Weekly Market Review & Stock Recommendations – March 29, 2021

Weekly Market Review & Stock Recommendations – March 29, 2021

Dear Client/Reader,

Global Economic Roundup

Crude oil rates drop as Covid-19 lockdown concerns outweigh Suez Canal disruptions

•  Oil prices skidded around 2% as fuel demand concerns re-emerged alongside fresh coronavirus pandemic lockdowns, trimming overnight gains spurred by the grounding of a giant container ship blocking crude shipments through the Suez Canal.

Companies raise record $140bn in US junk bond market in first quarter

•  Corporations have issued $140bn within the US junk bond market over the previous three months, outpacing a file sprint for money within the second quarter of 2020 when teams raced for funding to outlive the shock of coronavirus.

CBN holds MPR at 11.5%, other parameters constant

        • The Monetary Policy Committee (MPC), of the Central Bank of Nigeria (CBN),               has voted to retain the Monetary Policy Rate (MPR) at 11.5%.

Equities Market

The Nigerian Bourse closed bullish last week as the ASI advanced by 2.17% week-on-week to close at 39,216.20 points. Year-to-date returns closed at -2.62% at the end of the week.

Some of our recommended stocks are mentioned below;

FBNH PLC :

First Bank being the premier bank in West Africa has undoubtedly witnessed change over time. FBNH is one the major companies that was forecasted to support the 2020 20.50 percent growth for the financial services sector, as FBNH leveraged their diversified business model, to prop up their revenue from other sources, during the heat of the pandemic. 

The FY’2020 result of FBNH Plc showed that;

  • Profit before tax grew by 3.76% from N75.29 billion in FY’2019 to N78.11billion in FY’2020.
  • Net interest income went down by 8.19% from N279.59 billion in FY’2019 to N256.69 billion in FY’2020.  
  • The growth in Profit before tax can be attributed to a 190.50% and 18.94% increase in net gains on sale of investment securities and fees and commission income.
  • Profit after tax grew by 10.40% from N208.84 bn in FY’2019 to N230.57 bn in Q4’2020, due to a 26.57% decline in income tax expense.  
  • Earnings per share grew by 11.79% to N2.18 in FY’2020 from N1.95 in FY’2019.
  • FBNH has a BVPS of N21.05, P/BV of 0.36x and P/E ratio of 3.49x

PRESCO PLC :

PRESCO recent move to expand its existing Palm Oil mill from 60 ton/hour to a 90 ton/hour milling plant by year-end 2020, construction of a new 60 ton/hour Palm Oil mill in Sokoban estate, which is to be completed in 2023, and expansion of the company’s palm kernel oil plant to 350 ton/day (current capacity: 60 ton/day), will support their topline growth in subsequent quarters.

The FY’ 2020 result of PRESCO Plc result showed that:

  • Revenue increased by 21.22% from N19.72 bn in FY’2019 to N23.91bn in the current period.  
  • Gross profit went up by 11.29% to N14.16 bn in FY’2020 from N12.72 bn in FY’2019.
  • Profit before tax rose by 59.92% to N8.95bn in FY’2020 from N5.59 bn in FY’2019, supported by an 28.07% decline in finance cost.
  • Profit after tax advanced by 108.57% from N3.37 bn in FY’2019 to N7.04 bn in FY’2020. 
  • Earnings per share grew by 108.57%, from N3.37 in FY’2019 to N7.03 in FY’2020. 
  • Presco has a BVPS of N32.92, P/BV of 2.28x and a P/E ratio of 10.67x. 

Please find here our Weekly Market Review & Stock Recommendations for this week.

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