AGS NEWS – The recent drop in stock prices for the Dangote Group, particularly Dangote Sugar Refinery and NASCON Allied Industries, has been linked to foreign exchange losses and the Securities and Exchange Commission’s (SEC) rejection of their proposed merger.

Analysts pointed to inflation and forex volatility as worsening factors. The depreciation of the naira has increased import costs, further squeezing profit margins.

From May to August 2024, Dangote Sugar Refinery’s stock fell by 18.67%, from N45.00 to N36.60, due to supply chain disruptions and volatile sugar prices.

NASCON Allied Industries also saw a decline, with its stock dropping by 12.57% from N37.00 to N32.45. However, Dangote Cement’s stock grew by 41%, rising from N419 in May to N591 by early August.

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NASCON announced the suspension of its proposed merger with Dangote Sugar Refinery and Dangote Rice Limited, following SEC concerns, particularly about Dangote Rice’s non-operational status.

Shareholder groups and financial analysts noted that while the Dangote Group subsidiaries face challenges, including forex losses and high raw material costs, they remain resilient.

The SEC’s decision to reject the merger has also been a significant factor in the stock price fluctuations.

Regarding Dangote Cement, market forces were cited as the primary reason for price changes, a trend seen across the entire cement industry.

The performance of Dangote’s refinery project cannot yet be assessed, as it is not a publicly quoted company.

Experts urged swift resolution of regulatory issues to maintain investor confidence in Nigeria’s economy. They emphasized that while the challenges are significant, long-term investments like Dangote’s will eventually yield benefits.