ACCESS HOLDINGS EXPLAINS WHY ITS ISSUED SHARES PRICE IS HIGHER THAN MARKET PRICE
As of June 9, 2024, Access Holdings' share price stood at N19.35, which is 2% lower than the N19.75 price set for the ongoing rights issue. On July 8, the opening day of the rights issue, the share price opened at N19.20, appreciated by 2% to close at N19.60, and then declined by N0.25 to close at N19.35 on July 9. These fluctuations raised concerns among shareholders during the "Facts Behind the Issue" presentation at the Nigerian Exchange (NGX).
ANOMALOUS PRICING:
Typically, share offering programs set the offer price at a discount to the market price to attract investors. In rights issues, the discount is generally larger than in public offerings. For instance, Fidelity Bank priced its rights issue shares at N9.25, compared to N9.75 for its public offering shares. The larger discount in rights issues serves as an incentive for existing shareholders.
REASONS FOR PRICE DISPARITY:
Aigboje Aig-Imoukhuede, Chairman of Access Holdings, explained that the higher issue price is justified by the bank's strong earnings profile. He highlighted that significant earnings potential and robust financial performance underpin the bank's valuation. Even without currency devaluation profits, the bank shows potential earnings of about 17 naira per share, with a trading price of around 19.75 naira per share. This strong performance reduces the need for additional capital that could dilute earnings.
The rights issue aims to reward long-term investors who have supported the bank through challenging times. In FY 2023, Access Holdings achieved earnings per share of about N17.23, based on a net income of N619.3 billion, a 288% increase from the N4.44 earnings per share in 2022. At the offer price of N19.75, the price-to-earnings (P/E) ratio of 1.15 is notably lower compared to industry peers, suggesting that Access Bank shares might be undervalued.
KEY DETAILS:
- Current Share Price: N19.35 as of June 9, 2024.
- Rights Issue Price: N19.75.
- FY 2023 Earnings Per Share: N17.23.
- P/E Ratio: 1.15 for issued shares.
- Industry Peers' P/E Ratios: FBNH (2.62), GTCO (2.36), UBA (1.32), Zenith Bank (1.74).
As of June 9, 2024, Access Holdings' share price stood at N19.35, which is 2% lower than the N19.75 price set for the ongoing rights issue. On July 8, the opening day of the rights issue, the share price opened at N19.20, appreciated by 2% to close at N19.60, and then declined by N0.25 to close at N19.35 on July 9. These fluctuations raised concerns among shareholders during the "Facts Behind the Issue" presentation at the Nigerian Exchange (NGX).
ANOMALOUS PRICING:
Typically, share offering programs set the offer price at a discount to the market price to attract investors. In rights issues, the discount is generally larger than in public offerings. For instance, Fidelity Bank priced its rights issue shares at N9.25, compared to N9.75 for its public offering shares. The larger discount in rights issues serves as an incentive for existing shareholders.
REASONS FOR PRICE DISPARITY:
Aigboje Aig-Imoukhuede, Chairman of Access Holdings, explained that the higher issue price is justified by the bank's strong earnings profile. He highlighted that significant earnings potential and robust financial performance underpin the bank's valuation. Even without currency devaluation profits, the bank shows potential earnings of about 17 naira per share, with a trading price of around 19.75 naira per share. This strong performance reduces the need for additional capital that could dilute earnings.
The rights issue aims to reward long-term investors who have supported the bank through challenging times. In FY 2023, Access Holdings achieved earnings per share of about N17.23, based on a net income of N619.3 billion, a 288% increase from the N4.44 earnings per share in 2022. At the offer price of N19.75, the price-to-earnings (P/E) ratio of 1.15 is notably lower compared to industry peers, suggesting that Access Bank shares might be undervalued.
KEY DETAILS:
- Current Share Price: N19.35 as of June 9, 2024.
- Rights Issue Price: N19.75.
- FY 2023 Earnings Per Share: N17.23.
- P/E Ratio: 1.15 for issued shares.
- Industry Peers' P/E Ratios: FBNH (2.62), GTCO (2.36), UBA (1.32), Zenith Bank (1.74).