Weekly Market Review & Stock Recommendations – November 22, 2021
Dear Client/Reader,
Global Economic Roundup
Oil at Six-Week Low as US, China Expected to Release Crude Oil Reserve
The price of oil has shot up in recent times, boosting profits for major producers but hurting the wallets of drivers who need to fill up their tanks. This week, however, some of the pressure has started to lift. West Texas Intermediate futures, the US benchmark for oil prices, and Brent futures, the global benchmark, are now trading at their lowest levels in six weeks on signals that supply constraints could begin to ease soon. US President Joe Biden and Chinese President Xi Jinping discussed the “importance of taking measures to address global energy supplies” during their virtual summit this week. That sparked chatter about a coordinated move initiated by the White House to put millions of barrels of oil on the market.
U.K. Inflation Surges to Highest in a Decade on Energy Costs
U.K. inflation climbed faster than expected to the highest in a decade, heaping pressure on the Bank of England to raise interest rates and tightening a squeeze on living standards for households. The cost of living has surged at its fastest pace in almost 10 years, hitting 4.2% in the year to October. It is mainly due to higher fuel and energy prices but the cost of second-hand cars and eating out also rose, the Office for National Statistics said. Inflation has been up sharply since Covid restrictions ended this year and the economy reopened. The Bank of England says it may have to raise interest rates in the “coming months” to tackle rising prices.
Lagos State Government to launch its Bond Issuance of N125 billion
The Lagos State Government is about to launch its Series IV Bonds of up to N125 billion under the State’s N500 billion Bond Issuance Programme. This was disclosed by the Joint Issuing House, Comercio Partners Capital Limited. The offer date and prices of the bonds are yet to be made known as the information will be made available after the launch. The proceeds from the issuance are to be directed at executing priority projects and refinancing bridge facilities and will enable Lagos State to further accelerate the development of physical and social infrastructure in the State in line with the State’s THEME Agenda.
Some of our recommended stocks are mentioned below;
FIDELITY BANK PLC:
Fidelity Bank Q3 2021 results showed that interest income advanced by 3.73% from N132.47 bn in Q3 2020 to N137.41 bn in the current period. Net interest income decreased by 13.39% to N64.96bn in Q3 2021 from N75bn in Q3 2020; this is attributable to the 26.07% increase in interest expense. Profit before tax increased by 31.40% from N21.35bn recorded in Q3 2020 to N28.05bn in the current period. Profit after tax increased by 29.93% from N20.41bn in Q3 2020 to N26.51bn in Q3 2021, despite a 63% surge in income tax expense. Earnings per share increased by 31.43% from N0.70 in Q3 2020 to N0.92 in the current period. Fidelity Bank has a BVPS of N9.76, P/BV of 0.27x and P/E ratio of 2.79x.
UBA PLC:
UBA Plc Q3 2021 result showed that Interest income advanced by 8.38% from N317 bn in Q3 2020 to N343bn in the current period. Net interest income increased by 23.25% to N229 bn in Q3 2021 from N186 bn in Q3 2020. The increase in net interest income was driven by the rise in interest income and a 12.75% drop in the interest expense. In a similar tune, operating income increased by 16.28% from N282 bn in Q3 2020 to N328 bn in the current period. Likewise, profit after tax advanced by 36.35% from N77 bn in Q3 2020 to N104 bn in Q3 2021 despite a 41.67% increase in tax expense. Consequently, earnings per share went up by 36.11% from N2.16 in Q3 2020 to N2.94 in Q3 2021. UBA has a BVPS of N23.34, P/BV of 0.36x and P/E ratio of 2.79x.
Please find here our Weekly Market Review & Stock Recommendations for this week.
