On the Ghana stock exchange
FML’s performance shrunk based on an assessment of its full-year financials for 2017. FML’s profits fell from GHS 66.13 million in 2016 to GHS 47.04 million in 2017. Earnings per share and return on equity decreased by 30% and 44% respectively despite a rise in sales from GHS 386.4 million in 2016 to GHS 445.96 million. The slip in profits was attributed to an increase in the cost of sales by 23.4% due to inflation and devaluation of the Cedi. Additionally, increases in sales and distribution costs resulting from the launch of Fan Maxx lowered operating profit by 22.8%.
FML’s quick ratio increased from 0.59 in 2016 to 0.68 in 2017 indicating the company’s improved ability to meet its short-term liabilities. Inventory turnover ratio declined from 7.46 in 2016 to 6.72 in 2017. FML was therefore unable to turnover its inventory as well as it did in 2016. Day sales outstanding also increased from 10.45 days to 21.45 days signaling an increase in FML’s collection period for goods sold on credit and therefore constraining its cash flow. FML’s ability to efficiently use its assets to generate sales declined from 1.58 in 2016 to 1.50 in 2017. Its times-interest-earned ratio also declined from 55.17 in 2016 to 45.01 in 2017 due to a decline in its operating profits.
Market Value added (MVA) for FML, however, indicates that management has been effective at growing shareholder wealth. MVA increased from GHS 1.12 billion to GHS 1.84 billion in 2017. FML’s current trailing price-earnings ratio of 40.76 indicates that investors anticipate higher growth in the future. Despite the recent tumble in FML prices, GN analysts anticipate that share prices of FML will rise in the medium to long term based on the company’s investments in its product lines.
The composite index and the financial stock index surged by 39.55 points and 53.97 points respectively to peg at a YTD of 25.33% and 31.00%. Trading ended yesterday with 7 gainers [SCB, ACCESS, SIC, ETI, SOGEGH, EGL & MLC] with GCB, EGH and TOTAL losing GHS 0.15, GHS 0.14 and GHS 0.01 respectively. EGL topped trading in terms of volume as 80,400 shares worth GHS 361,800 changed hands.
On the Ghana alternative market
Trading activities on the Ghana Alternative Market was hushed as no shares changed hands.
On the Currency market
The Cedi made some recovery against the Dollar yesterday. The Cedi experienced a marginal depreciation against the British Pound and the Euro. The local currency exchanged at a mid-rate of GHS 4.44216 to the USD, GHS 6.1597 to the GBP and GHS 5.4568 to the EURO. The GCFM Cedi index, a measure of the holistic performance of the Cedi on the inter-bank market recorded a year to date depreciation of 1.54%.
By GN Research