United Capital: The good and the bad

On Tuesday, United Capital Plc released its audited results for the 2019 financial year.

  • Gross earnings declined from N9.2 billion in 2018 to N8.5 billion in 2019, down 7.6% year on year.
  • Profit before tax declined from N6.2 billion in 2018 to N4.9 billion in 2019, down 20.9% year on year.
  • Profit after tax, however, increased from N4.3 billion in 2018 to N4.9 billion in 2019, up 13.9% year on year.
  • The increase in profit after tax was due to an income tax writeback, as against a N1.8 billion tax bill in 2018.
  • The group has declared a N0.50 dividend, amounting to a 60.2% payout of its earnings.
  • It also amounts to a 66.6% increase from the N0.30 paid in the previous year.

United Capital, a Treasure in the Mire, United Capital Plc announces close period ahead of Q3 2019 results, United Capital Plc announces dividend payment for the financial year ended December 2019 , United Capital: The good and the bad

The good

The asset management arm’s partnership with fintech Cowrywise seems to be paying off, as it had a massive increase in Asset Under Management. Funds under management grew by a whooping 518% from N7.7 billion in 2018 to N40.2 billion in 2019.

In a press release following the release of the results, the firm stated that it had successfully positioned the wealth management arm on the path of profitability.

The firm is also diversifying, as it has set up a consumer finance arm, UC finance, and obtained an operating licence in Ghana.

The bad

There was no breakdown of the profit made by each unit; as such, it is hard to tell which are the best and worst performers. The 2019 profit before tax is one of the lowest in the last 5 years.

The firm should have also given more clarity as to the deferred taxes which were written back.

Where will the price go from here?

Price movement in the short term is a bit difficult to predict. The company’s share price had this week hit a 6 month high of N3.

United Capital: The good and the bad

A bumper dividend payout means shareholders could decide to take positions in the stock, both for capital appreciation and in terms of dividends.

Year to date, the share price is up 22.1%, outperforming the NSE All-Share Index, which is up 2.63%, year to date.

Shareholders could sell down if bearish sentiments persist on the exchange as a whole. February has been a largely negative month for the NSE All-Share Index.

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