By Dulue Mbachu
The numbers say it all! Transcorp Hotels started 2023 at 6.25 naira per share and closed on the last trading day at 70.18 naira per share, representing a more than 11-fold growth. It was the best performance for the year by any Nigerian stock.
In the first trading days of 2024, the stock surged further, crossing the 100 naira mark. This now puts it in the league of a few companies with a market capitalization above the trillion-naira mark.
So what was the magic? In our analysis, Transcorp Hotel is simply recovering the growth spurts that were suppressed for much of the coronavirus pandemic buoyed by several current, favourable factors.
At the heart of Transcorp Hotels’ fundamentals is its role as the “national village square,” the playground of the rich and mighty in Nigeria. Hang out in the lobby of the hotel for a couple of hours and you can compile an authentic list of who’s who in Nigeria. Indeed, the Abuja Hilton is among those strange creatures in economics where higher prices simply beget more demand.
The Hilton brand in Abuja was such an exemplary success that there were plans announced to build new hotels in the country’s biggest city of Lagos and the oil-industry hub of Port Harcourt and the southeastern tourist centre of Calabar.
Then Covid-19 struck in 2020 and all those ambitions suddenly seemed misplaced. There was a run on hotel and hospitality stocks worldwide, and Teanscorp Hilton was no exception. Only the Calabar target was met so far. Those who had bought the shares on those expectations suffered huge losses, at least, temporarily.
Take the case of Uruabia Akamnonu, a retail investor who bought 15,000 shares of Transcorp Hotels shares at 7.20 naira each after those expansion plans were announced. Through the coronavirus pandemic and its aftermath, the shares slumped, losing more than 50 percent of their value at one point.
“Things were so bad that I stopped looking at my stocks portfolio, where everything seemed in the red,” said Akamnonu in an interview with Nairaweb. ng. “And Transcorp Hotel was one of the worst cases.”
With the end of the pandemic, the hospitality industry began a slow recovery as business travel resumed globally. But 2023 proved a turning point year for Transcorp Hotels, perhaps, due to the 2023 general elections.
It was a time to live up to its reputation as the “national village square” in full. It wasn’t only the choice destination of all the important personages and officials that arrived in the country, it was also the base of international election observers. Of course, the routine business travellers were still in the mingle.
All of these combined to give a robust, positive image of the company as an excellent performer, further boosting investor confidence. At a time the Nigerian stock market was enjoying a rally, Transcorp Hotel became the choice of many seeking bargain shares with intrinsic value.
The company’s latest report for the third quarter shows a 32 percent growth in revenue and a 62 percent growth in profit, justifying the confidence of investors. It’s a performance Transcorp Hotels’ Chief Executive Officer Dupe Olusola attributes to the company’s resilience and adaptability. “We have remained nimble, adapting quickly to meet the dynamic preferences of our guests,” she told reporters recently.
Those who got in before the stock became a bandwagon have been smiling to the bank.
“It was for me quite a pleasant surprise,” recalled retail investor Akamnonu. “I had even forgotten all about the investment until my husband, who had made me buy Transcorp Hotels, urged me to check my portfolio again, that I might be surprised.”
When she did, the little over 100,000 naira she invested was now worth more than 1.2 million naira. Her screams of joy were heard all over the house, Akamnonu said.