The recent decline in Dangote Group’s stock prices, including Dangote Sugar Refinery and NASCON Allied Industries, has been attributed to foreign exchange losses and the Securities and Exchange Commission’s (SEC) rejection of their merger request. Analysts believe that ongoing inflationary pressures and forex volatility have exacerbated these challenges.
Stock Price Declines
– Dangote Sugar Refinery’s stock price fell by 18.67% from N45.00 to N36.60 between May and August 2024, due to supply chain disruptions and volatile sugar prices.
– NASCON Allied Industries’ stock price decreased by 12.57% from N37.00 to N32.45 over the same period.
– However, Dangote Cement achieved a 41% growth in its share price from May to August 2024, rising from N419 to N591.
Merger Suspension
The proposed merger between Dangote Sugar Refinery, NASCON, and Dangote Rice Limited has been suspended due to the SEC’s concerns regarding Dangote Rice Limited’s non-operational status.
Expert Insights
– Bisi Bakare, a shareholders’ advocacy group leader, attributed the decline to challenges facing the manufacturing sector, including foreign exchange losses and inflationary pressures.
– Ariyo Olugbosun, a financial analyst, believed that the SEC’s denial of the proposed merger led to a loss of investor interest, exacerbating stock price fluctuations.
– Boniface Okezie, President of the Progressives Shareholders Association of Nigeria, highlighted that market forces drove the fluctuations and that Dangote Cement remains higher in value compared to its peers.
Refinery Project and Regulatory Issues
– Boniface noted that Dangote’s refinery project cannot be assessed yet, as it is not a publicly quoted company.
– Ongoing issues with the Nigerian National Petroleum Corporation (NNPC) and other regulatory bodies are hampering progress, potentially deterring foreign investors.
