Deap Capital Management and Trust is one of the companies that I am really glad to have my portfolio despite the fact their price has been on technical suspension for a while now. They are still in the process of coming to the market for an IPO to raise N17 billion.
They released their half year results for the period ended March 2008 recently on the floor of the NSE, which showed very strong financials. They have a management that really means business going by the way they have been growing their profits margin.
A breakdown of the results revealed that turnover for the period appreciated by 242.5 percent from N220.7 million in 2007 to N755.9 million in 2008. Profit before tax grew by 470.2 percent from N11.2 million in 2007 to N74.5 million in 2008. After tax profit also increased from N75.8 million in 2007 to N422.3 million indicating an increase of 456.9 percent. They have been able to increase their profit margin going by the percentage increase in profit before tax.
Deap Capital has been able to increase return on equity from 0.14 to 0.84, with a possible year end ROE of 1.68, which is not too bad. They have also been able to grow their earning per share for the 2nd quarter to 42K from 13K in the 1st quarter, which means that their projection for the year end from the 1st quarter have been thrown into a non-linear positive spin. Their projected year end earning per share now comes to 84K making their forward price earning multiple at the current price of N8.70 to drop to 10.36.
This has effectively made Deap Capital one of the cheapest stocks in the NSE with a conservative fair value of N18.47, which means that it is presently selling at a 53% discount.