IS MORISON INDUSTRIES WORTH SAVING?
Soon says the Nigerian stock exchange, Morision Industries plc may ask shareholders to cough out a little above N500m in new money through a Rights issue of 11 additional shares for each 2 held by any shareholder in the company's register by last friday, Agust 25.
According to the acting head of listing and reghulations department of the exchange, Mr Godstime Iwenekhai, Morison Industries has formally submitted an application for the rights issue to the stock exchange stating that it intends to issue 836.983m new shares at N0.60 per share to existing shareholders.
A close look at the recent half year results published by the company indicates quite clearly that Morison Industries needed the money desperately if it is to stop current high speed down hill.
By hald year, total income not only dropped by 25.4% to just N61.4m,but more importantly, under very real pressure from loan servicing, it almost lost every kobo it earned within the period.
This was mainly because by June 2017 it had borrowed N250m compared to only N50m by December 2016; incurred backbreaking N24.884m finance charges on this compared to only N2.585m at the same time in 2016 and so reported a loss of N60.684m within the period, almost triple the N21.238m reported previously.
Yes, it did record operational loss of N35.8m, 92% on N18.65m previously,but the reality is that pay off the existing debts, have some money left to venture into new areas and Morison Industries could do a lot better than it is doing now but then, every shareholder will have to answer the question for himself: Is the company worth saving?
The right answer may have to do with its current potentials. Incidentally, Morison Industries is small by many standards as its total income in 2016 was about N140m and that, even now, looks set to shrink this year but it is a company with a history that dates back to 1947 when it started out as a trading agency to incorporation in 1955. It was listed on the Nigerian stock exchange in 1978 and since the indigenisation era of the 1970s, it has been 60% Nigerian owned.
Noteworthy too was the fact that its 40% foreign holding has gone through different hands from Guinness in 1983 to ITM Group and from ITM group in 1991 to Morison Investments, UK.
Presently, it is not dealing in products meant for the mass market except in the crowded field of antiseptics, liquid detergent and germicides. It carved a niche for itself in small but much needed wound care, bone injuries management products and surgical tools for good healthcare and supply of herbicides, biocides and other related products for the agro allied industry.
But it looks set to venture afield into beckoning opportunities in Agriculture given today's renewed emphasis on production and exports. It has since been licensed to export agricultural produce like sheanuts; cashew nuts; cocoa, and ginger. and so, armed with less costly cash and with the Naira still on the low side, agric exports indeed beckons.
Henates gathered too that it wants to venture into growing of cassava; pepper, tomatoes, banana and other food and cash crops which in today's Nigeria with its exploding population, particularly in the urban areas, continue to offer good opportunities so long as the government continues to think and aim for buy Nigerian.
But then, invest in a loss maker with fast shrinking net worth; threatening debt profile; with faded memories of any dividend payment (back in 2006); valued at year low N0.90 per share and still dropping; and working capital very much in the red, invest in all that at a premium when compared to its nominal value of N0.50 and not the still cascading market price?
Well, the choice is rather personal but rest assured that any shareholder that does not take up its rights or sell same to another Nigerian shareholder at the stock exchange window for rights when if it is appfoved, will provide shareholders more optimistic about the future, to increase their holding and that includes the foreign holders of 40% in the company.
For now, there is no doubt about it, Morison Industries needs new capital to free itself from cash crunch and all its limitations. If not, the near future is likely to be very turbulent and bleak.
According to the acting head of listing and reghulations department of the exchange, Mr Godstime Iwenekhai, Morison Industries has formally submitted an application for the rights issue to the stock exchange stating that it intends to issue 836.983m new shares at N0.60 per share to existing shareholders.
A close look at the recent half year results published by the company indicates quite clearly that Morison Industries needed the money desperately if it is to stop current high speed down hill.
By hald year, total income not only dropped by 25.4% to just N61.4m,but more importantly, under very real pressure from loan servicing, it almost lost every kobo it earned within the period.
This was mainly because by June 2017 it had borrowed N250m compared to only N50m by December 2016; incurred backbreaking N24.884m finance charges on this compared to only N2.585m at the same time in 2016 and so reported a loss of N60.684m within the period, almost triple the N21.238m reported previously.
Yes, it did record operational loss of N35.8m, 92% on N18.65m previously,but the reality is that pay off the existing debts, have some money left to venture into new areas and Morison Industries could do a lot better than it is doing now but then, every shareholder will have to answer the question for himself: Is the company worth saving?
The right answer may have to do with its current potentials. Incidentally, Morison Industries is small by many standards as its total income in 2016 was about N140m and that, even now, looks set to shrink this year but it is a company with a history that dates back to 1947 when it started out as a trading agency to incorporation in 1955. It was listed on the Nigerian stock exchange in 1978 and since the indigenisation era of the 1970s, it has been 60% Nigerian owned.
Noteworthy too was the fact that its 40% foreign holding has gone through different hands from Guinness in 1983 to ITM Group and from ITM group in 1991 to Morison Investments, UK.
Presently, it is not dealing in products meant for the mass market except in the crowded field of antiseptics, liquid detergent and germicides. It carved a niche for itself in small but much needed wound care, bone injuries management products and surgical tools for good healthcare and supply of herbicides, biocides and other related products for the agro allied industry.
But it looks set to venture afield into beckoning opportunities in Agriculture given today's renewed emphasis on production and exports. It has since been licensed to export agricultural produce like sheanuts; cashew nuts; cocoa, and ginger. and so, armed with less costly cash and with the Naira still on the low side, agric exports indeed beckons.
Henates gathered too that it wants to venture into growing of cassava; pepper, tomatoes, banana and other food and cash crops which in today's Nigeria with its exploding population, particularly in the urban areas, continue to offer good opportunities so long as the government continues to think and aim for buy Nigerian.
But then, invest in a loss maker with fast shrinking net worth; threatening debt profile; with faded memories of any dividend payment (back in 2006); valued at year low N0.90 per share and still dropping; and working capital very much in the red, invest in all that at a premium when compared to its nominal value of N0.50 and not the still cascading market price?
Well, the choice is rather personal but rest assured that any shareholder that does not take up its rights or sell same to another Nigerian shareholder at the stock exchange window for rights when if it is appfoved, will provide shareholders more optimistic about the future, to increase their holding and that includes the foreign holders of 40% in the company.
For now, there is no doubt about it, Morison Industries needs new capital to free itself from cash crunch and all its limitations. If not, the near future is likely to be very turbulent and bleak.
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