United Bank for Africa is one of the companies that I have always known will create a lot of wealth for their shareholders. They pride themselves as one of the biggest, if not the biggest, bank in Nigeria. They showed the stuff they were made up of when they released their 2nd quarter results for the period ended March 31, 2008 on the floor of the NSE on Friday, May 16, 2008. They declared a bonus of 25K per share and a bonus of 1 for every 2 shares owned; fliers were distributed on the trading floor detailing the results for the period and the stock went on serious demand. It gained maximum points of 5% on the same day.
The results showed that they were able to grow their turnover by 67% from N46.883 billion to N78.103 billion within the same corresponding period, while profit before tax grew by 71% from N11.761 billion to N20.125 billion. After tax profits also rose from N10.765 billion to N18.420 billion indicating a 71% growth. They came out with a press release a few weeks ago saying that their year end is going to be December 2008 as against September 2008, because of the CBN law for the unification of year end for all the banks in Nigeria. Hence, they are going to declare a 15-month year end results in December 2008. That simply means that their projected year end earning per share is going to be around N4.08, which means that at the current price of N60.90 their forward price earning multiple will come to 14.93x but a year has 12 months and not 15 months meaning that the results is not going to be a true reflection of the strength of the bank.
The true forward price earning multiple of the bank is 18.68x meaning that the real value of the bank based on the results is around N75. I am eager to see how far the price will go before the closing of register, which will be between June 2 - June 4, 2008.