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-   -   Fidelity Bank (http://www.stockmarketnigeria.com/forums/banking-stocks/336-fidelity-bank.html)

Stockbear 6th April 2007 01:41 AM

Fidelity Bank
 
What are your thoughts on this partnership? Will this improve/increase the number of ABC Transport's revenue?

Quote:

The Punch
5 April, 2007

Fidelity Bank partners ABC Transport on Travelsonline

Goddy Egene


FIDELITY Bank Plc has formed a partnership with ABC Transport Company Plc to ease the burden of travllelers in the country. The bank on Wednesday announced the introduction of a new product called Fidelitytravelsonline, an e-service solution that facilitates on-line bookings for passengers traveling in ABC Transport vehicles.

A statement from the bank said the product was designed to cater for inter-city travellers who have always contended with extreme challenges in making travel arrangements, ABC Transport offers time-sensitive departure schedules and appeals to discerning travellers within Nigeria and routes on the West African Coast.

The statement described Fidelitytravelsonlin as a revolutionary product that would give intending travelers the unusual ease of making reservations and effecting on-line payments for travel tickets in the convenience of their homes, offices, cybercafés or the nearest Fidelity Bank branch.




woroakara 26th June 2007 10:01 PM

Fidelity Bank
 
I Understand That Fidelity Wants To Come Out For A Public Offer And Of Course It Means Their Stock Price Will Soon Rise Astronomically From The Grape Vine.

Do You Know When??? And How Much They Will Sell???

c kenneths 27th June 2007 05:20 AM

No info readily available, we are of course keeping our ears to the ground.

olusolakemmy 27th June 2007 10:28 AM

they have perform very well interms of profit after tax and they keep saying they have a target and they will meet the target!!

generally, fidelity bank is a promising bank and public offer to boost share holders fund is not a bad idea.

we are expecting it!!!!!!!!!!!!!1

eriksbmw 27th June 2007 10:55 AM

I stated earlier that Fidelity is one of the few banks that derives significant income from core banking services.

Their stock is a good long term buy....if indeed they are about to raise funds then now may be the time to dive in and speculate a little !

c kenneths 4th July 2007 05:23 PM

fidelity prepares for share reconstruction
 
Arrangements are being concluded for fidelity bank to reconstruct their share capital in readiness for a public offering later this year.

Stacks 4th July 2007 08:38 PM

Yes, most of us read about it.. But why bring up Cement and Flour under a banking thread? Please note there are more applicable threads.

ibik_imam 5th July 2007 11:36 AM

Fidelity Bank share reconstrcution
 
Hi,
Does anybody have any idea how fidelity bank plans to carry out their share reconstruction. MY Ideas are
1. The might do either 3 for 1 or 2.5 for 1. I believe 3 for 1
2. Time scale will be when their share price reaches around N15 per share so that their new price (N45) will be at par with some of the big boys in the banking industry like GT bank etc.

But does any body have more info?

But Intend to sell some of my shares when it reaches N15 as I feel that the reconstructed price will have an initial fall before stabilizing.And for Profit taking

oseitutu 5th July 2007 01:40 PM

There are some trends which I noticed with the Nigerian Stock Exchange. Most stocks rise immediately they come out of technical suspension. Iguess it is because of the type of buy instructions stockbrokers get and also the sentiments attached to technical suspension....most times (excluding transcorp for obvious reasons). Hold your shares and sell in one year if you can. But just make sure you come back here to thank this string when you take your money!

windywendy 5th July 2007 01:58 PM

This whole share reconstruction thing is nothing but fraud on investors, and I'm surprised the NSE allows such things. If a company wants to reduce the number of its shares outstanding, it should simply just buy back its shares, rather than arbitrarily reducing the number of shares outstanding and arbitrarily increasing the price. Ultimately the price is determined by demand and supply and will usually end up falling back to what investors believe the company is worth. It's the investors that end up losing out in these so-called share reconstruction schemes. :mad:

oseitutu 6th July 2007 02:42 AM

Windywendy I beg to disagree with you on that one. Usually, the reconstructions I have seen recently sees the stock priced at a higher value: Access, Bank PHB. They are also more likely to pay dividends. I think it has to do with making everything uniform after all these mergers. There may be a management element there, but remember not all companies are liquid enough to buy back a lot of their shares!
After a reconstruction, the new price really is for the holders of the stock to benefit from. The company only has the par value of the shares. They are not benefiting directly from reconstruction.

windywendy 6th July 2007 04:23 PM

The question is not whether or not the share price goes up post reconstruction. The question for me is: will I as a shareholder be better or worse off after the reconstruction exercise? Take for example one of the banks in which I had shares in. The reconstruction reduced my shareholding in half but the price did not double! It went up quite alright, but not by 100%, an appreciation which would have left me just where I was before the so-called reconstruction. Management cannot just come out and reduce shareholding while arbitrarily increasing the share price. At the end of the day, demand and supply will prevail and the price will settle at a point investors think is the fair price. If the price settles above 100% of the pre-reconstruction price, then that's good (i'm referring to a situation where reconstruction reduces shareholding by 50%). But there's absolutely no guarantee that will happen. It's all dependent on demand and supply and the market's perception of the company.

As to your point about companies not benefiting directly from reconstruction, I beg to disagree. Reconstruction means they pay less dividends in future, as they get to reduce the number of shares outstanding. What's the sense in doing a share reconstruction only for the company to come out and issue further shares via a public offering? Access bank did a share reconstruction not too long ago and are now talking about a public offering. Same thing with Fidelity. It seems to me that management is just doing these so-called reconstruction schemes in order to make the company look good enough for prospective investors, which means they can go out there and make raise more cheap money.

In my opinion, a fairer deal would be to buy back the shares from the floor. Afterall, the investors paid money for those shares and if the company wants them back, the company should pay to get them back. I've never seen any other stock exchange where such reconstruction exercises are done, it's just baffling.

oseitutu 7th July 2007 01:28 AM

Quote:

Originally Posted by windywendy (Post 3489)
The question is not whether or not the share price goes up post reconstruction. The question for me is: will I as a shareholder be better or worse off after the reconstruction exercise? Take for example one of the banks in which I had shares in. The reconstruction reduced my shareholding in half but the price did not double! It went up quite alright, but not by 100%, an appreciation which would have left me just where I was before the so-called reconstruction. Management cannot just come out and reduce shareholding while arbitrarily increasing the share price. At the end of the day, demand and supply will prevail and the price will settle at a point investors think is the fair price. If the price settles above 100% of the pre-reconstruction price, then that's good (i'm referring to a situation where reconstruction reduces shareholding by 50%). But there's absolutely no guarantee that will happen. It's all dependent on demand and supply and the market's perception of the company.

As to your point about companies not benefiting directly from reconstruction, I beg to disagree. Reconstruction means they pay less dividends in future, as they get to reduce the number of shares outstanding. What's the sense in doing a share reconstruction only for the company to come out and issue further shares via a public offering? Access bank did a share reconstruction not too long ago and are now talking about a public offering. Same thing with Fidelity. It seems to me that management is just doing these so-called reconstruction schemes in order to make the company look good enough for prospective investors, which means they can go out there and make raise more cheap money.

In my opinion, a fairer deal would be to buy back the shares from the floor. Afterall, the investors paid money for those shares and if the company wants them back, the company should pay to get them back. I've never seen any other stock exchange where such reconstruction exercises are done, it's just baffling.

Okay, now let us assume the company buys back the shares from the floor. Remember that if you are a shareholder, you are part owner. The funds used to buy back the shares belong to you also. If the money for dividends is used to buy shares in the secondary market, where will the management get money to pay dividends? Also they will be buying at a premium, market price.

If you say reconstruction means they pay less dividends in the longer run, then you may have misunderstood what they do. Remember that dividends are rated as dividend yield at current price and PE ratio rates the earnings in relation to the current price. If with three of my shares worth say 3 naira each, dividend yield was 2%, after reconstruction I would expect the yield to be at least 2%. If it drops, it would immediately signal a red flag about reduced profitability. Also since relisting prices are determined by a lot of factors and with technical suspension, you can not start at a lower price than the suspension, the eventual winner is the holder of these restructured shares.

Like I mentioned earlier, look at Access Bank and look at Bank PHB. Bank PHB went on technical suspension at 3.06 naira. They then converted three shares to one and when they came out of suspension, their quoted price was almost 18 naira (instead of 9 naira). Now the shares are worth above 30 naira. Assuming one were to sell the three shares purchased at 9.18 naira, it would be mopre than 300% profit.

This practice may be froth with "wuru wuru", but it seems legal and allowed. If you are management, you too will do anything you can within limits of the law to make money for your organisation, isn't it? I have very little experience in the international front so I do not know whether it is done elsewhere.

c kenneths 7th July 2007 01:49 AM

Maybe the expected result for fidelity bank is good, and that may be why some investors are taking position in this company, the price keeps rising even when the market generally is heading southwards.
Fidelity ended the week at N12.12k

anekwlc 7th July 2007 03:04 AM

Not only that the fidelity share price is rising, the share is becoming scarce. My brooker told me on friday that he was not able to get my request

c kenneths 8th July 2007 03:47 AM

Quote:

Originally Posted by anekwlc (Post 3515)
Not only that the fidelity share price is rising, the share is becoming scarce. My brooker told me on friday that he was not able to get my request

And I was planning to buy more on monday.

wanaj0 8th July 2007 01:56 PM

Quote:

Originally Posted by c kenneths (Post 3526)
And I was planning to buy more on monday.


be careful. It will soon go on technical suspension. That's the reason for the price movements.

windywendy 9th July 2007 02:29 AM

Quote:

Originally Posted by oseitutu (Post 3510)
Okay, now let us assume the company buys back the shares from the floor. Remember that if you are a shareholder, you are part owner. The funds used to buy back the shares belong to you also. If the money for dividends is used to buy shares in the secondary market, where will the management get money to pay dividends? Also they will be buying at a premium, market price.

If you say reconstruction means they pay less dividends in the longer run, then you may have misunderstood what they do. Remember that dividends are rated as dividend yield at current price and PE ratio rates the earnings in relation to the current price. If with three of my shares worth say 3 naira each, dividend yield was 2%, after reconstruction I would expect the yield to be at least 2%. If it drops, it would immediately signal a red flag about reduced profitability. Also since relisting prices are determined by a lot of factors and with technical suspension, you can not start at a lower price than the suspension, the eventual winner is the holder of these restructured shares.

Like I mentioned earlier, look at Access Bank and look at Bank PHB. Bank PHB went on technical suspension at 3.06 naira. They then converted three shares to one and when they came out of suspension, their quoted price was almost 18 naira (instead of 9 naira). Now the shares are worth above 30 naira. Assuming one were to sell the three shares purchased at 9.18 naira, it would be mopre than 300% profit.

This practice may be froth with "wuru wuru", but it seems legal and allowed. If you are management, you too will do anything you can within limits of the law to make money for your organisation, isn't it? I have very little experience in the international front so I do not know whether it is done elsewhere.


Assuming the company buys back its shares from the floor, then I as a shareholder have the option of selling or not selling, rather than having my shareholding reduced against my will. The company does not necessarily have to use the money for dividends to buy back shares. Most companies have a consistent dividend policy, and a company that has been paying dividends will be unlikely to come out and not pay dividends unless it's in trouble.

With regard to the issue of dividends, most banks, when paying dividends will tell you they're paying xxkobo per share, and compare it to the previous year's. So assuming a company that paid 50k per share in the previous year reduces its shareholding in half. That means that for me as an investor to earn the same dividends they'll have to pay N1 per share in the subsequent year. Now, it's very very unlikely that'll happen. If the bank pays less than N1 per post-reconstructed shares, then it has paid less dividends.

The examples you cite are indeed the good ones, and I do believe that the the share prices of the examples you've quoted are overpriced mainly due to market sentiments and/or price manipulations, not because the companies are actually worth as much as the quoted prices. Of course for the short term investor that wants to make his quick returns and get out, this may look like a good deal, but for the long term investor it isn't. Please explain to me, what's the sense in access bank reconstructing its shares and then coming out to do a public offer that will again increase the number of shares outstanding? And to think that this is coming of the heels of the just concluded private placement that resulted in the listing of additional shares in the first place... It makes me wonder what was the original motive of the share reconstruction exercise in the first place? The private placement was done at a price that's even half of what they're offering as the PO price -- obviously, the private equity investor didn't think the market price was realistic, and must have put the fair value of the company at the N7.90 or so that they paid.

Obviously, with the way I feel about the share reconstruction thing, I wouldn't do it if I were management of any of these banks.

Onwuka Iroabuchi, S 9th July 2007 04:13 AM

Nigerian stocks&investment stratagies
 
Oseitutu,

I think Windy Wendy is right...you have to look at what the money houses are doing, besides spinning money like no man's business. They are managing our SE, Some thing ought to be done about these banks. Same people...same business...same money...higher dividend. The rest of country is just a can of worms and failed businesses.

Well, does anybody know anything about coffee...some Hatians friends of mine and Cote'd voirians are interested. Coffee beans from West Africa are the world best but who is selling.

oseitutu 9th July 2007 02:44 PM

Quote:

Originally Posted by windywendy (Post 3554)
The examples you cite are indeed the good ones, and I do believe that the the share prices of the examples you've quoted are overpriced mainly due to market sentiments and/or price manipulations, not because the companies are actually worth as much as the quoted prices. Of course for the short term investor that wants to make his quick returns and get out, this may look like a good deal, but for the long term investor it isn't. Please explain to me, what's the sense in access bank reconstructing its shares and then coming out to do a public offer that will again increase the number of shares outstanding? And to think that this is coming of the heels of the just concluded private placement that resulted in the listing of additional shares in the first place... It makes me wonder what was the original motive of the share reconstruction exercise in the first place? The private placement was done at a price that's even half of what they're offering as the PO price -- obviously, the private equity investor didn't think the market price was realistic, and must have put the fair value of the company at the N7.90 or so that they paid.

Obviously, with the way I feel about the share reconstruction thing, I wouldn't do it if I were management of any of these banks.

If you reconstruct shares, you do not pick up new capital from the public, but if you do a public offer or private placement, you pick new money.


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