Weekly Market Review & Stock Recommendations – July 19, 2021

Weekly Market Review & Stock Recommendations – July 19, 2021

Dear Client/Reader,

Global Economic Roundup

OPEC+ agrees oil supply boost after UAE wins argument with Saudi

OPEC+ ministers agreed on Sunday to boost oil supply from August to cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.

OPEC+ last year cut production by a record 10 million barrels per day (bpd) amid a pandemic-induced slump in demand and collapsing prices. It has gradually reinstated some supply to leave it with a reduction of about 5.8 million bpd. From August until December 2021 the group will increase supply by a further 2 million bpd or 0.4 million bpd a month, OPEC said in a statement. The group had agreed to extend their overall pact until the end of 2022 from an earlier planned date of April 2022, to leave more room for manoeuvre in case global recovery stalls due to new virus variants.

China’s postal sector sees rapid H1 growth

China’s postal industry registered accelerated revenue and business volume growth in the first half of 2021, official data shows. From January to June, the sector’s business revenue totaled 614.39 billion yuan (about 95.05 billion U.S. dollars), up 22.2 percent year on year, according to a statement released by the State Post Bureau. The sector’s business volume jumped 34.4 percent from the same period last year to 642.47 billion yuan in the first half, according to the statement. In June alone, the sector’s business revenue and volume respectively climbed 13.6 percent and 22.9 percent.

China’s express delivery firms handled 49.39 billion parcels in the first six months, up 45.8 percent from one year earlier. Their business revenue during the period reached 484.21 billion yuan, up 26.6 percent year on year.

CBN restricts sugar importation to Flour Mills, Dangote, BUA

The Central Bank of Nigeria (CBN) has restricted the importation of sugar to three companies due to their backward integration programmes. The companies are Dangote Sugar Refinery Plc, BUA Sugar Refinery Limited, and Golden Sugar Company – owned by Flour Mills of Nigeria Plc. In April, CBN had hinted that it is planning to include sugar on the list of import items banned from accessing foreign exchange (FX) to reduce the $1 billion annual import bill and encourage local production..

Some of our recommended stocks are mentioned below;

UCAP PLC:

United Capital’s result for Q2’2021 showed that gross earnings increased by 54% from N4.45 bn in Q2’2020 to N6.85bn in Q2 2021. Net operating income rose by 57% from N4.35 bn in Q2’2020 to N6.81bn in Q2’2021. Profit before tax rose by 65% from N2.27 bn in Q2’2020 to N3.74 bn in the current period. Profit after tax increased by 64% to N3.14 bn in the current period from N1.91 bn in Q2’2020. Consequently, Earnings per share went up by 64% from N0.64 in Q2’2020 to N1.05 in the current period. UCAP has a BVPS of N3.61, P/BV of 1.58x and P/E ratio of 5.92x.

ZENITH PLC:

The Q1’2021 result of Zenith Plc showed that Net interest income increased marginally by 2.05% to N83.17 bn in Q1’2021 from N81.50 bn in Q1’2020. However, Interest income declined by 11.50% from N114.33 bn in Q1’2020 to N101.18 bn in the current period. The increase in net interest income was driven by a 45.14% decline in interest expense. Likewise, profit before tax advanced by 3.79% from N58.79 bn recorded in Q1’2020 to N61.02 bn in the current period.. Profit after tax grew by 5.01% from N50.53 bn in Q1’2020 to N53.06 bn in Q1’2021, due to a 3.63% decline in income tax expense. Consequently, earnings per share went up by 4.97% from N1.61 in Q1’2020 to N1.69 in Q1’2021. Zenith Bank has a BVPS of N34.78, P/BV of 0.64x and P/E ratio of 3.40x.

Please find attached.

Thank you.

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

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