BOPP is a hold

On the Ghana stock exchange

BOPP remains a viable stock for investment as the company has maintained growth in its earnings year on year. Its revenues and profits after tax have grown at compound annual growth rate of 20% and 16% over the past five years.

Its return on equity (ROE) increased from 14.6% in 2016 to 19% in 2017. The company’s ROE for the past five years has ranged between 13.3% and 21.5%. Its return on assets also increased to 16.6% in 2017 from 12.2% in 2016.

BOPP’s ability to effectively use its assets to generate revenues increased with its total asset turnover rising from 1.12 in 2016 to 1.19 in 2017. Its total asset turnover has varied between 0.77 and 1.19 over the past 5 years. The company is largely financed by equity and has over the past five years carried no obligations on long-term debt. The number of times the company replaced and sold its stock declined with its inventory turnover ratio falling to 12.36 in 2017 from 14.90 in 2017. Its inventory turnover in 2017, however, remains above its five-year average of 11.68. BOPP’s day sales outstanding which indicates the number of days it takes for the company to receive cash on its credit sales also increased to 35 days in 2017 from 29.27 days in 2016 indicating the need for it to speed up collections on its receivables to improve its cash flow. The company’s ability to cover short-term liabilities also improved with its current ratio increasing to 2.57 in 2017 from 1.79 in 2016.

In terms of its share price performance, BOPP’s share price appreciated significantly in 2017 rewarding investors with a YTD return of 194.23%, the highest on the bourse. YTD return on BOPP currently stands at 17.32%. It is anticipated that the company will continue to grow its earnings through effective management practices coupled with the expected rise in fresh fruit bunch yields in 2018 resulting from its sustained nutrition programme and good rainfall in previous years. Additionally, the price of oil palm is expected to rise based on World Bank’s forecasts. The intrinsic price of BOPP has been pegged to GHS 7.50 based on current valuation. BOPP is a hold.

The Composite and the financial stock indices dipped by 0.47 points and 10.81 points to peg at a YTD return of 33.23% and 35.83% respectively. There were 5 gainers (FML, TOTAL, PZC, SOGEGH & SCB) and 2 losers (GCB & EGL). FML topped the charts in terms of volume as 92,100 shares worth GHS 1,620,672 changing hands.

On the Ghana Alternative Market

Trading activity on the Ghana Alternative market was hushed as no shares changed hands.

On the Currency market

The Cedi appreciated marginally against the British Pound and the Euro at the end of yesterday’s trade. The Cedi to Dollar exchange rate remained stable. The local currency exchanged at a mid-rate of GHS 4.4042 to the USD, GHS6.2652 to the GBP and GHS 5.4480 to the EURO as at the end of yesterday’s trade. The GCFM Cedi index, a measure of the holistic performance of the Cedi on the interbank market now records a year-to-date depreciation of 1.58%

 

By GN RESEARCH

Leave a Reply

Your email address will not be published. Required fields are marked *