Share Price Performance Review (2nd Quarter 2015)
Shares of HFC began the second quarter (Q2) of the year 2015 at a price per share of GH¢1.55 per share. The share price rose steadily to a price of GH¢1.72 before closing the quarter at a price of GH¢1.60 for the three months to June 2015. HFC shares has thus registered 6.67% appreciation in price during that period.
Activities in HFC shares on the Ghana Stock Exchange (GSE) has been generally low compared to other financial stocks on the market. This could be attributed to the then on-going mandatory take-over (MTO) offer period by Republic Bank to shareholders of HFC at an attractive price of GHS1.90.
This is because retail shareholders who usually drive prices on the Market, were attracted to the offer price of Republic Bank of Ghs1.90 per share. Hence the lack of trading activities in HFC during that period. HFC closed the half year 2015 trading at a forward (annualized) Price-Earnings (P/E) multiple of 7.90 times, above the average of its peers on the GSE at 7.82 times.
HFC’s Price-Book Value (PBV) was 1.93 times, with the average of listed banks*at 2.33 times. HFC Bank paid a dividend of GH¢0.06 per share for the 2014 financial year. Its dividend yield is currently at 3.75%, compared to that of the average of Listed Banks at 4.73%.
The MTO by Republic Bank had shareholders sell 51,286,733 HFC shares representing 17.25% to Republic Bank. This increased Republic Bank’s stake in HFC shares to 57.11%. The issued shares of HFC remained the same at the close of the second quarter 2015 at 297.36 million shares and a market capitalization of GH¢475.78 million as at June 30, 2015.
The rapid increase in share price as a result of the takeover offer price may see a correction, going forward. HFC fundamentals are quiet healthy and it is expected to take advantage of the international dimension that Republic Bank brings to bear on its image. With this, HFC Bank can be said to be poised for long term sustainable growth, not forgetting opportunities within Ghana.
HFC currently intends to grow most of its Universal Banking businesses to deliver value to its shareholders by being one of the top three banks in Ghana in three years. This would impact positively on its share price performance eventually. Medium and long term investors are encouraged to HOLD their shares in HFC.