I have decided to reshuffle my portfolio and want to dedicate a certain percentage for a particular company that has a high growth potential.
I hunted through the NSE for companies that have less than 500 million shares, have their share prices less than and around N30 and have been performing well over the past two years. I was able to come up with Okomu Oil, Presco, RT Briscoe and Nigerian-German Company. After a quick acid test, in which I determined to buy into one that was relatively cheap with price earning ratio less than 20x, I came up with Nigerian-German Company and RT Briscoe. I have decided to analyze RT Briscoe today and I will do that of Nigerian-German Company (NGC) tomorrow.
All I have at the moment are their recent financial results which I will analyze quickly along with that of NGC. I will have to go to their head offices to get their annual reports for the past 4 - 5 years, digest them and make up my mind about which one is better to invest in for the long term.
RT Briscoe is one of the companies in the Automobile and Tyre sector of the NSE and probably the most visible of all them. The others are Dunlop, Incar, Intra Motors and Rieztcot; they are all penny stocks and are presently struggling to make ends meet as it is. RT Briscoe recently collaborated with Ford to market their cars in Nigeria and it has virtually made them a force to reckon with in the car sales industry in Nigeria. I met some of their staff in Lagos Business School, which means that it is a company that value their staff.
They released their full year results for the period ending December 2007 on the floor of the NSE in March. There was a 23.4% increase in turnover compared with the same period in December 2006 from N13.162 billion to N16.239. Profit before tax rose within the same period from N745.274 million to N899.306 million which indicated a 20.7% rise while profit after tax rose by 14.7% from N531.776 million to N609.943 million. The financials indicate a stable and a good growth margin.
The returns on equity rose from 2.93 to 3.36 within the same period. Their full year earning per share is N1.68 which means that their price earning multiple is 16.29x at the current price of N27.36. This gives a discount of 41% based on the fair value of N38.63.
That means that RT Briscoe at the moment is a good buy but I still have to analyze NGC and then get their annual reports for the past 4 - 5 years before I make up my mind on which one I will accumulate for the long term.
I wish myself happy hunting.