The bears have taken over the alcoholic companies as investors take out their investment from Guinness, Nigerian Breweries, International Breweries despite exit from COVID-19 mystery for three consecutive weeks.
In a market analysis by Ripples Nigeria, it was noticed that the bears are bleeding the three major alcoholic companies dry as investors seem to believe the market will go negative.
Investors’ Confidence drop after COVID-19 mystery
The three weeks sell-off followed the release of Nigerian Breweries, International Breweries and Guinness financial statements for the period ended June 30, 2021.
Nigerian Breweries and International Breweries had released theirs at the end of July 30, 2021, posting that they generated N103.58 billion and N42.99 billion in revenue respectively, for Q2 this year
This is significantly above the N68.65 billion recorded by Nigerian Breweries and N25.26 billion generated by International Breweries during the COVID-19 lockdown in Q2 2020 – it represents 51.5 percent and 70.2 percent year-on-year growth respectively.
Guinness, which released its financials on August 26, 2021, had revealed that its revenue for Q2 rose by 54 percent to N160.41 billion, in contrast to the N104.37 billion it generated during Q2 2020.
Note that the nationwide lockdown had affected production volume, sales, and distribution across Nigeria. Business-to-business contracts were also impacted as on-trade and off-trade businesses were also shut down.
Hotels, bars and restaurants, supermarkets, were only opened towards the fourth quarter, hence, the low revenue recorded by Nigerian Breweries, Guinness, and International Breweries.
But the revenue growth across the three major brewers in Q2 2021 failed to attract the bulls or boost investors’ confidence in the companies short-term growth, leading to shareholders entering profit-taking mode.
Ripples Nigeria traced investors’ activities in Guinness, Nigerian Breweries, International Breweries, and discovered that they experienced four weeks bearish run that depreciated their market value by 2.20 percent, 16.5 percent, and 7 percent respectively.
Nigerian Breweries major loser as brewers lose N82.90 billion
Nigerian Breweries, Guinness, and International Breweries lost N82.90 billion to investors mass exit in the last four weeks, making August a bloody month for the alcoholic companies.
Analysis of Nigerian Breweries, which is the market leader, showed that exiting shareholders of the company lost N71.97 billion during the period under review.
This makes the producer of Star lager beer, Gulder and Maltina, the highest loser, after its market valuation dropped to N383.85 billion as at September 3, 2021, below the N455.82 billion reported on August 9 – its stock is currently valued at N48 per share against the latter’s N57.
Shareholders of Guinness Nigeria, the second largest market shareholder, lost N1.53 billion to the bears whose rampage cut the brewer’s value to N67.90 billion at of September 3.
The sell-off among Guinness investors pushed the market capitalisation down from N69.43 billion of August 9, 2021, after the stock price crashed to N31 per share, from N31.70 kobo per share.
The third largest market shareholder travelled same path with its rivals, as profit-taking by International Breweries’ investors caused the company N9.40 billion in investment.
International Breweries’ market value dropped by 7 percent within the bearish four weeks, to settle at N124.90 billion, as of September 3, below the N134.31 billion it was valued for on August 9 – this was caused by the depreciation of the stock price from N5 to N4.65 Kobe per share for both period respectively.
Note that while the sell-off in Nigerian Breweries and International Breweries occurred after the financials of both companies were released, that of Guinness happened weeks into the release.
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