The share prices of Chams, eTranzact and CWG, Nigerian tech companies quoted on the NGX, are up over 169% this year. 

If you invested ₦1 million into Computer Warehouse Group (CWG) in January, your stake would be worth ₦5 million today. The share prices of three publicly-listed Nigerian tech companies — Chams, eTranzact and CWG — are up over 169% this year. While all three firms have seen minimal movements in their share prices over the previous five years, an uptick between April and July this year has caused their market value to double.

Payments company eTranzact is up over 171.4%; Chams Holdings is trading at 350% higher than any time in the last few years before April; And Computer Warehouse Group (CWG) share price has jumped 169% since the start of the year.

The growth coincides with a broader trading activity on the Nigerian Stock Exchange that has pushed the market to reach a new all-time high over the previous three months. Since the start of the year, share prices of Nigeria’s most valuable public equities have grown significantly, surpassing records from 2008.

However, the stock market rally doesn’t reflect some economic realities in the country, as inflation has soared to 24%, while currency devaluation has negatively impacted companies in multiple industries. The performance of Chams, eTranzact and CWG  suggests growing interest in tech equities on the Nigerian bourse. Overall, the technology and communications industry sector rose 41% year-on-year compared to Q2 2022, data from the National Bureau of Statistics (NBS) shows. 

Analysts speculate that the surge in tech stocks aligns with the general market trends. “It is a case of a rising tide lifting all boats,” Onome Ohwovoriole, an analyst with Money Africa, told TechCabal.

The three firms represent an older cohort of Nigerian technology services dating back nearly 40 years.  They are among the handful of technology companies trading on the bourse while younger startups chase higher valuations in the private market or posture they will list their equities abroad. 

eTranzact, a two-decade-old company that offers payment processing services to individuals, merchants, small businesses and large corporates, saw its 2022 revenue rise 157% to ₦1.17 billion. Chams, a 40-year-old firm recently transformed into a HoldCo, provides identity management and payment services to government entities and private companies in Nigeria. It reported an annual income of ₦5.2 billion for 2022 and net losses of ₦375 million. CWG, which operates fintech and cloud services, has seen its share price peak this year as company insiders increased their holdings. The company’s flagship products are technology infrastructure services and cloud software services.

Despite the strong performances since April, analysts warn of market uncertainty and volatility. Ohwovoriole told TechCabal it is challenging to predict the market’s direction in the near term. Mayowa Badejo, a partner at 213 Capital Ltd, an investment and risk advisory firm, stressed that all three stocks represent high-risk-high return scenarios. 

“While their revenues have grown over the years, their earnings have nosedived greatly due to debt servicing. They also don’t pay dividends historically,” Badejo explained to TechCabal. The price-to-earnings valuation of Chams and CWG, a key performance metric monitored by investment researchers, shows that both companies are undervalued and cheap to buy, he believes.

“eTranzact has good earnings and lower debt. It is profitable and undervalued compared to its fair value but expensive based on price to earnings. The only risk is that it appears to be overvalued now,” Badejo concluded.

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Joseph Olaoluwa Senior Reporter, TechCabal

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