Weekly Market Review & Stock Recommendations – December 06, 2021

Dear Client/Reader,

Global Economic Roundup

OPEC+ Agrees to Proceed With January Oil-Production Hike

OPEC and its allies agreed to proceed with their next oil-production hike, while signaling they could revisit the decision at any moment as the risk to demand from the omicron variant of Covid-19 becomes clearer. The group will add 400,000 barrels a day of crude to global markets in January, as previously scheduled. However, it also left the door open to adjusting the plan at short notice if the market changes, an unusual step that underscores the uncertain outlook due to a resurgent pandemic and a U.S.-led release of emergency stockpiles. Global oil prices have lost more than $10 a barrel since last Thursday, on the back of the news of Omicron new strain, which caused investors to panic sell.

U.S. Fed Seen on Track for Faster Bond Tapering Despite Jobs Numbers

Federal Reserve policy makers are likely to follow through with a faster tapering of asset purchases despite mixed readings on the labour-market recovery. U.S. job growth registered its smallest gain this year while the unemployment rate fell by more than forecast to 4.2%, offering a mixed picture that may nevertheless push the Federal Reserve to quicken the wind-down of pandemic stimulus. Nonfarm payrolls climbed 210,000 in November after upward revisions to each of the prior two months. The labor force participation rate edged up to 61.8%.

Nigeria’s external reserve dips $633 million in November as CBN intensifies FX intervention

Nigeria’s foreign reserve dipped by $633.47 million in the month of November 2021 to close the month at $41.19 billion as of 30th November 2021,  representing a 1.51% decline in the foreign reserve level from October 2021. The decline in the country’s external reserve level in the month of November can be attributed to the continuous effort by the apex bank to maintain exchange rate stability by intervening in the supply of FX in the official market. Nigeria’s official exchange rate averaged N414.92/$1, an appreciation compared to N415.1/$1 recorded in the previous month. This is in line with the CBN’s effort to ensure liquidity in the market despite continuous current account deficit, huge international trade gap and a lower-than-expected remittance.

Some of our recommended stocks are mentioned below;

WAPCO PLC:

Wapco Plc Q3 2021 results showed that revenue grew by 21.86% from N179bn in Q3’2020 to N219bn in Q3’2021. Similarly, gross profit went up by 13.53% to N63bn in Q3’2021 from N56bn in Q3’2020. Profit from operations rose by 17.09% from N41 bn in Q3’2020 to N48bn in Q3’2021. Profit before tax grew by 28.02% to N43 bn in Q3’2021 from N34bn in Q3’2020. Profit after tax rose by 43.26% from N28bn in Q3’2020 to N40.39bn in Q3’2021. Consequently, Earnings per share increased by 43.43%, from N1.75 in Q3’2020 to N2.51 in Q3’2021. Wapco has a BVPS of N23.83, P/BV of 1.03x and P/E ratio of 7.36x.

TRANSCORP PLC:

Transcorp Plc Q3 2021 results showed that revenue grew by 57.39% from N54.38bn in Q3’2020 to N85.59bn in Q3’2021. Profit from operations rose by 77.15% from N15.54bn in Q3’2020 to N27.53bn in Q3’2021. Profit before tax grew by 600% to N14.13bn in Q3’2021 from N2.02bn in Q3’2020. Profit after tax rose by  671% from N1.75bn in Q3’2020 to N13.47bn in Q3’2021. Consequently, Earnings per share increased by 152.94%, from –N0.34 in Q3’2020 to N0.18 in Q3’2021. Transcorp has a BVPS of N3.12, P/BV of 0.31x and P/E ratio of 4.08x.

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