Weekly Market Review & Stock Recommendations – October 18, 2021
Dear Client/Reader,
Global Economic Roundup
Oil Edges Higher With Energy Shortages Boosting Winter Demand
Crude is holding above $80 a barrel as shortages of coal and natural gas heading into the Northern Hemisphere winter are expected to keep demand high. These shortages have prompted some switching fuels such as diesel and fuel oil in the power sector. The latest pressure on energy supplies comes from record thermal coal prices in China as key mining regions are hit by flooding. It seems there is not a lot policy makers and politicians in consumer countries can do beyond asking OPEC to please pump more oil.
IMF and Goldman Sachs Slash US Growth Forecast
The IMF on Tuesday slashed its 2021 growth forecast for the United States by one full percentage point to 6%, the biggest reduction suffered by any G7 economy in its latest World Economic Outlook. The cut reflects disruptions to supply chains and softening consumption in the third quarter, the IMF said. The revision comes days after Goldman Sachs cut its growth forecasts for the US economy this year and next, citing weaker consumer spending and the winding down of the government’s Covid-19 relief programs. Goldman Sachs now expects the economy to expand by 5.6% this year, compared to a previous estimate of 5.7%. In 2022, growth is projected to expand by 4%, down from 4.4%.
Nigeria’s Foreign Reserve Records $2.76 Billion Boost in September 2021
Nigeria’s foreign reserve received a boost of $2.76 billion in the month of September 2021 to close at $36.78 billion as of the end of the month. This is according to data from the Central Bank of Nigeria (CBN). This gain represents the highest monthly gain recorded since May 2020, when the reserve gained $3.07 billion in a single month. Notably, Nigeria’s foreign reserve increased by 8.13% from $34.02 billion recorded as of August 2021 to $36.78 billion in the review month. It is worth noting that an increased foreign reserve comes as good news to the economy as it means the apex bank has more foreign exchange at its disposal to intervene in the forex market which in essence reduces the pressure on the country’s exchange rate.
Some of our recommended stocks are mentioned below;
ZENITHBANK PLC:
Zenith Plc is projected to have a Q3 2021 interest income of N382.58bn, up by 20% from N318.82bn in Q3 2020. PAT is estimated to increase by 5.41% from N159.32bn in Q3 2020 to N169.93bn in Q3 2021, bringing the EPS up by 6.76% to N5.41 in Q3 2021. Zenith Plc Q2’2021 results showed that gross earnings advanced by 1.61% to N159.94bn from N157.4bn in Q2’2020. Interest income declined by 6.00% from N216.95bn in Q2’2020 to N203.93bn. Profit before tax advanced by 2.57% from N114.12bn recorded in Q2’2020 to N117bn in the current period. Profit after tax went up by 2.21% from N103.83bn in Q2’2020 to N106.12bn in Q2’2021. Earnings per share advanced by 2.42% from N3.30 in Q2’2020 to N3.38 in the current period. Zenith Bank has a BVPS of N36.42, P/BV of 0.68x and P/E ratio of 3.65x.
FLOURMILL PLC:
Flourmill Plc is projected to have a Q2 2021 revenue of N424.75bn, up by 7.30% from N355.11bn in Q2 2020. PAT is estimated to increase by 19.61% from N9.93bn in Q2 2020 to N11.88bn in Q2 2021, bringing the EPS up to N2.90. Flour Mill Plc’s result for Q1 2021 showed that revenue increased from N154.57bn in Q1 2020 to N233.70bn in Q1 2021 by 51.18%. Gross profit 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 went up 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 0.67x and P/E ratio of 8.35x.
Please find here our Weekly Market Review & Stock Recommendations for this week.
