Caverton Shares Rise on Renewed Demand by Bargain Hunters
By Goddy Egene
Bargain hunters, who see a long term value in the shares of Caverton Offshore Group Plc last week swooped on the stock to take advantage of its low price last week.
Consequently, the stock rose by 13.4 per cent to lead the price gainers for the week. The equity rose from N0.67 to N0.76 per share. Caverton, which got listed two years ago at N9.50 per share has suffered unprecedented decline. This year alone it went down by 69 per cent as a result of dwindling fortunes in the face of headwinds in the oil gas sector where it plays a leading role as a servicing firm.
However, some investors are taking advantage of the share price, with the hope that its fortunes will recover in the very near future. Besides, the company has embarked on a diversification programme.
“To any discerning and long term investor, the current price of Caverton is very attractive. So I am not surprised that some of those investors are taking advantage of the price now,” a stock broker said.
Caverton is diversifying its services into other sectors and new markets following the challenges in the oil and gas sector of the Nigerian economy.
Due to the challenges facing its clients in the oil and gas sector as a result of the decline in price of crude oil at the international market, Caverton decided to diversify its operations.
Speaking on the diversification, the Group Chief Executive Officer of Caverton, Mr. Bode Makanjuola, had said: “We are working tirelessly to broaden our service offerings through diversification into other sectors, as well as geographically into newer markets in a bid to boost our non-oil and gas revenues.”
According to him, in the first quarter of this year, the company successfully signed a new five-year contract in its helicopter operations to manage and operate a fleet of aircraft for the Lagos State Government.
Makanjuola said the company was also making steady progress with the construction of their new Maintenance, Repair & Overhaul facility (MRO) at their Ikeja base, adding that the timeline for delivery of the MRO is still on track for end of 2017.
The company ended the half year to June 30, 2016 with a loss of N2.422 billion compared with a profit of N1.093billion in the corresponding period of 2015.
Caverton attributed the poor results to the unavoidable impact of the recent Naira devaluation which took place within the second quarter of the year.
It said the impact of the devaluation by the Central Bank of Nigeria (CBN) resulted in unrealised foreign translation loss arising largely from the groups’ dollar denominated borrowing used to finance core assets in both its Helicopter and Marine businesses.