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Following the recent removal of the price cap by the Nigerian Stock Exchange (NSE), and the consequent fall in the share price of some stocks, especially in the Insurance industry, it is expected that some shareholders may begin to dump their shares for fear of losing value; but this has not been so for Consolidated Hallmark Insurance (CHI) Plc.
The reason is not far-fetched. The company has demonstrated consistent ability to deliver returns to its shareholders over the years, and an analysis of its financials shows strong positive fundamentals.
Majority of the shareholders of company, 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 confidence of CHI’s shareholders in the company’s performance was further reaffirmed during the first phase of its capital raising exercise, in which it offered N500million in the form of one new share for every six held by its existing shareholders in a 1,000,000,000 unit’s rights issue, which was oversubscribed. An analysis of the deals on the trading floor of the Nigerian Stock Exchange in the past few weeks indicates improved activities on the stock of the company, with increasing transaction volumes, but only 32 million units (a paltry 1%), out of the 7billion 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.
A quick glance at the company’s fundamentals, show why investors may want to hold on to CHI stocks, or why new investors may want to take position.
Firstly, the company is trading at a 12-month price to earnings (PE) ratio of 8.9X, price to book ratio of 0.39x and a dividend yield of 6.9 percent.
In addition, the company’s 9-month financials as at 2017 shows a profitable insurance business, with an underwriting profit of N836million and retained earnings of N114million. The company has also grown its total assets value to N8.14 billion from N4.6 billion in 2007.CHI is one of the few insurance businesses that delivers value to its shareholders in the Nigerian insurance market.
Commenting on the recent developments at the NSE, Eddie Efekoha, managing director/CEO of the company who is also the Chairman of the Nigerian Insurers Association, expressed confidence that discerning investors would rather scramble to take position on the stock, at a bargain price now rather than sell their valuable stock that has consistently made returns for them via growth in assets and dividend payments over the years. He said the intrinsic book value of the stock is presently over 70 kobo, and with its current liquidity levels in the market, more market players are now gearing up to take position while expecting an upside in price especially against the backdrop of the expected 2017 Year End Financials.
Efekoha therefore 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 (HMO), 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 will help to further grow revenue.
Efekoha explained further that strategies have been put in place to improve on the bottom line through cost-cutting initiatives in management expenses.
Consolidated Hallmark Insurance (CHI Plc) has consistently grown revenue since the 2007 merger of three legacy companies – from N1.506 billion in 2007 to N5billion and has paid dividends to shareholders 7 out of 10 years post-merger.
The company is known for very high professional and ethical standards, with excellent customer service and prompt claims settlement as its key selling points. Claims incurred rose from N197 million during the 2007 Financial Year to N1.185 billion for the nine months ended September, 2017 an attestation that the company is “a financial institution with satisfactory financial condition and adequate capacity to meet its obligations as and when they fall due“, as stated by foremost rating agency Agusto & Company, during its rating of the company in 2016.
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