Weekly Market Review & Stock Recommendations – August 9, 2021

Dear Client/Reader,

Global Economic Roundup

Oil falls in biggest weekly decline in months on demand worries

Oil prices fell about 1% lower on Friday, posting to their steepest weekly losses in months, on worries that travel restrictions to curb the spread of the Delta variant of COVID-19 will derail the global recovery in energy demand. Crude futures also came under pressure as the dollar strengthened after monthly U.S. job growth came in higher than expected. A stronger dollar makes greenback-denominated oil more expensive for buyers in other currencies. Brent crude oil futures settled down 59 cents, or 0.8%, at $70.70, while U.S. West Texas Intermediate (WTI) crude futures fell 81, or 1.2%, to settle at $68.28 a barrel. For the week, global benchmark Brent shed more than 6%, its largest week of losses in four months, and WTI tumbled nearly 7% in its biggest weekly decline in nine months.

Eurozone business activity soars to 15-year high in July

The eurozone business activity soared in July, expanding at its fastest pace in 15 years, as the rapid rollout of COVID-19 vaccines across Europe is encouraging consumers to spend more, according to a closely watched survey released on Wednesday. Europe’s service sector is springing back into life. Easing virus restrictions and further vaccination progress are boosting demand for a wide variety of activities, especially in the tourism, travel and hospitality sector.

DPR moves to check smuggling, gives filling stations ultimatum to migrate to DRMS Platform

The Department of Petroleum Resources (DPR) has given owners of the registered 33,000 petroleum products retail outlets a December 31 ultimatum to migrate their operations to the Downstream Remote Monitoring System (DRMS). The DRMS platform, also known as e-station, is to help check cross border smuggling, capture diversion of petroleum products, check overloading, under-dispensing as it helps to track product levels across retail outlets and depots.

Some of our recommended stocks are mentioned below;

UCAP PLC:

UCAP Q2 2021 results showed that revenue grew by 54% from N4.45bn in Q2 2020 to N6.85bn in Q2 2021. Net operating income rose by 57% from N4.35bn in Q2 2020 to N6.81bn in Q2 2021. Gross profit increased by 65% to N3.74bn in Q2 2021 from N2.26bn in Q2 2020. Profit after tax grew by 64.2% from N1.91bn in Q2 2020 to N3.14bn in Q2 2021, despite a 68.95% increase in income tax expense. Consequently, EPS rose from N0.64 in Q2 2020 to N1.05 in Q2 2021 by 64.06%. UCAP has a BVPS of N3.61, P/BV of 1.71x and a P/E ratio of  6.38x

FLOURMILL PLC:

Flour Mill Plc’s results showed that revenue expanded from N154.57bn in Q1 2020 to N233.70bn in Q1 2021 by 51.18%. Gross earnings also increased by 0.60% from N25.55bn in Q1 2020 to N25.70bn in Q1 2021. Finance cost dropped by 6.44% from N4.86bn in Q1 2020 to N4.55bn in Q1 2021. Profit before tax increased by 12.50% from N6.46 bn in Q1 2020 to N7.26bn in the current period. Profit after tax expanded by 9.57% to N5.45bn in the current period from N4.97bn in Q1 2020. Consequently, Earnings per share increased by 9.35% from N1.07 in Q1 2020 to N1.17 in the current period. Flour Mill Plc has a BVPS of N43.91, P/BV of 0.69x and P/E ratio of 8.68x.

Please find attached.

Thank you.

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