Red Star Express
This company is listed under the Commercial Services Sector of the NSE and they are basically the franchise of Fedex in Nigeria.. They have expanded their operations into distribution and warehousing services to meet global trends, which means that they are presently a growth stock.
They released their third quarter results for the period ended December 31, 2007 a few months ago on the NSE which showed that they were able to grow their turnover by 16.1% from N2.075 billion to N2.409 billion, while their profit before tax was raised by 35.09% from N228 million to N308 million. This means that they have also been able to work on reducing their cost of sales which has had a positive impact on their bottom line. Profit after tax grew by 34.38% from N160 million to N215 million.
The company presently has about 590 million shares in issue, which means that their earning per share for the period is 36K and their projected year end earning per share will come to about 49K. This means that at the current price of N8.46, their forward price earning multiple will come to about 17.26. Its fair value is around N10.78.
Hmm! It is scarce to see a growth stock come that cheap because they are risky investments and their prices usually factor that into the equation and make them come at a higher price earning multiples. I believe that Red Star Express is a good buy as the prices will reflect that in due time.
