Julius Berger Nigeria Plc led the gainers chart of the Nigerian Stock Exchange (NSE) last week as discerning investors move to position themselves ahead of the announcement of its audited results for the financial year ended December 31, 2007.
The share price of the company rose by N10.14 to close the week at N109.15. Investors exchanged 314,385 shares worth N33.605 million in 20 deals.
The reason for the renewed confidence in the shares of the construction giant may not be unconnected with anticipated improvement in its audited accounts and likely returns on investment against the backdrop of the favourable investment climate in the Nigerian construction industry.
During the financial year ended December 31, 2006, Julius Berger reported a turnover of N56.9 billion as against N39.84 billion in 2005. Its profit after tax stood at N1.12 billion compared with N626.9 million in 2005.
The directors recommended a dividend of 90 kobo per share which was approved by its shareholders at the company’s last year yearly general meeting.
Against this backdrop and given the massive infrastructural development as well as the strategic position of Julius Berger in the industry, it is being speculated that the company would do better both in operational performance and returns on investment.
The Nigerian construction industry is currently enjoying a boom because of the robust pace of economic activity resulting from the economic restructuring such as reduction in external debt and the policy drive by the Federal Government and state governments to dedicate resources towards significantly improving infrastructure such as road networks, water dams, power projects among others.
Also, there is increased demand for quality real estate projects in key cities due to the rural-urban migration and the concentration of commercial activities by companies and other institutions in these cities.
The construction industry has many participants but it is dominated by a few players.
It is also a high growth sector in terms of revenue
Julius Berger is one of the companies in the stock market with low capital base and also because majority of its shares are held by institutional investors, only a few of the shares held by Nigerian citizens and associates are available for trade because institutional investors hardly trade their shares unless when they are divesting.
In that case, such shares are either sold through a special sale offer on the NSE or through a block transfer to a new strategic investor.
As at December 31, 2007, Julius Berger has an authorised share capital of N172.5 million out of which N150 million is paid up.
Analysis of its ownership structure shows that Bilfinger Berger AG holds 49.87 per cent of the issued shares, Lagos State Government (Ibile Holdings Limited) 10.38 per cent, Plateau State Government (Plateau Investment Company Limited) 4.6 per cent, Nassarawa State Government (Nassarawa Investment Company) 0.08 per cent, Benue State Government (Benue Investment Company Limited) 5.2 per cent while Nigerian citizens and associations 29.87 per cent