Aug. 22 (Bloomberg) -- Flour Mills of Nigeria Plc, the country’s biggest miller by market value, advanced the most in 10 weeks on a technical signal that the shares dropped too far after the company said first-quarter profit fell.
The stock climbed 9.8 percent to 76.29 naira by the close in Lagos, Nigeria’s commercial capital, its biggest gain since June 11. Almost 860,000 shares were traded, equal to 1.5 times the three-month daily average volume.
The shares declined 19 percent this month to yesterday, pushing the relative strength index to 11.8, the lowest since June 2012. An RSI below 30 signals to some technical analysts that a stock may be oversold and set to gain. The index rose to 36 today. Profit for the fiscal three months through June fell to 3.6 billion naira ($22 million) from 4 billion naira a year ago, the company said on Aug. 20.
“The stock was oversold as a result of the profit drop and is looking attractive today,” David Adonri, chief executive officer of Lagos-based Lambeth Trust and Investment Co., said by phone.
Flour Mills has risen 17 percent this year, compared with a 30 percent climb in the Nigerian Stock Exchange All-Share Index.
The company’s revenue may get a boost from a sugar refinery that started production in February, pushing the stock price to an annual gain of 25 percent, according to Adonri. In the first quarter, revenue jumped 43 percent to 101 billion naira, the company said.
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