Weekly Market Review & Stock Recommendations – November 28, 2022
Dear Client/Reader,
Global Economic Roundup
Global oil market signals short-term weakness ahead of EU ban on Russian oil
The global oil market is signalling a potential shift, as traders and analysts worry about reduced crude demand and an oversupplied market in the coming months. After months of strength, crude futures are flirting with lows not seen all year as top oil consumer China enters additional COVID-19 lockdowns while central banks hike interest rates to combat inflation. Front-month global oil prices in the last week have traded weaker than future-dated contracts, while prices for physical crude grades throughout the world have declined, market participants said. “Differentials are confirming what outright prices have been implying – there is a demand deficit and/or supply surplus,” said Tamas Varga of oil broker PVM. On Dec. 5, a European Union ban on Russian crude imports is set to start, along with a plan by the G7 nations to force shippers to comply with a price cap on Russian oil sales.
UK to be second weakest performer of world’s big economies next year – OECD
The UK will be the second weakest performer of the world’s big economies next year as the global economy continues to suffer the knock-on effects of the biggest energy shock in four decades, a leading international institution has warned. The Paris-based Organization for Economic Co-operation and Development said only Russia of the members of the G20 group of leading developed and developing nations would suffer a bigger contraction than Britain in 2023. In its half-yearly economic outlook, the OECD said the UK economy would expand by 4.4% this year – the sixth fastest rate in the G20 – but contract by 0.4% next year. Although most countries have had their growth forecasts cut by the OECD since June, only Russia’s 5.6% contraction is forecast to be more severe than Britain’s. The poor performance is forecast to continue in 2024 with expansion of 0.2% – the joint weakest alongside Russia.
Annual UK-study expenses hits $2.5bn amid forex scarcity
The Governor, Central Bank of Nigeria, Godwin Emefiele, has said annual foreign exchange outflow on study-related to the UK has hit to about $2.5bn as visa applications increased. He also said the official foreign exchange receipt from crude oil sales into the official reserves of the country had dried up, but that the CBN had introduced measures to boost forex earnings through non-oil export which was already yielding results. Some of our recommended stocks are mentioned below;
MTNN PLC:
MTNN Plc Q3 2022 results showed an increase in revenue by 20.71% from ₦1.21trn in Q3 2021 to ₦1.46trn in Q3 2022. Operating profit advanced from ₦418.35bn in Q3 2021 to ₦537.68bn in Q3 2022, reflecting an increase of 28.52%. Profit before tax grew by 24.68% from ₦321.35bn in Q3 2021 to ₦400.67bn in the current period, despite a 40.10% increase in finance costs. Profit after tax rose by 22.12% from ₦220.31bn in Q3 2021 to ₦269.04bn in Q3 2022. EPS increased by 22.92% to ₦13.30 in Q3 2022 from ₦10.82 in Q3 2021. MTNN has a BVPS of ₦13.24, P/BV of 15.03x and P/E ratio of 11.11x.
UCAP PLC:
United Capital’s result for Q3’2022 showed that gross earnings increased by 28.40% from N11.33 bn in Q3’2021 to N14.55 bn in Q3’2022. Net operating income rose by 21.80% from N11.07 bn in Q3’2021 to N13.50 bn in Q3’2022. Profit before tax rose by 24.17% from N7.09 bn in Q3’2021 to N8.81 bn in the current period. Profit after tax increased by 29.34% to N7.71 bn in the current period from N5.97 bn in Q3’2021. Consequently, Earnings per share went up by 28.57% from N1.33 in Q3’2021 to N1.71 in the current period. UCAP has a BVPS of N3.61, P/BV of 1.73x and P/E ratio of 4.96x.
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