Weekly Market Review & Stock Recommendations -September 06, 2021
Dear Client/Reader,
Global Economic Roundup
Hurricane Ida Hurts Oil Demand Ahead of OPEC+ Meeting
Hurricane Ida made the headlines this week, forcing the evacuation and shut-downs of offshore platforms in the Gulf of Mexico, shutting in some 1.7 million barrels per day (mbpd) of crude output and 2 mbpd of refining capacity. Simultaneously, the upcoming OPEC+ meeting on 01 September has left market watchers guessing as to how the oil-producing club will react to the US’ call to produce more. We assume that the initial production target allocation, agreed last month, will remain unchanged.
U.S Stocks Hit Highs Ahead of US Jobs Report
US stock markets hit record highs on Thursday ahead of Friday’s keenly watched labour market report which will help set the path of monetary policies that have shored up markets during the pandemic. The blue-chip S&P 500 rose 0.3 per cent, while the tech-focused Nasdaq Composite edged up 0.1 per cent, both record highs. Economists polled by Bloomberg expect that Friday’s non-farm payrolls report, a monthly data release scrutinized by traders, will show US employers added 725,000 jobs in August.
Nigeria to launch Eurobond on Oct. 11, with Lagos, NY roadshows
Nigeria will launch its planned Eurobond issue on Oct. 11, its finance minister said. Zainab Ahmed also said the country would hold roadshows for the dollar-denominated issuance, which aims to raise roughly $3 billion, in Lagos and New York. The government is also targeting raising the same amount via multilateral and bilateral borrowing to fund its 2021 budget deficit. The ministry of finance has an approval in the 2021 budget to fund the budget deficit 50% locally and 50% externally. The ministry plans to do about half of that in eurobonds and the other half through other windows such as multilateral and bilateral sources. Parliament in July approved external borrowing of roughly $6.2 billion.
Some of our recommended stocks are mentioned below;
ACCESS BANK PLC:
Access Bank Plc Q2 2021 results showed that interest income advanced by 29.59% from N246.72bn in Q2 2020 to N319.73bn in the current period. Net interest income went up 58.52% from N126.21bn in Q2 2020 to N200bn in Q2 2021. Profit before tax advanced by 31.21% from N74.31bn in Q2 2020 to N97.5bn in the current period. Profit after tax went up by 42.44% from N61.03bn in Q2 2020 to N86.94bn in the current period. Consequently, Access recorded a 43.35% rise in earnings per share from N1.73 in Q2 2020 to N2.48 in Q2 2021. Access has a BVPS of N21.82, P/BV of 0.42x and P/E ratio of 1.86x.
UCAP PLC:
United Capital Plc 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 by 64.06% from N0.64 in Q2 2020 to N1.05 in Q2 2021. UCAP has a BVPS of N3.93, P/BV of 1.87x and a P/E ratio of 3.50x.
Please find here our Weekly Market Review & Stock Recommendations for this week.
