Author - Yahya Abdulrahman

Dear Client/Reader,

Negative Trend Reverses …ASI Gains 168 Basis Point

The Nigerian Stock Exchange (NSE) closed positive as bulls dominated proceedings in the market today. The benchmark All Share Index (ASI) appreciated by 1.68% to close at 34,818.01. Similarly, Market Capitalization increased by N300.55 billion to close at N18.19 trillion while the Year-to-Date (YtD) returns settled at 29.71%.

Sectors performance was broadly bearish

Performance across sectors was broadly bullish as 3 out of the 5 sectors closed in the green zone. Banking, Industrial, and Consumers Goods indices advanced by 2.53%, 2.81% and 2.98% respectively, on the back of buy interests recorded in the shares of Sterling (10.00%), WAPCO (9.55%), ETI (8.59%), NB (7.41%), DANGSUGAR (5.95%), CADBURY (4.92%), DANGCEM (4.22%), ACCESS (4.17%), UBA (3.57%), UCAP (3.23%) and ZENITH (3.09%) among others. While Insurance and Oil and Gas indices closed in the red zone on the back of sell interests in the shares of CORNERST (-8.62%), REGALINS (-8.33%), MBENEFIT (-7.14%) and ARDOVA (-6.25%).

NASD Market

The NASD market closed flat after today’s trading activities as the Unlisted Securities Index (USI) closed positive to close at 736.53. Consequently, Market Capitalization also closed flat by 0.07% to close at N547.46 billion. Market activity measured by aggregate volume increased by 2,900.95% while value increased by 127.63%. Investors traded a total of 12,121,740 units of shares valued at N13.33 mn in 8 deals. 

Please click here to view Daily Financial Market update for today, November 18th , 2020.

 

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Dangote Sugar Plc. Posts Highest Profit in 7yrs for 9M’ 2020 result

Dangote Sugar Plc. sustained its strongest momentum during 9M’2020 as it reported its highest profit in 7years at 26.63 billion, 81% higher than its 9M’2019 PAT. Revenue was also up in the period by 36.69% from 117.43 billion in 2019 to 160.51 billion in 2020. The profit jump was as a result of a combination of factors: strong revenue growth triggered by increased demand, higher tax credit, increased prices across all products and a reduction in cost of raw materials aided by the acquisition of Savannah Sugar Company in July 2020.  Despite the 10.73% increase recorded in Administrative expenses, Operating profit grew by 21.73%. Consequently, PBT increased by 26.60%. EPS grew by 76.61% y/y from N1.24 in 9M’2019 to N2.19 in 9M 2020.

Please click here to view Dangote Sugar Plc 9M-2020 result analysis.    

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Weekly Market Review & Stock Recommendations – October 19, 2020

Dear Client/Reader,

Global Economic Roundup

Oil gained nearly 2% as robust China trade data offsets returning supply

  • Oil prices rebounded on Tuesday, supported by robust economic data from China that offset returning supply in other regions but gains were capped by forecasts for a slow recovery in global oil demand as coronavirus cases rise.

Coronavirus spending pushes U.S. 2020 fiscal year deficit to $3.132 trillion

  • The U.S. budget deficit hit a record $3.132 trillion during fiscal 2020, more than triple the 2019 shortfall due to massive coronavirus rescue spending. The deficit more than doubled the previous record of $1.416 trillion in fiscal 2009, when the United States was battling a financial crisis.

Domestic Economic Roundup

Nigeria’s inflation rate hits 13.71% as food prices soar

  • The Nigerian inflation rate rose to 13.71% Y-o-Y in September 2020 indicating 0.49% point higher than 13.22% recorded in August 2020. On a M-o-M basis, the Headline index increased by 1.48% in September 2020. This is 0.14% rate higher than in August 2020 (1.34%). Also, the urban inflation rate increased by 14.31% Y-o-Y in review period from 13.83% recorded in August 2020, while the rural inflation rate increased by 13.14% in September 2020 from 12.65% in August 2020.
  • DMO offers for subscription N30 billion FGN bonds on October 21.
  • The Debt Management Office (DMO) has announced the offer for subscription by auction, a total of N30bn worth of bonds on October 21. The sum of N15 billion will be a 15-year re-opening bond at 12.5% per annum, that would mature in March 2035 and another N15 billion 25-year re-opening bond at 9.8% per annum, that would mature in July 2045.

Equities Market

The Nigerian Bourse closed bullish last week as the ASI improved by 0.86% week-on-week to close at 28,659.45 points, while year-to-date returns closed at 6.77%.

The current low prices of stocks still provide good buying opportunities in the market. Some of our recommended stocks are mentioned below;

PRESCO Plc Presco’s results for HY’2020 revealed that revenue increased by 29.35% from N10.41 bn in HY’2019 to N13.46 bn in the current period. Similarly, gross profit went up by 32.10% to N9.04 bn in HY’2020 from N6.85 bn in HY’2019, despite a 24.06% surge in cost of sales. In the same vein, operating profit increased by 51.73% from N4.35 bn in HY’2019 to N6.60 bn in the current period. The growth recorded in the operating profit was supported by reductions in key expenditure line items, such as; the administrative expenses and selling and distribution expenses, which both declined by 21.01% and 18.00%, respectively. Profit before tax rose by 67.71% to N5.77 bn in HY’2020 from N3.44 bn in HY’2019, supported by an 8.64% decline in finance cost. Profit after tax advanced by 70.51% from N2.58 bn in HY’2019 to N4.39 bn in HY’2020. Consequently, earnings per share grew by 70.82%, from N2.57 in HY’2019 to N4.39 in HY’2020. Presco has a BVPS of N32.28, P/BV of 2.04x and a P/E ratio of 7.51x.

Presco has been able to take advantage of greater government support and increased investor sentiment to sustain their growth through the recent economic crises. This was evidenced in their half year results, which stood in line with our earlier projections. The 2020 growth outlook for the agricultural sector remains positive at 4.20 percent, buoyed by the performance of key public companies, such as Presco, which are able to leverage the increased relevance of agriculture, during times of economic hardship that have been sponsored in part or in whole by crude oil shocks. Accordingly, see the 2020 PAT crossing N7.00 bn, taking the EPS past N7.00.

FIDELITY BANK – Fidelity Bank’s HY’2020 showed that interest income advanced by 2.09% from N85.83 bn in HY’2019 to N87.62 bn in the current period. Net interest income went up by 30.95% from N36.90 bn in HY’2019 to N48.32 bn in HY’2020. The increase in the net interest income was driven by the rise in interest income, and by a 19.68% decline in interest expense. Profit before tax advanced by 21.92% from N9.81 bn in HY’2019 to N11.96 bn in the current period. The growth in profit before tax is attributable to a 2,191% and 80.78% increase seen in the net gains from financial assets and other operating income, respectively. Increments in the revenue line items offset a 27.04% fall in fees and commission income, and a 15.12% and 8.28% hike in the fees and commission expense and operating expense, respectively. Profit after tax went up by 33.01% from N8.50 bn in HY’2019 to N11.30 bn in the current period, on the back of a 49.77% decline in income tax expense. Consequently, Fidelity recorded a 34.48% growth in earnings per share from N0.29 in HY’2019 to N0.39 in HY’2020. Fidelity has a BVPS of N8.65, P/BV of 0.24x and P/E ratio of 2.67x.

Fidelity Bank was able to deploy some cost reduction strategies to compliment the growth seen in their interest income, which helped the company improve all growth margins. The company’s effort to improve the volume of transactions on its electronic channels and also restructure and grow their loan book, yielded positive results, as the company was able to sustain their service delivery during the lockdown, and maintain their asset quality. Accordingly, we expect the 2020 PAT to reach N34.00 billion, taking the EPS near N1.18.

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

Thank you.

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

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Daily Financial Market Report for October 16, 2020

Dear Client/Reader,

Market Closed Bullish… ASI gained 111 basis points

The Nigerian Stock Exchange (NSE) closed bullish as the benchmark All Share Index (ASI) increased by 1.11%, from 28,344.04 to close at 28,659.45. Market Capitalization increased by N164 billion to close at N14.97 trillion while the Year-to-Date (YtD) closed at 6.77%.

Sectors performance was significantly bullish

Performance across sectors was significantly bullish. All the five sectors on the NSE closed bullish today; Banking, Consumer Goods, Oil and Gas, Insurance and Industrial indices surged by 4.47%, 1.29%, 1.08%, 0.63% and 0.34% respectively, owing to buy interests recorded in the shares of  Uba (7.52%) and Zenithbank (7.50%); Intbrew  (9.90%) and Cadbury (9.52%);  Total (10.00%) and Japauloil (5.00%);  Aiico (3.70%); Maybaker (7.97%) and Mtn (0.36%) amongst others.

NASD Market

The NASD market was bearish after today’s trading activities as the Unlisted Securities Index (USI) depreciated by 1.62% to close at 716.92. Consequently, Market Capitalization declined by 1.62% to close at N526.63 billion. Market activity measured by aggregate volume increased by 40.12% while value surged by 112.13%. Investors traded a total of 219,000 units of shares valued at N27,466,430.00 in 3 deals. Two securities traded on the USI today, namely; Wamco Plc and NDEP Plc.

Please find attached our Daily Financial Market update for today, October 16th, 2020.

Thank you.

Click here for our Daily Financial Market update.

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Daily Financial Market Report for October 15, 2020

Dear Client/Reader,

ASI Closes Flat… Sector performance was broadly bearish

The Nigerian Stock Exchange (NSE) closed flat as the benchmark All Share Index (ASI) decreased marginally from 28,344.33 to close at 28,344.04. Market Capitalization decreased by N150 billion to close at N14.81 trillion while the Year-to-Date (YtD) remained unchanged at 5.60%.

Sectors performance was broadly bearish

Performance across sectors was broadly bearish. Three out of the five sectors on the NSE closed in the red zone today; Banking, Insurance and Oil and Gas indices decreased by 0.74%, 0.45%, and 0.29% respectively, owing to sell interests recorded in the shares of Guaranty (-1.67%) and Access (-0.64%); Aiico (-3.57%) amongst others. However, the Consumer Goods (0.40%) and Industrial (0.30%) indices closed in the green zone due to buy interests in Pz (2.38%) and Nb (0.20%); Maybaker (0.33%) and Redstarex (1.23%) amongst others.

NASD Market

The NASD market was bearish after today’s trading activities as the Unlisted Securities Index (USI) depreciated by 0.16% to close at 728.74. Consequently, Market Capitalization declined by 0.16% to close at N535.31 billion. Market activity measured by aggregate volume increased by 3373.22% while value surged by 5012.12%. Investors traded a total of 156,295 units of shares valued at N12,947,712.00 in 13 deals. Two securities traded on the USI today, namely; Wamco Plc and CSCS Plc.

Please find attached our Daily Financial Market update for today, October 15th, 2020.

Thank you.

Click here for our Daily Financial Market update.

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Daily Financial Market Report for October 14, 2020

Dear Client/Reader,

ASI Closes Flat…Four Sectors were Bullish

The Nigerian Stock Exchange (NSE) closed flat as the benchmark All Share Index (ASI) increased marginally from 28,344.04 to close at 28,344.33. Market Capitalization increased by N153 billion to close at N14.81 trillion while the Year-to-Date (YtD) remained unchanged at 5.60%.

Sectors performance was significantly bearish

Performance across sectors was significantly bullish. Four out of the five sectors on the NSE closed in the green zone today; Insurance, Banking, Consumer Goods and Industrial indices increased by 0.60%, 0.48%, 0.21% and 0.15% respectively, owing to buy interests recorded in the shares of Cornerst (5.00%); Guaranty (1.35%) and Fidelitybk (0.49%); Guinness (3.33%) and Cadbury (1.38%); Wapco (1.47%) amongst others. However, the Oil and Gas (-0.17%) index closed in the red zone due to sell interests in Ardova (-3.61%) amongst others.

NASD Market

The NASD market was flat after today’s trading activities as the Unlisted Securities Index (USI) remained unchanged at 729.94. Consequently, Market Capitalization was stable at N536.19billion. Market activity measured by aggregate volume decreased by 57.75% while value climbed by 7.63%. Investors traded a total of 4,500 units of shares valued at N253,275.00 in 2 deals. Two securities traded on the USI today, namely; Wamco Plc and CSCS Plc.

Please find attached our Daily Financial Market update for today, October 14th, 2020.

Thank you.

Click here for our Daily Financial Market.

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Weekly Market Review & Stock Recommendations – October 12, 2020

Dear Client/Reader,

Global Economic Roundup

Oils jumps 9% for the week, snapping two-week losing streak

•      Oil prices eased on after an oil worker strike in Norway ended, which should boost output, even though production was still down in the United States ahead of a hurricane. Norwegian oil firms have struck a wage bargain with labor union officials, ending a strike that had threatened to cut the country’s oil and gas output by close to 25% next week

Democrats and Republicans dismiss Trump’s coronavirus stimulus offer

•      Democrats in the House and Republicans in the Senate expressed opposition to President Donald Trump’s $1.8 trillion coronavirus stimulus offer, further complicating a week of already confusing negotiations and dimming hopes for a deal before Election Day.

Domestic Economic Roundup

The proposed 2021 FGN Budget was passed to the National Assembly

•      The President presented the 2021 Appropriation Bill and the performance of the 2020 budget as at July 2020. The budget was a 27% increase from the approved N10.3 trillion for 2020.  Some of the assumptions underlying the appropriation bill includes; Benchmark Oil price of 40 US dollars per barrel, daily oil production at 1.86 million barrels and exchange rate at N379 per Us dollars.

Lagos State Accounted for 78.94% of Credit by Geographical Distribution in Q2 2020

•      The Nigerian Selected Banking sector data as at Q2 2020 revealed that total Geographical Distribution of Credit by State stood at N18.90trn compared to N18.56trn in Q1 2020 and N15.44trn in Q2 2019. This represents 1.82% increase in credit Quarter on Quarter and 22.38% Year on Year. Lagos State recorded the highest credit by geographical distribution with N14.92trn accounting for 78.94% while Yobe State recorded the least with N13.8bn accounting for 0.07% in Q2 2020.

Equities Market

The Nigerian Bourse closed bullish last week as the ASI improved by 5.30% week-on-week to close at 28,415.31 points, while year-to-date returns closed at 5.86%.

The current low prices of stocks still provide good buying opportunities in the market. Some of our recommended stocks are mentioned below;

OKOMU OIL PLC – Okomu Oil Palm Plc. HY’2020 results showed that revenue grew by 57.92% from N8.57 bn in HY’2019 to N13.53 bn in the current period. Similarly, gross profit went up by 81.03% to N12.44 bn in HY’2020 from N6.87 bn in HY’2019. The growth in gross profit was driven in part by the growth in revenue, and by a 35.98% decline in cost of sales. Profit before tax grew by 94.15% to N5.51 bn in the current period from N2.84 bn in HY’2019. Profit after tax rose by 64.29% from N2.44 bn in HY’2019 to N4.01 bn in the current period. Earnings per share increased by 58.49% from N2.65 in HY’2019 to N4.20 in the current period. Okomu has a  BVPS of N32.79, P/BV of 1.76x and P/E ratio of 9.52x.

The agricultural sector is projected to grow by 8.20 percent, as the economic slowdown will shift attention to the sector as an alternative to oil investment, similar to what was witnessed in 2016. The structural vulnerabilities that derive from our reliance on crude oil has caused attention to be pivoted from crude oil and to other revenue generating sources in our economy, and Okomu is receiving increased attention in this regards. Accordingly, we expect their PAT to cross N7 billion and their EPS to soar past N7.

UCAP – United Capital’s result for HY’2020 showed that gross earnings increased by 37.26% from N3.24 bn in HY’2019 to N4.45 bn in HY’2020. Net operating income rose by 45.40% from N2.82 bn in HY’2019 to N4.10 bn in HY’2020, due to a 347.65%, 85.03% and 77.15% increase in net interest margin, net trading income and fees and commission income, respectively. Profit before tax rose by 14.10% from N1.99 bn in HY’2019 to N2.27 bn in the current period, despite the surge in key expenditure line items, such as the personnel expenses which rose by 7.86%, and the other operating expense which increased by 87.73%.  Profit after tax increased by 15.98% to N1.91 bn in the current period from N1.65 bn in HY’2019. Consequently, Earnings per share went up by 14.29% from N0.28 in HY’2019 to N0.32 in the current period. UCAP has a BVPS of N3.02, P/BV of 1.17x and P/E ratio of 5.53x

The financial services sector is projected to grow by 8.50 percent this year, supported by the performance of highly digitized firms such as United Capital. The company has been able to digitize their products, with various online and mobile platforms for service delivery. This in turn serves them, as the Covid induced restrictions on movement has minimally disrupted some aspects of their business. Hence, we should see the PAT climb above N5.4 billion, while the EPS is projected above N0.90.

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

Thank you.

Click here for our Weekly Market Review & Stock Recommendations.

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