Weekly Market Review & Stock Recommendations -September 13, 2021

Weekly Market Review & Stock Recommendations -September 13, 2021

Dear Client/Reader,

Global Economic Roundup

OPEC+ raises forecast for oil demands next year

The Organisation of the Petroleum Exporting Countries and allies, including Russia, collectively known as OPEC+, has raised its forecast for oil demand next year, in a move that might help to build a case for raising output. Brent crude for November delivery gained 18 cents, or 0.3 per cent to touch 71.81 dollars a barrel, U.S. West Texas Intermediate (WTI) crude for October was up 17 cents, or 0.3 percent at $68.67. Prices were also supported by a U.S. industry report showing that crude inventories fell more than expected last week, though much U.S. refinery capacity remains offline in the wake of Hurricane Ida.

U.S. Hiring Slows Sharply Amid Delta, Complicating Fed Taper

U.S. hiring downshifted abruptly in August with the smallest jobs gain in seven months, complicating a potential decision by the Federal Reserve to begin scaling back monetary support by year end. Payrolls rose 235,000 in August, short of the forecasted 733,000 jobs. The unemployment rate also dipped further to reach a pandemic-era low of 5.2%, while holding above the 50-year low of 3.5% from early 2020. Still, this marked an eighth consecutive month of net job growth, and brought total employment closer to pre-pandemic levels.

Nigeria’s international trade deficit hits N5.81 trillion in H1 2021

The recent report from NBS showed that Nigeria exported total merchandise valued at N7.99 trillion in the review period, opposed to a total import value of N13.8 trillion, indicating a trade balance of -N5.81 trillion between January and June 2021. This is by far the highest trade deficit recorded by Nigeria in any half-year period. Despite recent data indicating improved inter-border trade activities, it is increasingly becoming a major forex burden for the country as scarce forex is still being used to import merchandise, while earnings from exports continue to dwindle.

Some of our recommended stocks are mentioned below;

UBA PLC:

UBA Plc Q2 2021 result showed that Interest income advanced by 8.29% from N205.59bn in Q2 2020 to N222.63 bn in the current period. Net interest income increased by 24.09% to N148.07 bn in Q2 2021 from N119.32 bn in Q2 2020. Likewise, profit after tax advanced by 36.35% from N44.43 bn in Q2 2020 to N60.58 bn in Q2 2021 despite a 22.89% increase in tax expense. Consequently, earnings per share went up by 36.29% from N1.24 in Q2 2020 to N1.69 in Q2 2021. UBA has a BVPS of N22.00, P/BV of 0.35x and P/E ratio of 2.25x.

GTCO PLC:

GTCO Plc Q2 2021 showed that interest income declined by 17.97% from N153.71 bn in Q2 2020 to N126.09 bn in the current period. Net interest income went down by 16.11% from N127.62bn in Q2 2020 to N107.06 bn in Q2 2021. Profit before tax also declined by 15.18% from N109.71 bn in Q2 2020 to N93.06 bn in the current period. Profit after tax went down by 15.76% from N94.27 bn in Q2 2020 to N79.41 bn in the current period. Consequently, GTCO recorded a 16% fall in earnings per share from N3.32 in Q2 2020 to N2.79 in Q2 2021. GTCO has a BVPS of N24.50, a P/BV of 1.10x and a P/E ratio of 4.85x.

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

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