Leading home-grown commercial bankers, FDH Bank plc share price has jumped up by 14 percent from K74. 55 to K85. 03, a development stock market analysts says it is a consequence of of scarcity of the shares.
This development, experts have said, has resulted in some investors selling at a premium.
This happened earlier in the week where the company paid its final dividend to shareholders that appeared in the register book almost a fortnight ago.
According to Malawi Stock Exchange (MSE) daily trading updates, FDH Bank plc shares traded at K85 per share last week on Tuesday June 17 2024, gaining 14.02 percent and went on to add three tambala by the close of business on Friday to K85.03 each share.
The bank’s board of directors recommended a final dividend of K7.039 billion, which is K1.02 per share in respect of 2023 profits and this brings total dividends to K22.639 billion, representing K3.22 per share.
FDH Bank plc registered an after-tax profit of K35.647 billion, which is 55 percent up from K22.932 billion achieved during a similar period in 2022.
The bank listed on the 16-counter MSE on August 3 2020 with an initial public offer share price of K10.
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa attributed the rise in share price to investors that were tempted to sell at a premium after receiving the dividend.
He said: “Lately, there has been increased demand for this stock, similar to other companies in the banking sector.
“It is important to acknowledge that the banking sector has been performing well and this demand may reflect anticipation of continued strong performance,” said Makwakwa.
“Additionally, it is worth noting that some investors are now selling their shares after receiving the recently paid dividend. This strategy allows them to benefit from the dividend return and realise capital gains by selling at a premium,” he added.
However, Makwakwa said looking forward, the sustainability of FDH Bank share price will depend on the trading statement from the firm.
He said if the bank indicates that its profit will increase by at least 20 percent for the first half of 2024 which ends on June 30, the share value could be sustained in the short to medium-term.
Minority Shareholders Association of Listed Companies director Brian Kampanje said they are delighted with the share price gain, which guarantee some capital gains on their investment.
He said: “We are excited with what has happened with FDH Bank shares. As shareholders, this means an increase in worth and this probably can help attract more Malawians to participate in the stock market business as it proves to be profitable.”
“Lately, there has been increased demand for this stock.”
Kondwani Makwakwa
Stockbrokers Malawi Limited equity investment analyst
