Ghanaian oil palm plantation and company, the Benso Oil Palm Plantation (BOPP), has performed tremendously well on the Ghana Stock Exchange (GSE) since the start of this year – 2023.
From a year-low price of GHS 7.65, the equity rose in share price by 84.4% to a year-high of GHS 14.11 before marginally declining to GHS 14.00, a share price it has maintained for months.
The 84.4% rise in share price in monetary terms means a gain of GHS 6.46 for traders who bought the equity when it was trading at GHS 7.65.
BOPP per data from the GSE, boasts of a dividend yield of 14.81% which is significantly above the 2.04% average dividend yield of companies on the GSE, on the back of some GHS 2.074 paid as total dividends per each share at the end of 2022.
The higher dividend yield mainly implies that the company pays to shareholders as dividends, a significant portion of its net profit. It also gives an indication of the expected returns on the BOPP equity.
The equity also boasts of an Earning Per Share (EPS) of GHS 4.08 and Price Earning (P/E) Ratio of 3, beating MTNGH equity which is a regular gainer and among the top picks on the local bourse in terms of dividend payments (GHS 0.16 for MTN), dividend yield (12.06% for MTN) and EPS (GHS 0.24 for MTN).
The telecommunication giant, however, beats BOPP in terms of P/E ratio with MTN recording a P/E ratio of 6 and BOPP recording a P/E ratio of 3.
The EPS measures distributable profit available to shareholders whereas the P/E ratio measures how highly investors value a company’s ability to grow its income stream. It is no surprise that MTN has a higher P/E ratio than BOPP given the relatively strong fundamentals of MTN and also the fact that MTN is considered more of being a Blue-Chip company on the Ghana Stock Exchange (GSE) by being able to remain profitable irrespective of the economic environment – whether during bad or good economic periods.
Based on its first-quarter performance for this year, BOPP boasts of a remarkable surge in its total assets, climbing from GHS 248 million to an impressive GHS 349 million. BOPP’s financial results for Q1 2023 showcased an impressive surge in its total comprehensive income. The company recorded a noteworthy figure of GHS 35 million, which represents a significant increase compared to the GHS 29 million recorded in the corresponding period of the previous year.
The company’s liabilities however rose from GHS 34 million to GHS 43 million, despite the increase in liabilities, BOPP has enough assets (8x the value of liabilities) to cover its liabilities. This means that should the company cease operations today, it can settle or pay for its debts eight (8) times.
Admittedly, trading in BOPP equities has slowed with the recent trading in the equity being last Wednesday, July 19, and Monday, July 24, 2023, with some 156 and 105 total shares traded amounting to some GHS 2,184 and GHS 1,470 respectively.
Share price, dividend yield, dividend payments, earnings per share and P/E ratio of BOPP are all expected to inch up in the short to medium term as inflation driven mainly by increment in food prices is expected to remain high only reducing to single digits and reverting to the Bank of Ghana’s medium term target of 8+-10 in 2025.
BOPP is expected to benefit from high food prices resulting in increased income, higher dividend payments and higher share price.
This is because BOPP is a company operating in the food sector, which is among the “defensive sectors” group which usually performs well during periods of high inflation and even economic downturns due to the fact that such goods cannot be done away with and as such high demand for such goods persist.
Examples of the “defensive sectors” in which some companies operate include health, telecommunication, food and utility.
BOPP has 34.8 million shares listed on the Ghana Stock Exchange (GSE) with a market capitalization of GHS 487.2 million.
The above information is based solely on the fundamental analysis of BOPP given its performance at end-2022 as well as its year-to-date performance (from January 1 to July 24) on the GSE. No technical analysis was considered in this write-up.