Fidson Healthcare Plc’s stock dropped to a 52-week low of N12.5 per share at the start of trading on August 26, 2024, marking a significant 25% decline from its year-end high of N17 recorded in December 2023.
The pharmaceutical company’s shares are facing intense sell-side pressure, with analysts warning of a potential further drop to N11.
The downward trend follows the release of Fidson’s second-quarter results for the period ending June 30, 2024.
The results revealed a 50% year-over-year decrease in revenue, with operating profit plunging by 55% and pre-tax profit plummeting by 68%.
This disappointing performance has amplified the bearish sentiment surrounding the stock, driving it down by 13% between June and August 2024.
Key Insights
Fidson’s revenue dropped by 50% in Q2 2024 compared to the same period in 2023, falling from N37 billion to N18 billion.
- The company’s pre-tax profit fell by 68% year-over-year, largely due to escalating expenses linked to foreign exchange costs and the naira’s devaluation.
- Investor sentiment has soured, with the volume of sellers in the market surging by 201% from April to June 2024.
- The stock experienced some volatility in July, dipping to N13 before recovering to N14 by the end of the month.
- However, renewed selling pressure in August dragged the price back down to N12.5 before it managed a slight recovery to N13 by the fourth week of the month.
Dividend and Capital Raise: On July 4, 2024, during its Annual General Meeting, Fidson’s shareholders approved the board’s proposal to raise up to N20 billion in additional capital.
The funds are intended to support the company’s operations amid its declining revenue.
The capital raise could be executed through various methods, including a public offering, rights issue, or private placement.
In addition to the capital raise, shareholders also approved a dividend payout of 60 kobo per share, totaling N1.3 billion. This represents a 9.1% increase from the 55 kobo per share dividend distributed in 2022, which amounted to N1.2 billion.
This strategic move to inject fresh capital underscores Fidson’s need to stabilize its operations and navigate the challenging economic environment.