Sector: Other Financial Institutions
PAT: N486 million
Projected PAT: N1.94 billion
Projected EPS: 58K
Current Price: N7.35
Shares Outstanding: 3.37 billion
Market Cap: N24.77 billion
Forward PE: 12.67x
Forward Industry Average PE: 11.52x
Fair Value: N12.18
Crusader Insurance, which was formerly listed in the Insurance Sector of the Nigerian Stock Exchange applied for a change to be listed under the Other Financial Institutions Sector last week, as Crusader Nigeria. The company has obviously diversified away from the insurance sector, although they still have a subsidiary that is still in the industry. The company has acquired a brokerage firm and it is also into pension funds administration.
Crusader Nigeria released its first quarter unaudited result for the period ended March 2008 on the floor a few days ago. The turnover was grown from N757 million to N1.158 billion within the same corresponding period indicating a 52.97% growth. Profit before tax grew by 129.07% from N227 million to N520 million while after tax profit rose by 147.96% from N196 million to N486 million.
This company has been able to reduce its cost of sales as shown by the increase in growth in the profit before tax as compared to that of the turnover. The triple digit growth in profit after tax also shows that Crusader Nigeria is a growth company and has a lot of potentials if they can maintain it into the future. This could have informed the decision they made to raise money from the market via a hybrid offering, which we have been waiting for over the past four months, since the price was placed on technical suspension.
Based on this result, with outstanding shares of 3.37 billion, their earning per share will come to 14K with a linearly projected full year earning per share of 58K. At the current technical suspension price of N7.35, the forward price earning multiple is 12.67x and using it alone brings the fair value of Crusader Nigeria to N12.18, which means that the company is presently selling at a 40% discount.
Just like Deap Capital, the volume of Crusader Nigeria shares trading on the floor on daily basis is quite small compared with the total shares in issue and is also likely to go on a free fall if the technical suspension is released at this time. Even though there is a pervading pessimism surrounding the market at the moment, the company has sound fundamentals and investing in it will be a good decision for the medium to long term.