Weekly Market Review & Stock Recommendations – March 14, 2022Yahya Abdulrahman
Global Economic Roundup
UAE Wants OPEC to Increase Production
The oil market has been stretched incredibly thin, with few producers willing — or able — to replace Russian barrels banned by the United States and shunned by others. Enter the United Arab Emirates, which suggested it may be coming to the rescue. The UAE’s ambassador to Washington, Yousef Al Otaiba, told CNN Wednesday that the country wants to increase oil production and will encourage the Organization of the Petroleum Exporting Countries (OPEC) cartel to ramp up supply. The comments sent oil prices dropping on Wednesday. US oil fell 12% to less than $109 a barrel. Brent crude, the global benchmark, fell 13% to $111 a barrel. It marked their steepest one-day decline in nearly two years.
US Inflation Hits Fresh 40-Year High of 7.9%
U.S. consumer price gains accelerated in February to a fresh 40-year high on rising gasoline, food and housing costs, with inflation poised to rise even further following Russia’s invasion of Ukraine. The consumer price index jumped 7.9% from a year earlier following a 7.5% annual gain in January, Labor Department data showed Thursday. The widely followed inflation gauge rose 0.8% in February from a month earlier. The February report showed that gasoline prices rose 6.6% from the prior month and accounted for almost a third of the monthly increase in the CPI. The Biden administration on Tuesday banned Russian oil imports into the U.S., a move that will add to energy price pressures.
Fuel Shortages Disrupt Domestic Flight Schedules in Nigeria
Fuel shortages in Nigeria, Africa’s largest oil producer, have caused two of its largest domestic airlines to cancel some internal flights and delay others this week. Several airlines including Air Peace, Arik, Dana Air, Ibom Air and United Airlines, released statements about facing challenges in sourcing jet fuel. Despite being Africa’s largest producer, Nigeria imports nearly all its jet fuel, which has nearly doubled to as high as 625 naira ($1.50) a litre since December, Arik Air said. Global jet fuel prices have hit a near-14-year peak as Russia’s invasion of Ukraine triggered a surge in the crude oil market, hitting airlines and passengers with steep cost increases.
Some of our recommended stocks are mentioned below;
Wapco Plc FY 2021 results showed that revenue grew by 27.11% from N230.57bn in FY 2020 to N293.09bn in FY 2021. Similarly, gross profit went up by 30.98% to N142.58bn in FY 2021 from N108.86bn in FY 2020. Profit from operations rose by 42.55% from N45.67bn in FY 2020 to N65.11bn in FY 2021. Profit before tax grew by 65.69% to N37.57bn in FY 2021 from N62.25bn in FY 2020, on the back of a 45.66% decline in finance cost. Profit after tax rose by 65.37% from N30.84bn in FY 2020 to N51bn in FY 2021. Consequently, Earnings per share increased by 66%, from N1.91 in FY 2020 to N3.17 in FY 2021. Wapco has a BVPS of N23.50, P/BV of 1.00x and P/E ratio of 7.41x.
MTNN’s FY 2021 results showed an increase in revenue by 22.87% from N1.35trn in FY 2020 to N1.65trn in FY 2021. Operating profit advanced from N426.71bn in FY 2020 to N584.75bn in FY 2021, reflecting an increase of 37.04%. Profit before tax went up by 46.11% from N298.87bn in FY 2020 to N436.69bn in the current period. Profit after tax grew by 45.53% from N205.21bn in FY 2020 to N298.65bn in FY 2021, despite a 45.53% surge in taxes. EPS grew by 45.54% to N14.67 in FY 2021 from N10.08 in FY 2020. MTNN has a BVPS of N13.02, P/BV of 15.82x and P/E ratio of 14.04x.
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