Chemical and Allied Products (CAP) delivered stellar results in 2024, amidst what was an extremely challenging year. Management needs to work on making the stock more liquid.

Revenue 

Revenue made during the period was N36.3 billion, 52% higher than the N23.8 billion it generated in 2023. 

N36.2 billion of revenue (the lion share)  was from sales of paint and the rest (N126 million) from services. 

Profit 

Profit after tax rose by 51% from N2.5 billion in 2023 to N3.8 billion in 2024. Profit margins dipped slightly year on year from 11% in 2023 to 10% in 2024. 

Simply put, for every N100 in revenue made by the firm in 2024, N10 was profit. The previous year, it was N11. Ideally, id like to see profit margin at N15 to N20, for every N100 in revenue.

Finance costs dipped sharply

There was a sharp dip in finance costs (which is nice to see). Im just wondering how it was achieved. Finance costs fell by 80.6% from N155.3 million in 2023 to N30.1 billion in 2024. 

What’s in it for shareholders?

The company has proposed a final dividend of N2.40 per share amounting to N1.9 billion. That’s a 54.8% increase from the N1.55 it paid last year. 

It also amounts to a 51.3% payout of the N4.67 in earnings it made during the period. 

One more thing 

Management however needs to address the liquidity of the stock, by giving a bonus issue. In my view, a 1 for 1 bonus.

The trading volumes for this stock are abysmal. 

A stock with a N38.2 billion market capitalization shouldn’t be trading 150 units a day.  

In the short term, a bonus would depress earnings, but they are growing at a decent rate.

5 year cumulative annual growth rate (CAGR) for earnings per share is 27% and revenue is 42% respectively.