Investors of livestock feeds, UAC Nigeria Plc, Computer warehouse Group and some other companies listed on the Nigerian Stock Exchange, who fall within the eligible list of 27 new industries for pioneer status in Nigeria may begin to reap huge benefits from increased earnings for shareholders through dividends or increased retained earnings.
The Federal Government had recently announced that any company that is designated as a Pioneer company is not expected to pay tax in the aspect of their business that is under Pioneer Status, automatically leading to improved returns for the companies involved.
Economic analysts are of the view that a positive impact on the company’s valuation is expected from the FG’s decision which should lead to an increased share price in the medium to long-term.
Although not many quoted companies can benefit from this pioneer status, an analysis of the list of 27 new industries recently released, revealed that a number of stocks on the Mainboard of the All-Share Index can qualify to obtain Pioneer Status.
Livestock feeds falls under the manufacture of animal feeds, one of the new industries added to the pioneer list. As the only company on the Nigerian Stock Exchange that is specifically into the manufacturing and marketing of animal feeds, the company could benefit from Pioneer Status if it applies.
On the part of UAC Foods, which falls under the Processing and Preservation and Production of Meat and Poultry Production, owners of the fast food chain can also benefit from Pioneer Status under the production and preservation of meat and poultry.
Incidentally, livestock feeds are also a subsidiary of UACN.
Under E-Commerce Services and Software development & Publishing, Computer Warehouse Group, CWG, a leading provider of Information, and Communication Technology solutions services in Nigeria also listed on the NSE can benefit from Pioneer status as the company also engages in selling its proprietary software applications to banks, SME’s and other businesses asides, selling computer hardware resources.
Courteville Business Solutions also falls within this category, as the company currently sells the software that is being used by vehicle license registration offices in about 22 states in the country, including Lagos State,
Furthermore, the company sells other software related products and has an e-commerce website called Egole. Courteville’s performance has gone from bad to worse more recently, posting a profit of just N38 million in 2016.
Despite suffering from poor management and a business model that is unable to leverage on its competitive edge, it can still benefit immensely from obtaining Pioneer Status for some of the business currently in the pipeline.
The third category, where quoted companies could benefit from is the Real Estate Investment Vehicles under the ISA, which represents companies that are into the development and sale of properties in the Nigeria, are specifically those
who do so by pooling funds from the public under the approval of the security and exchange commission. Some of such companies listed on the NSE, include the UPDC Reits, Skye Shelter Funds, UPDC and Union Homes.