Flourmills Analysis

Background:

Flour Mills of Nigeria Plc (FMN) is one of the largest and most successful industrial conglomerates in Nigeria.

The Company’s activities span flour milling, pasta manufacturing, port operations, cement trade & manufacturing, fertilizer blending, bags & other packaging materials manufacturing and agricultural business.

Since its incorporation in 1960, FMN has not only survived all macroeconomic challenges but also grown into a market leader with popular and highly recognizable brands, an extensive distribution network, a turnover in excess of N90 billion (USD 700 million), strong profitability, healthy Balance Sheet and a highly skilled workforce.

FMN has been listed on the Nigerian Stock Exchange since 1978. With a broad ownership base of approximately 67,000 shareholders, it is constantly ranked amongst the top 25 companies in terms of market capitalization. In 2005 the Company successfully completed a N5.24 billion (US$40.7 million) rights issue which was oversubscribed by 8%.

FMN group employs approximately 5,200 staff with diverse ethnic, cultural and religious backgrounds who work harmoniously together to deliver superior value to Nigerian consumers nationwide.

Analysis:

Looking at the chart attached,we see that the price is in a downward range,with the downward channel in place price tested labelled areas 1 and 2 before going south,tested 3 and went up to 4 before going down to 5.
If you observe the movement,that its ranging and going down.Presently price touched 5 and its moving up(the circled area consist of a reversal candle),we are looking to catch the move up.Also if you look at the second attachment price is turning at a resistance(turned to support) of 12/7/2002 as seen below.




Recommendation/Conclusion:

- Buy flourmills at the present price and our first target will be 40 naira,personally this is a good price to buy.




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