News

Weekly Market Review & Stock Recommendations – November 21, 2022

Dear Client/Reader,

Global Economic Roundup

OPEC Releases its Oil Demand Forecast

OPEC has cut its global oil demand growth forecast for 2022 and 2023 for the fifth time in eight months on mounting economic challenges, including high inflation, rising interest rates, high sovereign debt, tight labour markets, and supply chain constraints. The organisation trimmed demand growth for both years by 100,000b/d. It expects demand to grow by 2.55mb/d to an average of 99.6mb/d in 2022 and by 2.24mb/d to an average of 101.8mb/d in 2023. While Analysts see downside risks in covid-19 restrictions in China and the looming global recession, moderating inflation in some economies and the likely resolution of the geopolitical tension in Eastern Europe may portend some optimism.

UK inflation hits 41-year high of 11.1%

In October, inflation in the United Kingdom reached a 41-year high of 11.1%, exceeding expectations as food, transportation, and energy prices continued to squeeze households and businesses. This was disclosed by the  Office for National Statistics on Wednesday. The jump was higher than the Bank of England’s forecast for inflation to peak at 10.9% and more than five times the central bank’s 2% target. The report stated that rising food prices also made a large upward contribution to the change with transport (principally motor fuels and second-hand car prices) making the largest, partially offsetting, downward contribution to the change in the rates. In October, the sharp rise in the cost of living was caused by higher gas, electricity, and food prices despite the government’s energy price guarantee, which capped bills for gas and electricity at £2,500 for a household with average usage of both fuels.

Japan’s inflation hits 40-year high as BOJ sticks to easy policy

Japan’s core consumer inflation accelerated to a 40-year high in October, driven by currency weakness and imported cost pressures that the central bank shrugs off as it sticks to a policy of ultra-low interest rates. The nationwide core consumer price index (CPI) was up 3.6% on a year earlier, exceeding the 3.5% rise expected by economists and the 3.0% gain seen in September. It was the largest jump since February 1982, when a Middle East crisis stemming from the Iran-Iraq war disrupted crude oil supply and triggered a spike in energy prices. The rise in the index, which excludes volatile fresh food prices but includes oil products, confirmed that inflation remained above the 2% goal of the Bank of Japan (BOJ) for a seventh consecutive month. But economists do not expect the BOJ to join a global trend of raising interest rates, because it sees this year’s acceleration in inflation as a cost-push episode that will fade as import costs stop pushing.

Some of our recommended stocks are mentioned below;

STANBIC PLC:

Stanbic IBTC Holdings Plc Q3 2022 showed that Net interest income advanced by 47.53% from N54.99bn in Q3 2021 to N79.66bn in the current period, supported by a 46.65% rise in interest income and despite the 44.13% rise in interest expense. Trading income rose by 175.93% from N9.02bn in Q3 2021 to N24.89bn in Q3 2022. Profit before tax gained 52.16% from N45.311bn in Q3 2021 to N68.95bn in the current period. Profit after tax went up by 38.14% from N39.95bn in Q3 2021 to N55.19bn in the current period, despite a 156.59% increase in income tax expense. Consequently, Stanbic IBTC Plc recorded a 39.93% rise in earnings per share from N2.93 in Q3 2021 to N4.10 in Q3 2022. Stanbic IBTC Plc has a BVPS of N29.17, P/BV of 0.99x and P/E ratio of 5.03x.

FIDELITY PLC:

Fidelity Bank Plc Q3 2022 results showed that interest income advanced by 53.08% from N137.41bn in Q3 2021 to N210.35bn in the current period. Net interest income increased by 72.19% to N111.85bn in Q3 2022 from N64.96bn in Q3 2021. Profit before tax increased by 34.72% from N28.05bn recorded in Q3 2021 to N37.79bn in the current period. The increase in profit before tax was due to a 15.07% increase in fee and commission income. Profit after tax increased by 31.85% from N26.51bn in Q3 2021 to N34.96bn in Q3 2022, despite a 84.15% increase in income tax expense. Earnings per share increased by 31.52% from N0.92 in Q3 2021 to N1.21 in the current period. Fidelity Bank has a BVPS of N10.76, P/BV of 0.32x and P/E ratio of 2.13x. 

Kindly find here our weekly stock recommendation.

Read more...

Weekly Market Review & Stock Recommendations – November 14, 2022

Dear Client/Reader,

Global Economic Roundup

Oil Prices Rise As China Eases Covid Restrictions

China announced on Friday an easing of its strict Covid measures that have weighed on the oil market in recent months, sending oil prices higher by more than 2.5% in early trade in Europe. The Chinese authorities said on Friday that quarantine times would be reduced for inbound passengers and close contacts of Covid-infected people while close contacts of close contacts would no longer be traced. The new guidelines of China’s National Health Commission mark the first significant easing of the Chinese ‘zero-Covid’ policy, which has weighed on economic activity and fuel demand in the world’s top oil importer this year and has depressed the oil market. The market cheered the easing of the Chinese Covid rules and both benchmarks jumped by more than 2% after the news broke.

UK businesses fear gloomy Christmas as cost of living soars

British businesses fear a gloomy Christmas ahead, as almost half of households plan to cut festive spending due to the soaring cost of living and sales are already falling sharply in inflation-adjusted terms. Payments processor Barclaycard said 48% of people it surveyed over Oct. 21-24 plan to spend less this Christmas, with 59% intending to buy less generous gifts and 42% cutting back on socializing. The British Retail Consortium said spending at major stores in October was 1.6% higher than a year earlier, slowing from 2.2% in September and representing a big fall in the volume of purchases once inflation was taken into account. “Christmas will come later than last year for many and there may be more gloom than glitter as families focus on making ends meet, particularly as mortgage payments rise,”

China’s trade unexpectedly shrinks as COVID curbs, global slowdown jolt demand

China’s exports and imports unexpectedly contracted in October, the first simultaneous slump since May 2020, as surging inflation and rising interest rates hammered global demand while new COVID-19 curbs at home disrupted output and consumption. The bleak October trade figures highlight the challenge for policymakers in China as exports had been one of the few bright spots for the struggling economy. Outbound shipments in October shrank 0.3 percent from a year earlier, a sharp turnaround from a 5.7 percent gain in September, official data showed on Monday, and well below analysts’ expectations for a 4.3 percent increase. It was the worst performance since May 2020. The data suggests demand remains frail overall, heaping more pressure on the country’s manufacturing sector and threatening any meaningful economic revival in the face of persistent COVID-19 curbs, protracted property weakness and global recession.

Some of our recommended stocks are mentioned below;

WAPCO PLC:

Lafarge Africa (WAPCO) Plc Q3 2022 results showed that earnings advanced by 23.11% from N219.20bn in Q3 2021 to N269.85 bn in the current period. Gross profit increased by 3199% to N134.77bn in Q3 2022 from N102.11bn in Q3 2021. In a similar tune, profit before tax advanced by 22.88% from N43.90bn recorded in Q3 2021 to N53.95 bn in the current period. Likewise, profit after tax grew by 11.15% from N40.40bn in Q3 2021 to N44.90bn in Q3 2022. Consequently, Earnings per share went up by 11.16% from N2.51 in Q3 2021 to N2.79 in Q3 2022. Lafarge Africa has a BVPS of N25.29, P/BV of 0.88x and P/E ratio of 5.98x.

ACCESSCORP PLC:

Access Holdings Plc Q3 2022 results showed that interest income advanced by 21.46% from N470.9 bn in Q3 2021 to N571.98 bn in the current period. Net interest income went up by 4.78% from N267.73 bn in Q3 2021 to N280.53 bn in Q3 2022. Profit before tax grew by 8.97% from N135.06 bn in Q3 2021 to N147.18 bn in the current period due to the 36.05% increase in net impairment charges, 17.27% rise in fees and commission expense and 11.62% rise in net foreign exchange gain. Profit after tax went up by 12.54% from N121.88bn in Q3 2021 to N137.17bn in the current period, on the back of a 22.92% fall in income tax expense. Consequently, Access recorded a 12.14% rise in earnings per share from N3.46 in Q3 2021 to N3.88 in Q3 2022. Access Holdings Plc has a BVPS of N29.11, P/BV of 0.28x and P/E ratio of 1.56x. 

Kindly find here attached.

Thank you.

Read more...
Scroll Up