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By Chinwendu Obienyi
Investors trading on the floor of the Nigerian Exchange Limited (NGX) increased their demand for shares of Vitafoam Nigeria Plc which led to its share price to rise by 15 per cent at the close of business on Friday.
Following heated demand, the company’s share which opened at N12.40 per unit on Monday rose steadily by N1.85 per unit to hit N14.25 on Friday, an increase of 15 percent despite market volatility.
Security dealers who spoke to Daily Sun, have ascribed the ongoing massive demand for shares of the company by investors due to the fact that the stock is underpriced relative to its intrinsic value. The Executive Director, Reading Investment, Kanmi Osobu, noted that the company has been doing well over the years but the market did not reward it accordingly.
“It is glaring that the company’s share is undervalued, compared with its consistent outstanding performance. With Earnings Per Share (EPS) of N2, why should Vitafoam be trading at N8? The company’s share price has capacity to move higher. This I believe has triggered demand for the stock by discerning investors.”
Corroborating him, the Managing Director/ CEO, Network Capital, Oluropo Dada, explained that Vitafoam had always maintained a stable board and management structure with a seamless succession plan. Dada noted that Vitafoam enjoyed the premier position of being the only company listed in its sector.
According to him, the company has remained resilient in the wake of the ongoing tough operating environment.
“A good company operates under a stable board and management. Succession plan in Vitafoam is seamless. The company has always rolled out innovative products. But the company’s performance has not really reflected in the pricing of its shares in the secondary market. There is no doubt that under-valuation of the stock is fast attracting investors into the company at the moment”, he said.
The manufacturer of rigid foam, furniture and other household equipment which recorded an outstanding financial performance last year also posted a net profit after tax of N1.11 billion in the first quarter of this year. Already, the group is showing sustained improvements across key performance indicators.
The company’s Group Managing Director, Taiwo Adeniyi, had earlier noted that the company placed premium on innovative human capital, product and services.
“As a matter of corporate policy, we do continuous improvement on our products. We sell high margin products. We are highly connected with our customers. We know their different needs and as such our products always gain acceptance in the market. Our foams and other products meet specific needs.
“We launched Buy Right, last year, when our research revealed that different weights require different types of foams. We do not just sell to customers, we offer health counseling to advice on the specific foam for individual customers. This has greatly endeared us to our customers”, he said.
