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Background
Cutix Plc manufactures electric cables. The Company produces insulated power cables, PVC insulated power cables, polyester aluminum enameled wire, speaker wire and cable, bare aluminum strand wire and cable, and irrigation cable.
In order to boost production and penetrate the Nigeria market, the company in 2009 commissioned the largest ultra modern wire and manufacturing plant in West Africa-Coleman Cable Plant- at Arepo along Lagos/Ibadan express road, Ogun.
Cutix, the most successful cable company has 880.17 million shares outstanding, with shareholder funds standing at N678.22 million at third quarter ended January 2014.
Financial Performance as at January 31 2014
Cutix Plc for the third quarter ended January 2014 recorded an impressive performance as gross revenue grew by 19.43 percent to N1.68 billion compared with N1.41 billion achieved in the corresponding period of 2013.
The company however incurred high input cost as cost of sales margin in the review period jumped to 71.25 percent from 70.90 percent in 9M14 hence gross profit margins declined to 28.72 percent Q3:14 as against 29.14 percent recorded in Q3:13
Administrative expenses for the third quarter ended January 2014 climbed by 16 percent to N262.54 million as against N226.339 million 9M13. But operating expenses margin declined marginally to 15.60 percent in 2014 from 16 percent in 2013.
Cutix, for the period ended January 2014 increased Profit before tax (PBT) by 18.73 percent to N227.71 million compared to N191.78 million recorded Q’3 2013,while net profit margin remained flat at 13 percent same period.
Earnings per share EPS fell by 33.33 percent to 14k from 21k in Q3 2013.
The Return on Equity ROE climbed to 17.70 percent from 16.5 percent for Q3 2013, while Return on Assets ROA fell to 8.29 percent from 9.73 percent for Q3 2013.
The company’s total assets in the period under review soared by 41.17 percent to N1.44 billion in 9M14 as against N1.02 billion recorded in 9M13- thanks to expansion drive through acquisition of assets which is boosting sales.
Current ratio, a measure of liquidity, dipped to 1.42x in Q’3:14 compared with 2.02x recorded in the corresponding period Q3:2013. The current ratio falls below the industry average of 2.1x however the company can still meet its short term obligations.
Sales turnover reduced to 1.16x in 9M14 from 1.38x in 9M13 which means that Cutix is generating N1.16k of sales for every N100 invested in net assets.
Share Performance and Outlook
Cutix share price increased by 0.23 percent in the past year to close at N2 as at Mar. 6 2013 on the floor of the Nigeria Stock Exchange (NSE).
Investors are willing to pay a high price for the company’s sales as its price to sales was 2.94x on the same, while price to book was 0.91x.
Growth in the Nigerian which is expected to expand by 7 percent in 2014, means that Cutix will continue to have a growing market and business.
BALA AUGIE
