Operators fume as MRS Oil, others delist from stock market

Again, strong indications emerged yesterday that the Nigerian Exchange Limited (NGX) will witness massive delisting of firms under the manufacturing, consumer goods and oil and gas sectors, as operators urged government to take urgent steps in tackling nation’s macro economic woes.

A reliable source hinted that aside MRS Oil, which has already announced its delisting plans and purchase of all minority shares at N135, CAP Plc may join the league as the majority shareholder: UACN is planning to buy out all minorities.

MRS Oil Nigeria is currently the 48th most valuable stock on the NGX with a market capitalisation of N46.3 billion, which is about 0.083 per cent of the Nigerian Exchange equity market. The company closed its last trading day (Thursday, April 25, 2024) at N135.00 per share. The company reopened for the year with a share price of N105.00 and has gained 28.6 per cent on that price valuation, ranking it 23rd on the NGX in terms of year-to-date performance.

For CAP Plc, the company is currently the 63rd most valuable stock on the NGX with a market capitalization of N23.5 billion, which is about 0.042 per cent.
It closed yesterday’s trading at N28.85 per share. The firm began the year with a share price of N20.85 NGN and has appreciated by 38.4 per cent, ranking it 17th on the NGX in terms of year-to-date performance.

The delisting of the two firms from the nation’s bourse will pull out close to N70 billion from the exchange’s over all market capitalisation. The operators expressed worry over the new wave of delisting; stating that the nation’s stock market, which currently ranked behind peers in terms of depth would become narrow if urgent steps are not taken to ameliorate the situation.

In addition, they stressed the need for government to deepen partnership with private sector to find lasting solutions to issues constituting disincentive to investment and currently depressing profit margin of listed companies, especially the huge infrastructure deficit.

The Guardian also learnt that a good number of these delisting arrangements are waiting final approval. Listed firms under these sectors have been severely impacted by persistent inflation, foreign exchange crisis and poor purchasing power resulting in rising operational cost and poor sales.

Head Equity, Planet Capital, Dr. Paul Uzum, said the prevailing weak economy, occasioned by instability in exchange rate, high inflation, high interest rate among others are impacting negatively on these firms operations, noting that the uncertainty of the business environment is
making it difficult for them to take investment decisions.

According to him, these challenges discourage participation of foreigners in the market and make it hard for listed companies to raise equity capital.

“If the company feels they are not getting any benefit afrom being listed, they will prefer to delist. In the case of MRS, the shares owned by the public are few and the stock hardly trades significant volumes.

“In general, companies want to remain listed only when they know they have built the pedigree to raise capital from the market. When they know that it will be hard to raise equity capital from the market, they will prefer to be unlisted,” he said.

President of NewDimension Shareholders Association of Nigeria, Patrick Ajudua said the challenge of spiralling inflation, unprecedented naira devaluation, high cost of energy, poor purchasing power and insecurity are the challenges the firms have been contending with over the year.

According to him, majority of these challenges which hqve continued to impede the operations of these firms are beyond their control.

“Government has a bigger role to play in stabilising the economy and creating conducive business environment.” Last year, 11 firms valued at N500 billion were delisted from the exchange. This increased the number of firms that delisted since 2002 to 135.