Presco Plc , a Nigerian palm-oil producer, jumped to its highest level on record because of prospects that it will maintain dividend payments and a plan to expand into rubber plantations lure investors.
The stock rose 3.3 percent to N44 by the close in Lagos, the commercial capital. More than 1.1 million shares were traded, equal to 4.6 times the three-month daily average.
An 18 percent decline in the price of palm oil traded in Malaysia since the start of 2013 helped pushed Presco’s profit down 11 percent in the nine months through September to N1.65 billion ($10 million), the company said Oct. 31. Still, the stock rallied 53 percent in the past 12 months to trade at 13 times forward earnings. Primera Africa Securities Ltd. rated it buy on Dec. 3, saying palm-oil shortages in Nigeria gave Presco a chance to become the market leader.
Investors expect the company to match last year’s dividend payment of N1 naira, even with a 5.7 percent decline in profit, Rasaki Salawu, an analyst at Lagos-based Meristem Securities Ltd., said.
Presco “has a history of good dividend payments,” he said. “The company has plans to venture into rubber in 2014. Even though this will not affect the bottom-line soon, the drive will be greeted positively by investors.”
The stock has risen 14 percent this year, compared with a 0.3 percent decline in the Nigerian Stock Exchange All-Share.
