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Weekly Market Review & Stock Recommendations – December 06, 2021

Dear Client/Reader,

Global Economic Roundup

OPEC+ Agrees to Proceed With January Oil-Production Hike

OPEC and its allies agreed to proceed with their next oil-production hike, while signaling they could revisit the decision at any moment as the risk to demand from the omicron variant of Covid-19 becomes clearer. The group will add 400,000 barrels a day of crude to global markets in January, as previously scheduled. However, it also left the door open to adjusting the plan at short notice if the market changes, an unusual step that underscores the uncertain outlook due to a resurgent pandemic and a U.S.-led release of emergency stockpiles. Global oil prices have lost more than $10 a barrel since last Thursday, on the back of the news of Omicron new strain, which caused investors to panic sell.

U.S. Fed Seen on Track for Faster Bond Tapering Despite Jobs Numbers

Federal Reserve policy makers are likely to follow through with a faster tapering of asset purchases despite mixed readings on the labour-market recovery. U.S. job growth registered its smallest gain this year while the unemployment rate fell by more than forecast to 4.2%, offering a mixed picture that may nevertheless push the Federal Reserve to quicken the wind-down of pandemic stimulus. Nonfarm payrolls climbed 210,000 in November after upward revisions to each of the prior two months. The labor force participation rate edged up to 61.8%.

Nigeria’s external reserve dips $633 million in November as CBN intensifies FX intervention

Nigeria’s foreign reserve dipped by $633.47 million in the month of November 2021 to close the month at $41.19 billion as of 30th November 2021,  representing a 1.51% decline in the foreign reserve level from October 2021. The decline in the country’s external reserve level in the month of November can be attributed to the continuous effort by the apex bank to maintain exchange rate stability by intervening in the supply of FX in the official market. Nigeria’s official exchange rate averaged N414.92/$1, an appreciation compared to N415.1/$1 recorded in the previous month. This is in line with the CBN’s effort to ensure liquidity in the market despite continuous current account deficit, huge international trade gap and a lower-than-expected remittance.

Some of our recommended stocks are mentioned below;

WAPCO PLC:

Wapco Plc Q3 2021 results showed that revenue grew by 21.86% from N179bn in Q3’2020 to N219bn in Q3’2021. Similarly, gross profit went up by 13.53% to N63bn in Q3’2021 from N56bn in Q3’2020. Profit from operations rose by 17.09% from N41 bn in Q3’2020 to N48bn in Q3’2021. Profit before tax grew by 28.02% to N43 bn in Q3’2021 from N34bn in Q3’2020. Profit after tax rose by 43.26% from N28bn in Q3’2020 to N40.39bn in Q3’2021. Consequently, Earnings per share increased by 43.43%, from N1.75 in Q3’2020 to N2.51 in Q3’2021. Wapco has a BVPS of N23.83, P/BV of 1.03x and P/E ratio of 7.36x.

TRANSCORP PLC:

Transcorp Plc Q3 2021 results showed that revenue grew by 57.39% from N54.38bn in Q3’2020 to N85.59bn in Q3’2021. Profit from operations rose by 77.15% from N15.54bn in Q3’2020 to N27.53bn in Q3’2021. Profit before tax grew by 600% to N14.13bn in Q3’2021 from N2.02bn in Q3’2020. Profit after tax rose by  671% from N1.75bn in Q3’2020 to N13.47bn in Q3’2021. Consequently, Earnings per share increased by 152.94%, from –N0.34 in Q3’2020 to N0.18 in Q3’2021. Transcorp has a BVPS of N3.12, P/BV of 0.31x and P/E ratio of 4.08x.

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Weekly Market Review & Stock Recommendations – November 22, 2021

Dear Client/Reader,

Global Economic Roundup

Oil at Six-Week Low as US, China Expected to Release Crude Oil Reserve

The price of oil has shot up in recent times, boosting profits for major producers but hurting the wallets of drivers who need to fill up their tanks. This week, however, some of the pressure has started to lift. West Texas Intermediate futures, the US benchmark for oil prices, and Brent futures, the global benchmark, are now trading at their lowest levels in six weeks on signals that supply constraints could begin to ease soon. US President Joe Biden and Chinese President Xi Jinping discussed the “importance of taking measures to address global energy supplies” during their virtual summit this week. That sparked chatter about a coordinated move initiated by the White House to put millions of barrels of oil on the market.

U.K. Inflation Surges to Highest in a Decade on Energy Costs

U.K. inflation climbed faster than expected to the highest in a decade, heaping pressure on the Bank of England to raise interest rates and tightening a squeeze on living standards for households. The cost of living has surged at its fastest pace in almost 10 years, hitting 4.2% in the year to October. It is mainly due to higher fuel and energy prices but the cost of second-hand cars and eating out also rose, the Office for National Statistics said. Inflation has been up sharply since Covid restrictions ended this year and the economy reopened. The Bank of England says it may have to raise interest rates in the “coming months” to tackle rising prices.

Lagos State Government to launch its Bond Issuance of N125 billion

The Lagos State Government is about to launch its Series IV Bonds of up to N125 billion under the State’s N500 billion Bond Issuance Programme. This was disclosed by the Joint Issuing House, Comercio Partners Capital Limited. The offer date and prices of the bonds are yet to be made known as the information will be made available after the launch. The proceeds from the issuance are to be directed at executing priority projects and refinancing bridge facilities and will enable Lagos State to further accelerate the development of physical and social infrastructure in the State in line with the State’s THEME Agenda.

Some of our recommended stocks are mentioned below;

FIDELITY BANK PLC:

Fidelity Bank Q3 2021 results showed that interest income advanced by 3.73% from N132.47 bn in Q3 2020 to N137.41 bn in the current period. Net interest income decreased by 13.39% to N64.96bn in Q3 2021 from N75bn in Q3 2020; this is attributable to the 26.07% increase in interest expense. Profit before tax increased by 31.40% from N21.35bn recorded in Q3 2020 to N28.05bn in the current period. Profit after tax increased by 29.93% from N20.41bn in Q3 2020 to N26.51bn in Q3 2021, despite a 63% surge in income tax expense. Earnings per share increased by 31.43% from N0.70 in Q3 2020 to N0.92 in the current period. Fidelity Bank has a BVPS of N9.76, P/BV of 0.27x and P/E ratio of 2.79x.

UBA PLC:

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 N229 bn in Q3 2021 from N186  bn in Q3 2020. The increase in net interest income was driven by the rise in interest income and a 12.75% drop in the interest expense. In a similar tune, operating income increased by 16.28% from N282 bn in Q3 2020 to N328 bn in the current period. Likewise, profit after tax advanced by 36.35% from N77 bn in Q3 2020 to N104 bn 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 0.36x and P/E ratio of 2.79x.

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Weekly Market Review & Stock Recommendations – November 8, 2021

Dear Client/Reader,

Global Economic Roundup

US Federal Reserve winding down Covid stimulus

The US Federal Reserve has announced it is winding down the massive stimulus programme it put in place at the onset of the Covid-19 pandemic amid fears that the central bank may have to raise rates soon to control rising inflation. Fed officials have been debating for months over whether and when to taper the stimulus programmes that it set up to head off the economic headwinds caused by the pandemic. They announced on Wednesday that they would begin cutting that stimulus by $15bn a month but left interest rates unchanged.

Oil gains as supply concerns re-emerge after OPEC+ output plan

Brent crude was up $2.14, or 2.7%, at $82.68 per barrel. West Texas Intermediate crude (WTI) gained $2.47, or 3% to $81.28. The Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, agreed on Thursday to stick to their plan to raise oil output by 400,000 barrels per day (bpd) from December. U.S. President Joe Biden had called for extra output to cool rising prices. OPEC’s decision to stay the course and the Biden administration’s lack of a substantial response has the oil rally continuing.  Only a coordinated effort, with China and others involved, would address the lack of barrels in the market. After the OPEC+ meeting, the White House said it would consider all tools at its disposal to guarantee affordable energy, including the possibility of releasing oil from strategic petroleum reserves (SPR).Pension funds invested in banks rise to N2.05tn

Nigeria owes China $3 billion as of 2020

The World Bank says Nigeria has so far borrowed $3.121 billion from China as at March 2020, an amount which represents only 3.94 per cent of Nigeria’s total public debt of $79.21 billion as of September 2021.Similarly, in terms of external sources of funds, loans from China accounted for 11.28 per cent of the External Debt Stock of USD27.67 billion as of the same date. According to the World Bank, the total borrowing from China of USD 3.121 billion as of March 31, 2020, are concessional loans with interest rates of 2.50 per cent per annum with a tenor of 20 years and a grace period (moratorium) of seven years.

Some of our recommended stocks are mentioned below;

ZENITH PLC:

Zenith Plc Q3’2021 results showed that gross earnings advanced by 1.91% to N518.67bn from N508.97bn in Q3’2020. Interest income declined by 3.13% from N318.82bn in Q3’2020 to N308.84bn. Profit before tax advanced by 1.43% from N177.28bn recorded in Q3’2020 to N179.81bn in the current period. Profit after tax went up by 0.80% from N159.31bn in Q2’2020 to N160.59bn in Q3’2021 after a 6.95% increase in income tax expenses. Earnings per share advanced by 0.79% from N5.07 in Q3’2020 to N5.11 in the current period. Zenith Bank has a BVPS of N37.81, P/BV of 0.66x and P/E ratio of 2.45x.

AFRIPRUD PLC:

Afriprud Plc’s result for Q3’2021 showed that Gross Earnings declined from N2.63bn in Q3 2020 to N2.44bn in Q3 2021 by 7.03%. Interest income dropped by 9.16% from N1.77 bn in Q3’2020 to N1.60bn in Q3’2021. Profit before tax went down by 14.25% from N1.56 bn in Q3’2020 to N1.34 bn in the current period. Profit after tax declined by 18.27% to N1.15 bn in the current period from N1.40 bn in Q3’2020. Consequently, Earnings per share went down by 18.31% from N0.71 in Q3’2020 to N0..58 in the current period. Afriprud has a BVPS of N4.25, P/BV of 1.49x and P/E ratio of 5.47x.

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Weekly Market Review & Stock Recommendations – November 1, 2021

Dear Client/Reader,

Global Economic Roundup

US growth slows to just 2% as Delta hits economy

US economic growth slowed sharply in the third quarter of the year, as the fast-spreading Delta variant of coronavirus dampened consumer spending.The economy expanded at an annualised rate of just 2% in the three months to September – down from 6.7% in the previous quarter. It came as the US faced supply chain issues, rising inflation and new Covid restrictions in some places.But infection rates are falling and some experts think growth will pick up.On a non-annualised basis, the growth figure was 0.5%.

South Korea’s Q3 GDP grows at slower pace, misses forecast

South Korea’s economy grew at a slower pace in the third quarter, as robust exports were offset by weak domestic demand and construction and facility investments, data from the Bank of Korea showed on Tuesday. South Korea’s Q3 GDP grows at slower pace, misses forecast. Gross domestic product (GDP) grew a seasonally adjusted 0.3% in the third quarter, , the slowest in five quarters and following a 0.8% rise in the preceding three months. It also fell short of the 0.6% growth

Pension funds invested in banks rise to N2.05tn

The total amount of pension funds invested in banks by Pension Fund Administrators rose to N2.05tn at the end of July from N1.48tn in January. The National Pension Commission disclosed this in its report, titled ‘Unaudited report on pension funds industry portfolio for the period ended 31 July 2021’. It said total assets under the Contributory Pension Scheme stood at N12.78tn as of the period under review.

Some of our recommended stocks are mentioned below;

UBA PLC:

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 N229 bn in Q3 2021 from N186  bn in Q3 2020. The increase in net interest income was driven by the rise in interest income and a 12.75% drop in the interest expense. In a similar tune, operating income increased by 16.28% from N282 bn in Q3 2020 to N328 bn in the current period. Likewise, profit after tax advanced by 36.35% from N77 bn in Q3 2020 to N104 bn 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 0.36x and P/E ratio of 1.45x.

WAPCO PLC:

Wapco Plc Q3 2021 results showed that revenue grew by 21.86% from N179bn in Q3’2020 to N219bn in Q3’2021. Similarly, gross profit went up by 13.53% to N63bn in Q3’2021 from N56 bn in Q3’2020. Profit from operations rose by 17.09% from N41 bn in Q3’2020 to N48  bn in Q3’2021. Profit before tax grew by 28.02% to N43 bn in Q3’2021 from N34 bn in Q3’2020, on the back of a 25.30% decline in finance cost. Profit after tax rose by  43.26% from N28 bn in Q3’2020 to N40.39 bn in Q3’2021. Consequently, Earnings per share increased by 43.43%, from N1.75 in Q3’2020 to N2.51 in Q3’2021. Wapco has a BVPS of N23.83, P/BV of 1.01x and P/E ratio of 5.37x. 

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Weekly Market Review & Stock Recommendations – October 18, 2021

Dear Client/Reader,

Global Economic Roundup

Oil Edges Higher With Energy Shortages Boosting Winter Demand

Crude is holding above $80 a barrel as shortages of coal and natural gas heading into the Northern Hemisphere winter are expected to keep demand high. These shortages have prompted some switching fuels such as diesel and fuel oil in the power sector. The latest pressure on energy supplies comes from record thermal coal prices in China as key mining regions are hit by flooding. It seems there is not a lot policy makers and politicians in consumer countries can do beyond asking OPEC to please pump more oil.

IMF and Goldman Sachs Slash US Growth Forecast

The IMF on Tuesday slashed its 2021 growth forecast for the United States by one full percentage point to 6%, the biggest reduction suffered by any G7 economy in its latest World Economic Outlook. The cut reflects disruptions to supply chains and softening consumption in the third quarter, the IMF said. The revision comes days after Goldman Sachs cut its growth forecasts for the US economy this year and next, citing weaker consumer spending and the winding down of the government’s Covid-19 relief programs. Goldman Sachs now expects the economy to expand by 5.6% this year, compared to a previous estimate of 5.7%. In 2022, growth is projected to expand by 4%, down from 4.4%.

Nigeria’s Foreign Reserve Records $2.76 Billion Boost in September 2021

Nigeria’s foreign reserve received a boost of $2.76 billion in the month of September 2021 to close at $36.78 billion as of the end of the month. This is according to data from the Central Bank of Nigeria (CBN). This gain represents the highest monthly gain recorded since May 2020, when the reserve gained $3.07 billion in a single month. Notably, Nigeria’s foreign reserve increased by 8.13% from $34.02 billion recorded as of August 2021 to $36.78 billion in the review month. It is worth noting that an increased foreign reserve comes as good news to the economy as it means the apex bank has more foreign exchange at its disposal to intervene in the forex market which in essence reduces the pressure on the country’s exchange rate.

Some of our recommended stocks are mentioned below;

ZENITHBANK PLC:

Zenith Plc is projected to have a Q3 2021 interest income of N382.58bn, up by 20% from N318.82bn in Q3 2020. PAT is estimated to increase by 5.41% from N159.32bn in Q3 2020 to N169.93bn in Q3 2021, bringing the EPS up by 6.76% to N5.41 in Q3 2021. Zenith Plc Q2’2021 results showed that gross earnings advanced by 1.61% to N159.94bn from N157.4bn in Q2’2020. Interest income declined by 6.00% from N216.95bn in Q2’2020 to N203.93bn. Profit before tax advanced by 2.57% from N114.12bn recorded in Q2’2020 to N117bn in the current period. Profit after tax went up by 2.21% from N103.83bn in Q2’2020 to N106.12bn in Q2’2021. Earnings per share advanced by 2.42% from N3.30 in Q2’2020 to N3.38 in the current period. Zenith Bank has a BVPS of N36.42, P/BV of 0.68x and P/E ratio of 3.65x.

FLOURMILL PLC:

Flourmill Plc is projected to have a Q2 2021 revenue of N424.75bn, up by 7.30% from N355.11bn in Q2 2020. PAT is estimated to increase by 19.61% from N9.93bn in Q2 2020 to N11.88bn in Q2 2021, bringing the EPS up to N2.90. Flour Mill Plc’s result for Q1 2021 showed that revenue increased from N154.57bn in Q1 2020 to N233.70bn in Q1 2021 by 51.18%. Gross profit also increased by 0.60% from N25.55bn in Q1 2020 to N25.70bn in Q1 2021. Finance cost dropped by 6.44% from N4.86bn in Q1 2020 to N4.55bn in Q1 2021. Profit before tax increased by 12.50% from N6.46 bn in Q1 2020 to N7.26bn in the current period. Profit after tax expanded by 9.57% to N5.45bn in the current period from N4.97bn in Q1 2020. Consequently, Earnings per share went up by 9.35% from N1.07 in Q1 2020 to N1.17 in the current period. Flour Mill Plc has a BVPS of N43.91, P/BV of 0.67x and P/E ratio of 8.35x. 

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Weekly Market Review & Stock Recommendations – October 11, 2021

Dear Client/Reader,

Global Economic Roundup

OPEC+ Choice to Gradually Boost Oil Supply Sends Price to 7-Year High

The Organization of the Petroleum Exporting Countries is standing by its plan to gradually boost oil output as demand recovers, defying pressure to open its taps wider and delivering another jolt to crude prices. OPEC+ said that they would stick to a previous decision to increase supply by 400,000 barrels per day in November. That sent Brent crude futures, the global oil benchmark, up 2.5%. They continued to rally on Tuesday, hitting their highest level since 2018. West Texas Intermediate futures, the US benchmark, have reached their highest level in seven years. Oil prices could be pushed even higher thanks to the soaring cost of natural gas and coal, which may trigger a scramble for crude to generate power over the winter.

China needs coal, and Australia has it.

China needs to bolster its coal supply to avoid an economic slowdown this quarter, but Beijing’s icy relations with Australia could make that difficult. The world’s second-largest economy is facing a power shortage owing to a combination of factors such as extreme weather, surging demand for Chinese exports and a national push to reduce carbon emissions. China generates most of its electricity by burning coal but inventory of major power plants reached a 10-year low in August. Late last year, China stopped buying coal from Australia — which used to be the biggest exporter of the commodity to the country.

FG to Borrow Again to Finance N6.258 Trillion 2022 Budget Deficit

The Federal Government has given an indication of its readiness to borrow from both local and foreign sources to finance the N6.258 trillion deficit in the proposed 2022 budget. This is just as the Federal Executive Council (FEC) has approved the 2022 Appropriation Bill with an aggregate expenditure of N16.39 trillion. In her defense of the frequent borrowings by the federal government despite concerns raised from different quarters, the minister of finance said the move is necessary to be able to build projects and to ensure they are developed on a sustainable basis insisting that the total size of the borrowing is still within healthy and sustainable limits.

Some of our recommended stocks are mentioned below;

MAYBAKER PLC:

Maybaker Plc is projected to have a Q3 2021 revenue of N9.12bn, up by 41.71% from N6.44bn in Q3 2020. PAT is estimated to increase from N681.73 million in Q3 2020 to N966.10 million in Q3 2021, bringing the EPS up to N0.56. Maybaker Q2 2021 results showed an increase in revenue by 35.67% from N4.07bn in Q2 2020 to N5.52 bn in Q2 2021. Operating profit advanced from N687 million in Q2 2020 to N936 million in Q2 2021, reflecting an increase of 36.21%. PBT went up by 26.52% from N645 million in Q2 2020 to N816 million in the current period. PAT grew by 26.52% from N438 million in Q2 2020 to N555 million in Q2 2021, despite a 26% surge in taxes. EPS grew by 26% to N0.32 in Q2 2021 from N0.25 in Q2 2020. Maybaker has a BVPS of N3.93, P/BV ratio of 1.21x and P/E ratio of 7.41x.

NB PLC:

Nigerian Breweries Plc is projected to have a Q3 2021 revenue of N309.84bn from N234.02bn in Q3 2020. Likewise, PAT is estimated to grow by 32.40% from N6.94bn in Q3 2020 to N9.19bn in Q3 2021. EPS is expected to rise to N1.17 in Q3 2021. NB Plc Q2 2021 results showed that revenue grew by 37.8% from N151.81bn in Q2 2020 to N209.2bn in Q2 2021. Similarly, gross profit increased by 31.7% to N77.91bn in Q2 2021 from N59.14bn in Q2 2020. Profit from operations advanced by 32.4% from N15.04bn in Q2 2020 to N19.91bn in Q2 2021. Profit before tax grew by 43.1% to N11.94bn in Q2 2021 from N8.34bn in Q2 2020. Profit after tax grew by 38.1% from N5.58bn in Q2 2020 to N7.71bn in Q2 2021. Consequently, EPS rose by 35.2% from N0.71 in Q2 2020 to N0.97 in Q2 2021. NB Plc has a BVPS of N20.14,P/BV of 2.46x and a P/E ratio of 25.52x.

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Weekly Market Review & Stock Recommendations – October 04, 2021

Dear Client/Reader,

Global Economic Roundup

Oil Prices Rise Amid Prospect of Widespread Fuel Shortfalls

Signs of a global energy crunch pushed up oil prices as markets grappled with the prospect of widespread fuel shortfalls heading into the end of the year. Brent crude, the world benchmark, touched $80 per barrel on Tuesday, reaching a three-year high. Goldman Sachs forecast on Sunday that Brent would hit $90 (approximately €77) a barrel before the end of the year, up from its previous call for $80 (€68). A shortfall in global gas production, along with a concerted drive in China to cut down on pollution from heavy industry, is expected to push crude higher as industries shift to using oil to generate power.

China Power Crunch Is Next Economic Shock After Evergrande

China may be diving head first into a power supply shock that could hit Asia’s largest economy hard just as the Evergrande crisis sends shockwaves through its financial system. The crackdown on power consumption is being driven by rising demand for electricity and surging coal and gas prices as well as strict targets from Beijing to cut emissions. Economists are warning of lower economic growth in China as electricity shortages worsen, forcing businesses to cut back on production. The crisis is also beginning to hit people where they live, adding the risk of social instability on top of potential global supply chain disruptions.

Naira Depreciates At Official Window Despite a 266% Increase In Dollar Supply

The exchange rate between the naira and the US dollar closed at N414.73/$1, at the official Investors and Exporters window. Naira depreciated against the US dollar on Wednesday, to close at N414.73/$1, representing a 0.06% drop when compared to N414.50/$1 recorded on Tuesday 28th September 2021. Meanwhile, the exchange rate at the parallel market closed at N574/$1 on Tuesday. The naira fell at the official market despite a massive 266.2% increase in dollar supply. The local currency is still hitting record lows against the US dollar at the black market despite the news of Nigeria’s Eurobond sales which is meant to boost the nation’s external reserves.

Some of our recommended stocks are mentioned below;

ACCESS PLC:

Access Bank Plc is projected to have a Q3 2021 interest income of N447.79bn, up by 19.32% from N375.28bn in Q3 2020. PAT is estimated to increase from N102.30bn in Q3 2020 to N122.07bn in Q3 2021, bringing the EPS up to N3.43. Access Plc Q2 2021 showed that interest income advanced by 29.59% from N246.72bn in Q2 2020 to N319.73bn in the current period. Net interest income went up 58.52% from N126.21bn in Q2 2020 to N200bn in Q2 2021. Profit before tax advanced by 31.21% from N74.31bn in Q2 2020 to N97.5bn in the current period. Profit after tax went up by 42.44% from N61.03bn in Q2 2020 to N86.94bn in the current period. Consequently, Access recorded a 43.35% rise in earnings per share from N1.73 in Q2 2020 to N2.48 in Q2 2021. Access has a BVPS of N21.82, P/BV of 0.42x and P/E ratio of 1.84x.

DANGSUGAR PLC:

Dangsugar Plc is projected to have a Q3 2021 revenue of N216.11bn, up by 34.64% from N160.51bn in Q3 2020. PAT is estimated to increase from N26.63bn in Q3 2020 to N35.85bn in Q3 2021, bringing the EPS up to N2.95. Dangsugar Plc’s result for Q2’2021 showed that revenue increased from N103.23bn in Q2  2020 to N131.95bn in Q2 2021 by 28%. Operating profit also increased by 35% from N17.39bn in Q2’2020 to N23.48bn in Q2 2021. Net finance expense increased by 224% from N1.47bn in Q2’2020 to N4.79bn in Q2’2021. Profit before tax rose by 10% from N17 bn in Q2’2020 to N18.75bn in the current period. Profit after tax increased by 9% to N12.6bn in Q2 2021 from N11.5bn in Q2 2020. Consequently, Earnings per share increased by 7% from N0.97 in Q2’2020 to N1.04 in the current period. Dangsugar Plc has a BVPS of N9.80, P/BV of 1.78x and P/E ratio of 8.37x. 

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Weekly Market Review & Stock Recommendations -September 27, 2021

Dear Client/Reader,

Global Economic Roundup

Crude oil prices trade at highest levels since 2018, nearing $80 a barrel

The price of crude oil was up in London on Friday morning, climbing for a fourth day amid tighter supplies and a strong appetite for riskier assets like crude oil, as well as high hopes for an economic recovery following COVID-19. After reaching a two-month high on Thursday, Brent oil futures edged near $77 a barrel on Friday, closing at their highest level since October 2018. There seems to be no end in sight to crude prices, as they are headed upwards. Taking risks at an excessive rate.

China Injects $18.6 Billion into Banking System During Evergrande Crisis

China’s central bank boosted its gross injection of short-term cash into the financial system after concern over a debt crisis at China Evergrande Group roiled global markets. The People’s Bank of China pumped 120 billion yuan ($18.6 billion) into the banking system through reverse repurchase agreements, resulting in a net injection of 90 billion yuan. That matches the amount seen on Friday, and was just below that of Saturday. Sentiment was also boosted after Evergrande’s onshore property unit said it plans to repay interest due Thursday on its local bonds.

Nigeria raises $4 billion in Eurobond, dubbed one of the biggest financial trades in Africa

In what is seen as “one of the biggest financial trades to come out of Africa in 2021,” Nigeria raised $4 billion via Eurobond. The Order book peaked at $12.2 billion, which enabled the Federal Government to raise $1 billion more than the $3 billion it initially announced. Bids were received from Europe, America and Asia with participation from local investors. On the upcoming Eurobond issue, Nigeria chose JPMorgan, Citigroup, Standard Chartered, and Goldman Sachs, as well as local firm Chapel Hill Denham.

Some of our recommended stocks are mentioned below;

UBA PLC:

UBA Plc is projected to have a Q3 2021 interest income of N329.54bn, up by 3.91% from N317.14bn in Q3 2020. PAT is estimated to increase from N77.13bn in Q3 2020 to N80.15bn in Q3 2021, bringing the EPS up to N2.34. UBA Plc Q2 2021 result showed that Interest income advanced by 8.29% from N205.59bn in Q2 2020 to N222.63bn in the current period. Net interest income increased by 24.09% to N148.07bn in Q2 2021 from N119.32bn in Q2 2020.  Likewise, profit after tax advanced by 36.35% fromN44.43 bn in Q2 2020 to N60.58 bn in Q2 2021.Consequently, EPS went up by 36.29% from N1.24 in Q2 2020 to N1.69 in Q2 2021. UBA has a BVPS of N22.00,P/BV of 0.34x and P/E ratio of 2.20x

DANGCEM PLC:

Dangote Cement Plc is projected to have a Q3 2021 revenue of N1.06 trn, up by 39.16% from N761.44bn in Q3 2020. PAT is estimated to increase from N208.69bn in Q3 2020 to N290.40bn in Q3 2021, bringing the EPS up to N17.04 in Q3 2021 from N12.25 in Q3 2020. 

Dangcem Q2 2021 results showed that revenue grew by 44.81% from N476.85bn in Q2 2020 to N690.54bn in Q2 2021.Profit before operations advanced by 74% from N173bn in Q2 2020 to N302bn in Q2 2021. Profit before tax grew by 72% to N281.25bn in Q2 2021 from N162.85bn in Q2 2020. Profit after tax grew by 51.91% from N126bn in Q2 2020 to N191.63bn in Q2 2021. Consequently, EPS rose by 50.47% from N7.45 in Q2 2020 to N11.21 in Q2 2021. Dangcem has a BVPS of N47.24, P/BV of 5.19x and a P/E ratio of 10.93x.

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Weekly Market Review & Stock Recommendations -September 20, 2021

Dear Client/Reader,

Global Economic Roundup

Oil Prices Rise Further On Large Crude Inventory Draw

Crude oil prices went up on bullish news from the U.S. Energy Information Administration, which reported a 6.4-million-barrel draw in crude oil inventories and another draw in fuel inventories. A week earlier, the EIA had estimated a modest 1.3-million-barrel decline in crude oil inventories but a sizable draw in gasoline pushed prices higher, signaling that strong demand has not wavered amid the latest surge in Covid-19 infections. In its latest monthly oil report, the International Energy Agency forecast a 1.6-million-bpd rebound in global oil demand next month as the Delta variant of the coronavirus releases its grip on economies.

Biden Team Weighs China Trade Probe in Bid to Press Beijing

President Joe Biden is fighting his own trade war with China. The White House is weighing a new investigation into Chinese subsidies and their damage to the U.S. economy as a way to pressure Beijing. The news comes after a phone call Thursday between Biden and China President Xi Jinping after months of increasingly frosty relations between the two nations. The US also signed a security agreement with the UK and Australia in what is seen as an effort to counter China. China’s embassy in Washington accused the countries of a “Cold War mentality and ideological prejudice”.

Nigeria’s oil production drops to 1.2m b/d in August — lowest in 2021

Nigeria’s oil production dropped to an average 1.23 million barrels per day in August, representing the lowest figure recorded yet in 2021. According to the report, Nigeria’s crude fell from an average 1.36 million barrels per day in January to 1.23 million b/d in August, representing a 9 percent decline. By implication, the development would affect the nation’s crude exports and foreign earnings. Checks showed that difficulties in some oil terminals caused the decline in Nigeria’s oil output.

Some of our recommended stocks are mentioned below;

FIDELITY BANK PLC:

Fidelity Bank Q2 2021 results showed that interest income declined by 2.89% from N87.62 bn in Q2 2020 to N85.09 bn in the current period. Net interest income increased by 4.09% to N50.30 bn in Q2 2021 from N48.32bn in Q2 2020. Profit before tax increased by 72.43% from N11.96 bn recorded in Q2 2020 to N20.63 bn in the current period. Profit after tax increased by 70.80% from N11.30 bn in Q2 2020 to N19.31 bn in Q2 2021, despite a 100% surge in income tax expense. EPS increased by 71.79% from N0.39 in Q2 2020 to N0.67 in the current period. Fidelity Bank has a BVPS of N9.43, P/BV of 0.26x and P/E ratio of 1.80x.

WAPCO PLC:

Wapco is projected to have a Q3 2021 revenue of N209.12bn from N179.88bn in Q3 2020. Likewise, PAT is estimated to grow by 16.26% from N28.20bn in Q3 2020 to N32.78bn in Q3 2021 taking the EPS up to N2.04. Wapco Plc Q2 2021 results showed that revenue grew by 20.3% from N120bn in Q2’2020 to N145bn in Q2’2021. Profit before tax grew by 27% to N36.75 bn in Q2’2021 from N26.75bn in Q2’2020, on the back of a 40% decline in finance cost. Profit after tax rose by 21.4% from N23.3bn in Q2’2020 to N28.3bn in Q2’2021, despite a 55% surge in taxes. Consequently, EPS increased by 21%, from N1.45 in Q2’2020 to N1.76 in Q2’2021. Wapco has a BVPS of N23.09, P/BV of 0.95x and P/E ratio of 6.25x.

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Weekly Market Review & Stock Recommendations -September 13, 2021

Dear Client/Reader,

Global Economic Roundup

OPEC+ raises forecast for oil demands next year

The Organisation of the Petroleum Exporting Countries and allies, including Russia, collectively known as OPEC+, has raised its forecast for oil demand next year, in a move that might help to build a case for raising output. Brent crude for November delivery gained 18 cents, or 0.3 per cent to touch 71.81 dollars a barrel, U.S. West Texas Intermediate (WTI) crude for October was up 17 cents, or 0.3 percent at $68.67. Prices were also supported by a U.S. industry report showing that crude inventories fell more than expected last week, though much U.S. refinery capacity remains offline in the wake of Hurricane Ida.

U.S. Hiring Slows Sharply Amid Delta, Complicating Fed Taper

U.S. hiring downshifted abruptly in August with the smallest jobs gain in seven months, complicating a potential decision by the Federal Reserve to begin scaling back monetary support by year end. Payrolls rose 235,000 in August, short of the forecasted 733,000 jobs. The unemployment rate also dipped further to reach a pandemic-era low of 5.2%, while holding above the 50-year low of 3.5% from early 2020. Still, this marked an eighth consecutive month of net job growth, and brought total employment closer to pre-pandemic levels.

Nigeria’s international trade deficit hits N5.81 trillion in H1 2021

The recent report from NBS showed that Nigeria exported total merchandise valued at N7.99 trillion in the review period, opposed to a total import value of N13.8 trillion, indicating a trade balance of -N5.81 trillion between January and June 2021. This is by far the highest trade deficit recorded by Nigeria in any half-year period. Despite recent data indicating improved inter-border trade activities, it is increasingly becoming a major forex burden for the country as scarce forex is still being used to import merchandise, while earnings from exports continue to dwindle.

Some of our recommended stocks are mentioned below;

UBA PLC:

UBA Plc Q2 2021 result showed that Interest income advanced by 8.29% from N205.59bn in Q2 2020 to N222.63 bn in the current period. Net interest income increased by 24.09% to N148.07 bn in Q2 2021 from N119.32 bn in Q2 2020. Likewise, profit after tax advanced by 36.35% from N44.43 bn in Q2 2020 to N60.58 bn in Q2 2021 despite a 22.89% increase in tax expense. Consequently, earnings per share went up by 36.29% from N1.24 in Q2 2020 to N1.69 in Q2 2021. UBA has a BVPS of N22.00, P/BV of 0.35x and P/E ratio of 2.25x.

GTCO PLC:

GTCO Plc Q2 2021 showed that interest income declined by 17.97% from N153.71 bn in Q2 2020 to N126.09 bn in the current period. Net interest income went down by 16.11% from N127.62bn in Q2 2020 to N107.06 bn in Q2 2021. Profit before tax also declined by 15.18% from N109.71 bn in Q2 2020 to N93.06 bn in the current period. Profit after tax went down by 15.76% from N94.27 bn in Q2 2020 to N79.41 bn in the current period. Consequently, GTCO recorded a 16% fall in earnings per share from N3.32 in Q2 2020 to N2.79 in Q2 2021. GTCO has a BVPS of N24.50, a P/BV of 1.10x and a P/E ratio of 4.85x.

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