Stock price of CML expected to remain stable

On the Ghana stock exchange

CMLT’s recently released financials for 2017 signals an improvement in the company’s fundamentals. An evaluation of the company’s profitability shows an increment in its return to equity (ROE), return on asset (ROA) and earnings per share (EPS). EPS increased from GHS 0.03 in 2016 to GHS 0.04 in 2017. Return on equity and return on assets increased by 17% and 24% respectively. The increase in CMLT’s turnover from GHS 5.96 million in 2016 to 6.42 million in 2017 is a key driver of its 2017 performance in terms of profitability.


CMLT’s total assets turnover ratio increased from 1.16 in 2016 to 1.21 in 2017 indicating that the company used its assets more efficiently to increase its sales. Day sales outstanding and inventory turnover ratio however deteriorated. Inventory turnover ratio declined by 18% signaling that the number of times the company’s stock was sold and replaced fell in 2017. The day sales outstanding ratio also showed that CMLT’s collection period for trade receivables increased approximately by two days. The times-interest-earned ratio, on the other hand, swelled by 60.84% indicating that the company’s ability to meet its obligations on debt improved significantly placing it in good standing with its debtholders.


The share price performance of CMLT has not been volatile between 2016 and 2017 losing only a pesewa in September 2017. Its Market Value Added (MVA) was approximately GHS -1,303,917.84 in 2016 and GHS -1,875,666.54 in 2017 implying that management has not been successful at increasing shareholder wealth. GN analysts anticipate that the stock price of CMLT will remain fairly stable in the short to medium term based on its current performance.


Activity on the stock market ended with 13 gainers and 4 losers at week close. SCB topped the gainer’s list in absolute terms with GHS 1.88 to close the week at GHS 33.50. On the flip side, GCB lost GHS 0.30 to close the week at GHS 7.10. The Composite and Financial Stock Indices inched up by 3.22% and 3.44% to close the week at a YTD of 25.93% and 31.87% respectively. The outlook on the stock market performance for this week remains positive. GN analysts anticipate that returns on the market will appreciate, driven largely by capital gains on financial stocks.



On the Ghana alternative market

Trading activities on the GAX last week ended with 2,900 shares of HORDS worth GHS 290 changing hands.


On the Currency market

The Cedi made a recovery against the Dollar, Pound and Euro at week close. The local currency exchanged at a mid-rate of GHS 4.4186 to the USD, GHS 6.1034 to the GBP and GHS 5.4151 to the EURO as at week close. GN Market Analysts posit that the Cedi is poised to lose value marginally on the forex market in the short-term.


By GN Research

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