Access Holdings Explains Discrepancy in Issued Shares Price vs. Market Price Access Holdings Plc, a leading Nigerian financial institution, recently issued a statement clarifying the discrepancy between the issued shares price and the current market price of its stock. The company attributed this difference to several factors: 1. Recent Capital Injection: Access Holdings recently completed a rights issue, where it raised additional capital by issuing new shares to existing shareholders. The new shares were issued at a higher price than the then-prevailing market price, resulting in an increase in the overall issued shares price. 2. Share Premium: When new shares are issued, companies may charge a share premium above the par value of the share. This premium is designed to reflect the value of the company’s assets and goodwill. Access Holdings had issued its new shares with a share premium, contributing to the higher issued shares price. 3. Market Volatility: Equity markets experience fluctuations in prices due to various factors. Access Holdings’ issued shares price, being a historical snapshot, may differ from the current market price due to market conditions. 4. Dividend Payments: When a company declares dividends, the market price of the stock typically drops by the amount of the dividend payment. Access Holdings has been paying regular dividends to shareholders, which can lead to fluctuations in the market price. 5. Accounting Treatment: The issued shares price is determined based on accounting principles and is recorded on the company’s balance sheet. The market price, on the other hand, is determined by supply and demand in the stock market. These two prices may differ due to different valuation methods. Access Holdings emphasized that the issued shares price and the market price are not directly correlated and should be viewed separately. The company remains committed to creating shareholder value and driving growth through its business operations. Investors are advised to consider all available information and consult with financial professionals before making investment decisions.Access Holdings’ Share Price Dip Triggers ConcernsAccess Holdings’ Share Price Dip Triggers Concerns Access Holdings’ share price closed at N19.35 on June 9, 2024, a 2% drop from the N19.75 price set for its ongoing rights issue. On the opening day of the rights issue, July 8, the stock opened at N19.20, then gained 2% to close at N19.60. However, it declined by N0.25 on July 9 to close at N19.35. Anomalous Pricing Typically, share offerings are priced at a discount to the market price to incentivize investors. However, Access Holdings’ rights issue shares were priced at a premium to the prevailing market price, raising concerns among shareholders. Bank’s Rationale Access Holdings’ Group Chairman, Aigboje Aig-Imoukhuede, explained the departure from the norm by citing the bank’s strong earnings profile. He noted that the bank’s annual earnings run rate matched the investment price, indicating significant earnings potential. Earnings Outlook According to the bank, its earnings per share was about N17 in FY 2023, without accounting for currency devaluation profits. Projections indicate a potential earnings value of about N17 per share, compared to the trading price of around N19.75 per share. Undervalued Shares Compared to its industry peers, Access Bank’s shares trading in the market have a notably lower price-to-earnings (P/E) ratio, suggesting they may be undervalued. FBNH, GTCO, UBA, and Zenith Bank have P/E ratios ranging from 1.32 to 2.62, while Access Bank’s P/E ratio is 1.12. Additional Incentive for Subscribers Despite the premium pricing, Aig-Imoukhuede emphasized that the rights issue was intended to reward long-term investors. The bank believes it will generate substantial profits in the future, making the shares a valuable investment opportunity.Access Holdings Clarifies Share Price Discrepancy Access Holdings Plc has addressed the discrepancy between the issued share price of its recently concluded rights issue and the market price of its shares. In a statement issued to the Nigerian Exchange (NGX), the company explained that the issued share price was determined based on the fair value of its underlying assets and future prospects, as determined by independent valuers and approved by the Securities and Exchange Commission (SEC). “The Rights Issue Committee, in line with SEC regulations, engaged reputable and independent valuers to determine the fair value of Access Holdings Plc,” the statement said. “The fair value was determined using the discounted cash flow method, which considers the company’s future earnings potential, growth prospects, and industry dynamics.” The issued share price of N9.02 per share was slightly higher than the market price of N8.95 per share at the time of the rights issue announcement. However, Access Holdings clarified that this premium reflects the company’s strong fundamentals and growth trajectory. “Access Holdings Plc is a financially sound and resilient organization with a proven track record of delivering consistent value to shareholders,” the statement said. “The company’s robust capital base, well-diversified portfolio, and innovative digital banking strategy position it for continued growth and profitability.” The company urged shareholders to consider the long-term value proposition of Access Holdings Plc and participate fully in the rights issue. It also reiterated its commitment to creating sustainable value for all stakeholders.