Weekly Market Review & Stock Recommendations – January 10, 2022

Weekly Market Review & Stock Recommendations – January 10, 2022

Dear Client/Reader,

Global Economic Roundup

Oil Price Slips, but Gains 5% in the Week on Kazakh, Libyan Concerns

Oil prices settled lower on Friday, as the market weighed supply concerns from the unrest in Kazakhstan and outages in Libya against a U.S. jobs report that missed expectations and its potential impact on Federal Reserve policy. Brent crude settled down 24 cents, or 0.3%, to $81.75 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 56 cents, or 0.7%, at $78.90 a barrel.

US Job Growth Underwhelms in December; Unemployment Rate Dives to 3.9%

U.S. employment increased far less than expected in December amid worker shortages, and job gains could remain moderate in the near term as spiralling COVID-19 cases disrupt economic activity. The job market is rapidly tightening, with the Labor Department’s closely watched employment report on Friday showing the unemployment rate tumbled to a 22-month low of 3.9% from 4.2% in November. The second straight big monthly decline in the jobless rate occurred even as more people entered the labour force.

FG Spent $1.68bn on Food Imports in Nine Months

The Federal Government spent $1.68bn on food importation from January to September last year. According to the CBN, the government spent $163.60m, $197.73m, and $171.05m in January, February and March, respectively, while $156.30m, $135.72m and $213.58m were spent in April May and June, respectively. The report revealed that $184.69m, 188.88m and 271.59m were spent in July, August and September, respectively. The Central Bank Governor said that Nigeria could produce enough to feed its citizens and everything needs to be done to move away from a situation where everything is imported.

Some of our recommended stocks are mentioned below;

UBA PLC:

UBA Plc is projected to have a FY 2021 interest income of N450.96bn, up by 5.40% from N427.86bn in FY 2020. PAT is estimated to increase from N113.77bn in FY 2020 to N119.19bn in FY 2021, bringing the EPS up to N3.51.

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 N229bn in Q3 2021 from N186bn in Q3 2020. Operating income increased by 16.28% from N282bn in Q3 2020 to N328bn in the current period. Likewise, profit after tax advanced by 36.35% from N77bn in Q3 2020 to N104bn 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 0.34x and P/E ratio of 2.04x.

MAY & BAKER PLC:

May & Baker Plc is projected to have a FY 2021 revenue of N12.79bn, up by 36.23% from N9.39bn in FY 2020. PAT is estimated to increase from N964.56 million in FY 2020 to N1.31bn in FY 2021, bringing the EPS up to N0.76.

May & Baker Q3 2021 results showed an increase in revenue by 25.26% from N6.44bn in Q3 2020 to N8.06 bn in Q3 2021. Operating profit advanced from N1.14 billion in Q3 2020 to N1.49 billion in Q3 2021, reflecting an increase of 30.80%. Finance cost increased by 43.29% to N187 million in Q3 2021 from N131 million while Interest income increased by 106.58% from N10 million in Q3 2020 to N20.66 million in Q3 2021. PBT went up by 29.44% from N1 billion in Q3 2020 to N1.30 billion in the current period, despite a 24% increase in Administrative Expenses. PAT grew by 29.44% from N681.73 million in Q3 2020 to N882.43 million in Q3 2021, despite a 29% surge in taxes. EPS grew by 31% to N0.51 in Q3 2021 from N0.39 in Q3 2020. May & Baker has a BVPS of N4.12, P/BV ratio of 1.02x and P/E ratio of 6.18x.

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

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