest gains and dividends were enough to pull investors in that direction just as the liquidity profile of high cap stocks also guaranteed that they got a higher share of investors’ portfolios.”
He adds that the trend in 2014 might not be much different from the 2013 trend.
By: TELIAT SULE
