AFRICA PRUDENTIAL DELIGHTS INVESTORS WITH STRONG NUMBERS

The first listed share registration business on the floor of the Nigerian Stock Exchange recently released its full year earnings report for 2015 financial year to the investing community. The numbers were impressive, with the company's top and bottom lines pointing northward in what is seen as a consolidation of its performance in 2014. This improvement was attributed to the company's commitment to deliver value for its shareholders by remaining on top of its innovation and technology drive. In this way, it is able to deliver satisfactory services efficiently, while ensure cost management that has helped boost profitability.

The nature of its services and strong investment drive, as well as its understanding and exposure to the nation's financial market has supported the performance ratios in this result and those of previous years. The company's five-year strategic rolling plan since becoming listed in 2013 has revealed excellent performance in line with delighting shareholders with consistent dividend to support price on the exchange.

The scorecard revealed a 20.59 per cent rise in gross earnings toN2.54 billion from N2.11 billion in 2014. This was driven by the investments and income from the core service of share registration and administration. Within the period also, investment income grew by 20.32 percent to N1.62 billion from N1.35 billion, while 'other income' dropped by 37.25 percent to N32.33 million from N51.53 million. The huge impairment charges or losses during the year did not throw the company into a loss, although it calls for caution in the future, because such cost would have increased the company's bottom line to the advantage of its shareholders at the end of the day. Provision for the period grew to N52.87 million from N2.98 million in 2014, due to the high risk in the financial market environment especially with the decline in oil price in the international market that has made the global and local financial markets unstable. Despite this situation, the profit after tax of Afriprud increased to N1.45 billion from N1.22 billion in 2014, representing a 18.85 percent.

The up-trend in the company's financials for the year has supported its price and dividend of 60 kobo for 2015. The stock is currently selling at 2.50 each, which is slightly above its book value, which is a fair value for discerning investors. The company's  book value currently stands at N2.29and price to earnings ratio is 3.58x. Investors' waiting period has therefore reduced, as a result of improving earnings of the company.

AFRICA PRUDENTIAL REGISTRARS PLC
AUDITED REPORT FOR  2015
COY	2014	2015	% Chg
	(N)	(N)
Date Released	March 10, 2015	March 2,  2016
Price as@Rel.Date	3.15	2.59
Gross Earnings	2,109,020,000	2,543,282,000	20.85
Profit After Tax	1,218,367,000	1,447,938,000	18.85
Shareholders' Fund	4,526,082,000	4,574,968,000	1.08
Earnings Per Share	0.61	0.72	18.03
PE Ratio	5.17	3.58	-30.8
Earnings Yield	19.34	27.95	44.52
Book Value	2.26	2.29	1.33
Price to Book Value	1.39	1.13	-18.7
ROE	26.92	31.65	17.57
Profit Margin	57.77	56.93	-1.5
	Dec	Dec

  SOURCES: COMPANY DATA & INVESTDATA RESEARCH

Valuation/Recommendations

The continued improvement in the company's earnings is a major source of attraction for all stakeholders, regardless of the ongoing economic slowdown. The 2015 numbers is therefore an indication that the company would beat its earnings forecast for 2016. Its book value at N2.29 and profit margin of 56.93 per cent which is the highest in the market, signifies that the stock is fairly valued at the current market price on the strength of its Price-Earnings-Ratio of 3.58x, which is relatively okay in the market and low for its sector.
The company has consistently paid dividend since 2013, but has grown its 2015 payout by 71.43 percent to 60 kobo from 35 kobo in 2014. The management's commitment to deliver outstanding services to drive performance will support price in the short and long run. Based on this reality, we advise investors in the stock to HOLD and increase their stake as the market expect its first quarter earnings report any moment from now, which is likely to be positive. 

History

Africa Prudential Registrars Plc was established in 2006 and listed on the exchange in 2013 to provide share registration service. The company is a technology–driven Capital Market Investment Mediator (CMIM). It was fully owned by United Bank for Africa Plc before being quoted on the NSE, thereby becoming a publicly owned company with many shareholders. Its standard-delivery service for corporate organisations in the primary and secondary sectors of the capital market has always been its strong performance. 

Its 30 years of share registration experience in the Nigerian Capital Market has afforded the company opportunities to participate in various offers, including Initial Public Offerings, Right Issues, Debentures, as well as corporate and government bonds

Management

It is true that a company’s earnings performance reflects its management’s commitment, competence and ability to strategically re-position its products or services to drive profitability.
The impressive performance of Africa Prudential Registrars as shown in its latest full-year result, points to the need to encourage the management to continue its good work of posting strong earnings that could support its share price. 

The management team should be even more proactive in capturing more market share and building its top line to further boost profit in an environment where competition is daily becoming keener.

Performance Analysis

Looking at the numbers posted over the period of four years, it is obvious that the business environment remains challenging but the company has struggled through to continually post positive numbers that has supported payment of dividend following which its share price has remained above its listing price of January 2013. 

But then, a cursory look at the company's four -year (2012 to 2015) financials reveals that the management has surpassed its forecast and projection given when it was listed on the exchange four years ago with consistent rewards to shareholders.

Within the period, for example, the company has consistent grown its gross earnings and other performance indices. Gross income for the period grew by 70.80 percent to N2.54 billion from just N1.49 billion of 2012.
Profitability was more significant, rising from N561.65 million in 2012 to N1.45 billion and representing a 157.80 percent increase. This is very much in line with the commitment of management to grow earnings and manage cost as reflected in its profit margin for the review period.
Shareholders' fund on the other hand, currently stands at N4.57 billion from N2.37 billion in 2012 revealing an up trend in the last four years. The company’s dividend payment is a function of its strong earnings position for a long time, but the recent improvement in payout calls for more input to sustain the tempo.

AFRICA PRUDENTIAL REGISTRAS FOUR YEARS FINANCIAL PERFORMANCE
	2012	2013	2014	2015
Date Released		Feb. 17, 2014	Mar.10, 2015	Mar. 2, 2016
Price @ Released Date	3.00	3.37	3.15	2.59
Gross Earnings	1,489,015,000	1,854,276,000	2,109,020,000	2,543,282,000
Profit After Tax	561,651,000	914,456,000	1,218,367,000	1,447,938,000
Shareholders' Fund	2,369,233,000	4,333,482,000	4,526,082,000	4,574,968,000
Dividend	-	0.35	0.35	0.60

SOURCES: COMPANY DATA & INVESTDATA RESEARCH

Estimated Performance Ratios

The company's financial ratio for the period under review shows that the amount earned by investors and management were better at 72 kobo in 2015 than 38 kobo in 2012; 46 kobo in 2013; and 61 kobo in 2014. This is a reflection of the stable earning power of the company in an unstable risk business environment.

Price Earnings ratio is okay and attractive at the current estimate of 3.58x from a high of 7.91x in 2012. The last full year EPS is a yield of just 27.95 per cent of the market price as of the release date. This simply signifies an improvement on the stock's valuation by the market as against the posted numbers.
This was further indicated by the Book Value that ranges between the low of N2.14 and high of N2.29. Putting this ratio and the market price of the stock side-by-side, signals opportunity for medium and long term investors. The profit margin of the company over the years have improved as management effectively controlled cost to boost profit. 

AFRICA PRUDENTIAL REGISTRAR'S  ESTIMATED RATIOS
	2012	2013	2014	2015
EarningsPerShare	0.38	0.46	0.61	0.72
PE Ratio	7.91	7.37	5.17	3.58
Earnings Yield	12.65	13.57	19.34	27.95
Book Value	2.14	2.17	2.26	2.29
Price to Book	1.40	1.56	1.39	1.13
ROE	23.71	21.10	26.92	31.56
Profit Margin	50.96	49.32	57.77	56.93
Year End	Dec	Dec	Dec	Dec

SOURCES: COMPANY DATA & INVESTDATA RESEARCH