Weekly Market Review & Stock Recommendations – December 20, 2021Yahya Abdulrahman
Global Economic Roundup
Oil Prices Rose on Record U.S. Oil Demand
The increase in demand for petroleum products inspired fresh optimism in the market, as uncertainty in the markets faded after the Federal Reserve’s tapering announcement. The price of a barrel of WTI rose to $72.04, up $1.17 on the day. The price of a Brent barrel also increased despite measures taken to thwart the new Omicron variant, rising to $74.76, up $0.88 on the day. Oil prices are now at a three-week high. The price moves come just days after Saudi Arabia’s energy minister warned traders not to short oil as they did over Thanksgiving.
Fed to taper faster, and sees three rate rises in 2022
The US Federal Reserve has decided to end its pandemic stimulus programme more quickly, as it reacts to the surge in inflation. America’s central bank will taper its asset-purchase scheme by $30bn per month from January. That would wrap up the bond purchases, which had run at $120bn/month, by next March. Federal Reserve officials also now expect to raise interest rates by 25 basis points three times next year. In new economic projections released following the end of a two-day policy meeting, Fed officials also forecast that inflation would run at 2.6% next year, compared to the 2.2% projected as of September, and the unemployment rate would fall to 3.5%.
World Bank Approves $700 Million Credit for Nigeria’s Agro-Climatic Resilience Project
The World Bank has announced that it has approved $700 million from its International Development Association (IDA) for the Nigeria Agro-Climatic Resilience in Semi-Arid Landscapes (ACReSAL) Project. The scheme is expected to boost Nigeria’s implementation of sustainable landscape management practices in northern Nigeria and strengthen the country’s long-term enabling environment for integrated climate-resilient landscape management. It also added that due to low productivity of cash crops in Nigeria, the fund would be beneficial to deal with climate issues including water shortages in the North leading to desertification and habitat loss.
Some of our recommended stocks are mentioned below;
ACCESS BANK PLC:
Access Plc is projected to have a FY 2021 interest income of N593.78bn, up by 21.37% from N489.21bn in FY 2020. PAT is estimated to increase from N106.01bn in FY 2020 to N128.67bn in FY 2021, bringing the EPS up to N3.62.
Access Plc Q3 2021 showed that interest income advanced by 25.48% from N375.28bn in Q3 2020 to N470.91bn in the current period. Net interest income went up 36.41% from N196.27bn in Q3 2020 to N267.73bn in Q3 2021. Profit before tax advanced by 15.82% from N116.62bn in Q3 2020 to N135.07bn in the current period. Profit after tax went up by 19.15% from N102.30bn in Q3 2020 to N121.89bn in the current period. Consequently, Access recorded a 19.31% rise in earnings per share from N2.90 in Q3 2020 to N3.46 in Q3 2021. Access has a BVPS of N22.49, P/BV of 0.40x and P/E ratio of 1.96x.
MTNN Plc is projected to have a FY 2021 revenue of N1.55trn, up by 15.41% from N1.35trn in FY 2020. PAT is estimated to increase from N205.21bn in FY 2020 to N236.84bn in FY 2021, bringing the EPS up to N11.64.
MTNN’s Q3 ‘2021 results showed an increase in revenue by 23.62% from N975.76bn in Q3’ 2020 to N1.21trn in Q3 ‘2021. Operating profit advanced from N306.95bn in
Q3’2020 to N418.35bn in Q3’2021, reflecting an increase of 36.29%. Profit before tax went up by 51.92% from N211.53bn in Q3’2020 to N321.35bn in the current period. Profit after tax grew by 52.81% from N144.78bn in Q3’2020 to N220.31bn in Q3’2021, despite a 50% surge in taxes. EPS grew by 52.61% to N10.82 in Q3’2021 from N7.09 in Q3’2020. MTNN has a BVPS of N9.14, P/BV of 20.46x and P/E ratio of 12.96x.
Please find here our Weekly Market Review & Stock Recommendations for this week.