GSE: Dwindling fundamentals of SIC could dip share performance

 

On the Ghana Stock Exchange (GSE,) State Insurance Company [SIC]; in its latest 2016FY financial results reported marginal dip in company fundamentals over the 52-weeks period.

The listed insurance company recorded a 15.16% rise in Gross Insurance Premium; from GHS 138,984,920 in 2015 to GHS 160,061,927 in 2016.

Although claims incurred during the period under review fell by 56.19%; significant increase in underwriting loss over the one year period led to a notable dip in the bottom line of the firm. Underwriting loss increased by 144.8%; from GHS 4,678,314 in 2015 to GHS 11,452,738 in 2016. Profit after Tax fell by 60.66%; from GHS 9,498,923 in 2015 to GHS 3,736,516 in 2016.

Net Asset Value of the company also fell marginally by 1.82% to GHS 79,471,792. Earnings per share [EPS] value attributable to shareholders also fell from GHS 0.0486 in 2015 to GHS 0.0191 in 2016. Net Assets per share equally dip marginally from GHS 0.4137 to GHS 0.4062 in 2016. Current ratio which measures SIC’s ability to meet both short term and long term obligations when due however remains solid above the threshold of 1 although the liquidity measure fell marginally in 2016. Current ratio dipped slightly from GHS 1.0348 in 2015 to GHS 1.0130 in 2016. Return on Shareholders Fund [RSHF] fell significantly over the 52 weeks period as a result of the dip in the company’s bottom line. RSHF fell from 11.74% in 2015 to 4.770% in 2016.

SIC undoubtedly is one of the regular dividend payers on the Accra bourse, however, GN Analysts expect a dip in dividend per share for 2016FY compared to the previous year. The company could experience a slight dip in share performance as a result of dwindling company fundamentals. GN Analysts revised recommendation on SIC is a HOLD, at least until the fundamentals become stronger which will in effect drive share performance towards gains.

Trading activity on the bourse ended with 4 gainers [EGH, SCB, UNIL and GOIL] and 1 loser [CAL] yesterday. GGBL topped the trading chart in terms of volume as 2,510,000 shares worth GHS 3,765,000.00 changed hands. Returns on the Composite and Financial Stock Index pegged at 11.04% and 14.97% respectively.

Trading activity on the Ghana Alternative Market [GAX] was hushed as no shares changed hands.

HORDS currently lead record capital gains on the GAX, appreciating by 25% from 2016 year open.

The Cedi LOST to the British Pound and Euro yesterday but GAINED marginally to the USD.

The local currency exchanged at a mid-rate of GHS 4.5939 to the USD, GHS 5.6153 to the GBP and GHS 4.8999 to the EURO.

The GCFM Cedi index, a measure of the holistic performance of the Cedi on the inter-bank market now records a year-to-date depreciation of 9.47%.

 

By GN Research

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