MPICO stock price set To rise—analyst, MSE

Malawi Stock Exchange (MSE) and a market analyst say they expect the stock price of Mpico Limited, currently at K8 per share, to jump following the listing of 1.1 billion rights shares on the local bourse yesterday.

The listing of the shares followed the closing of Mpico rights issue on November 11 2016, raising K9 billion—a huge feat at a time the economy is wobbly. The money will be used to settle debt the property management firm had.

During the official listing of the shares yesterday, Mpico’s share price opened at K8 while the best bidder was offering K7.90, resulting in no trading activity on the counter despite having more bidders.

But FDH Stockbrokers manager Nelson Mkwende and MSE chief executive officer John Kamanga said the share price is expected to rise in the short-term.

Said Mkwende: “This [non-trading on the stock] is not an issue that shareholders or prospective shareholders should worry about as there is huge potential on the counter.”

On the other hand, Kamanga noted that the huge demand for the stock, at 2.5 million shares, shows that the

Mpico counter has brighter future ahead despite the price being stable and no trading activity taking place on the counter.

He said: “Listing came almost at the close of the year when decision-makers were closing their books, but as we are opening the year 2017, we should see some activity on the market.

“We have seen that there is demand of about 2.5 million shares. So, it is a matter of shareholders in Mpico to follow up on the demand or increase their price so that they can attract more sellers,” he said.

Kamanga said the performance of Mpico rights issue is an indication that the stock market has the capacity to meet the demand of those in need of capital.

“This demonstrates that one can raise capital at relatively comparative prices because we have seen that there has been a demonstration that the cost of raising capital has been quite minimal compared to the short-term,” he said.

Mpico Limited board chairperson Edith Jiya said the funds raised will be used to settle debt obligations.

“As a company, we are still working hard for the shareholders and we will utilise the funds that we have received. As a business, we are also looking at ways to ensure that we make it more efficient so that the shareholders actually realise value,” she said.

A rights issue is a way in which a company sells new shares to raise capital and shares are offered to existing shareholders in proportion to their current shareholding.

During the right issue, 82 percent of the shares were subscribed by existing shareholders and the investing public with the remaining 18 percent allocated to underwriters, which is a company or an investment bank that helps companies introduce new securities to the market.

Mpico Limited, which listed on MSE in 2007, is 57 percent owned by Old Mutual (Malawi) Limited with 33 percent owned by the public and the remaining 10 percent by Lincoln Investment. n