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The shares of three Nigerian tech companies listed on the NGX—Chams, eTranzact, and CWG—have witnessed a remarkable surge of over 169% in value this year.
To put this into perspective, if you invested ₦1 million in Computer Warehouse Group (CWG) in January, your investment would now be valued at ₦5 million. This significant uptrend in the share prices of these tech firms, occurring between April and July this year, has caused their market capitalization to double.
- eTranzact, a payment solutions company, has seen its share price surge by over 171.4%.
- Chams Holdings, a firm specializing in identity management and payment services, is currently trading at a remarkable 350% higher than its average over the past few years.
- Computer Warehouse Group (CWG) has experienced a notable 169% increase in its share price since the beginning of the year.
This substantial growth aligns with broader trading activity on the Nigerian Stock Exchange, propelling the market to reach new all-time highs over the past three months. Despite these impressive market gains, it’s important to note that they do not fully reflect certain economic realities in Nigeria, including a soaring inflation rate of 24% and currency devaluation impacting various industries negatively.
Nonetheless, the performance of Chams, eTranzact, and CWG underscores a growing interest in tech equities within the Nigerian market. Data from the National Bureau of Statistics (NBS) reveals that the technology and communications industry sector has experienced a 41% year-on-year increase compared to Q2 2022.
Analysts attribute the surge in tech stocks to broader market trends, with Onome Ohwovoriole, an analyst at Money Africa, explaining that it’s akin to “a rising tide lifting all boats.”
These three companies represent an older generation of Nigerian technology services, with nearly four decades of history. They are among the few tech firms traded on the exchange, as younger startups often pursue higher valuations in the private market or plan to list their equities internationally.
eTranzact, founded two decades ago, specializes in payment processing services for individuals, merchants, small businesses, and large corporations. In 2022, the company reported a 157% increase in revenue, totaling ₦1.17 billion.
Chams, with a 40-year legacy, has transitioned into a holding company and provides identity management and payment services to government entities and private firms in Nigeria. In 2022, it reported an annual income of ₦5.2 billion and net losses of ₦375 million.
CWG, operating in fintech and cloud services, has witnessed a share price peak this year, partly due to increased holdings by company insiders. The company’s primary offerings include technology infrastructure services and cloud software services.
Despite the strong performances since April, analysts caution against market uncertainty and volatility. Ohwovoriole highlights the difficulty in predicting the market’s short-term direction, while Mayowa Badejo from 213 Capital Ltd underscores that all three stocks entail high-risk, high-return scenarios.
Badejo elaborates that despite revenue growth over the years, these firms have faced significant earnings declines due to debt servicing and have historically not paid dividends. However, he believes that Chams and CWG are undervalued and offer attractive purchase opportunities based on price-to-earnings valuations. Regarding eTranzact, he notes its good earnings and lower debt but suggests caution due to its current valuation.
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