News

21 Feb

Weekly Market Review & Stock Recommendations -February 20, 2023

Dear Client/Reader,

Global Economic Roundup

Saudi Arabia And Russia Face Off Over Chinese Oil Market Share

China’s oil demand is rising with the reopening from Covid restrictions after nearly three years. The initial demand trend suggests a reopening in fits and starts, but analysts say that it will be China that will account for half of this year’s global oil demand growth, with total world oil demand reaching a record.  And while China’s oil demand is set to rebound, the leaders of the OPEC+ group, Saudi Arabia and Russia, will be competing to meet the growing demand in the world’s largest crude oil importer. Saudi Arabia sells its crude oil under long-term contracts, so it has a guaranteed share of the Chinese market. But Russia, having pivoted to Asia for crude and fuel sales after the Western sanctions, is offering its oil at discounts and could attract more Chinese buyers who don’t abide by the G7 price caps. The Saudis are signaling expectations of a strong rebound in China’s demand by unexpectedly raising their prices for Asia. But these prices cannot compete with discounted Russian barrels, and Chinese buyers may opt for requesting the minimum volumes from Saudi Arabia allowed under the long-term contracts OPEC’s top producer, Reuters’ Asia Commodities and Energy Columnist Clyde Russell argues. Last week, Saudi Arabia surprised the oil market by raising the official selling price (OSP) of its flagship crude going to Asia in March. Saudi Aramco lifted the price of its flagship Arab Light grade to Asia for March loadings by $0.20 per barrel to a premium of $2.00 a barrel over the Dubai/Oman average, the benchmark, off which Middle East’s oil is priced in Asia.

Consumer debt hits record $16.9 trillion as delinquencies also rise

Consumer debt hit a fresh record at the end of 2022 while delinquency rates rose for several types of loans, the New York Federal Reserve reported on Thursday. Debt across all categories totaled $16.9 trillion, up about $1.3 trillion from a year ago, as balances rose across all major categories. Despite a decline in originations, mortgage balances increased to $11.9 trillion, up about $250 billion from the third quarter and about $1 trillion from a year ago. Originations for new home loans and refinancings fell to $498 billion, less than half where they were for Q4 in 2021 and a drop of about $135 billion from the third quarter. Mortgage loans considered in “serious delinquency” of 90 days or more rose to a rate of 0.57%, still low but nearly double where they were from the year prior. Auto loan debt delinquencies rose 0.6 percentage point to 2.2%, while credit card debt jumped 0.8 percentage point to 4%. “Credit card balances grew robustly in the fourth quarter, while mortgage and auto loan balances grew at a more moderate pace, reflecting activity consistent with pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed. “Although historically low unemployment has kept consumers’ financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts,” he added. The rise in balances came amid an aggressive rate-hiking campaign from the Fed as it battled inflation running near its highest levels in more than 41 years.

Nigeria’s inflation hits 21.82% amid cash crunch

Amid the uncertainties being faced by Nigerians due to the scarcity of the redesigned Naira notes, the nation’s inflation rate rose in January after recording a fall in December. Inflation rose to 21.82 per cent in January compared to 21.34 per cent in December, the National Bureau of Statistics announced Wednesday. The statistics office said the headline inflation rate rose to 21.82 per cent compared to December 2022 headline inflation rate which was 21.34 per cent. The January 2023 inflation rate showed an increase of 0.47 per cent points when compared to December 2022 inflation rate, it said. Nigerians have in recent weeks faced an unprecedented cash crunch as a result of the naira redesign policy of the Central Bank of Nigeria (CBN). The crisis has plunged many citizens into hardship, with numerous others finding it extremely difficult to meet their basic daily needs. The Nigerian Governors’ Forum last week warned that the policy may drive the nation’s economy into a recession. In its inflation report Wednesday, the NBS said that increases were recorded in all Individual Consumption by Purpose (COICOP) divisions that yielded the headline index. “However, on a year-on-year basis, the headline inflation rate was 6.22 per cent points higher compared to the rate recorded in January 2022, which was 15.60 per cent. “This shows that the headline inflation rate (year-on-year basis) increased in January 2023 when compared to the same month in the preceding year (i.e., January 2022),” it said. The report noted that the contributions of items on a class basis to the increase in the headline index are bread and cereal (21.67 per cent), actual and imputed rent (7.74 per cent), potatoes, yam and tuber (6.06 per cent), vegetables (5.44 per cent), and meat (4.78 per cent). “On a month-on-month basis, the percentage change in the All-Items Index in January 2023 was 1.87 per cent, which was 0.15 per cent points higher than the rate recorded in December 2022 (1.71 per cent). “This means that in January 2023, on average, the general price level was 0.15 per cent higher relative to December 2022. “The percentage change in the average CPI for the twelve months period ending January 2023 over the average of the CPI for the previous twelve months period was 19.36 per cent, showing a 2.49 per cent increase compared to 16.87 per cent recorded in January 2022,” the report said.

Some of our recommended stocks are mentioned below;

ACCESSCORP:

Access Holdings Plc is projected to have a FY 2022 revenue of N740.81bn, up by 23.12% from N601.71bn in FY 2021. Profit after tax is estimated to grow from N160..22bn in FY 2021 to N197.26 bn in FY 2022 with an EPS of N5.63.

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 0.32x and P/E ratio of 1.79x.

ZENITH:

Zenithbank Plc is projected to have a FY 2022 revenue of N832.32bn, up by 19.51% from N696.45bn in FY 2021. Profit after tax is estimated to grow from N160.59bn in FY 2021 to N191.92bn in FY 2022 with an EPS of N6.11.

Zenithbank Plc’s Q3 2022 results showed that gross earnings advanced by 19.65% to ₦620.57 bn in Q3 2022 from ₦518.67 bn in Q3 2021. Net interest income grew by 20.52% from ₦234.75 bn in Q3 2021 to ₦282.91bn in Q3 2022, supported by a 26.52% rise in interest income. Profit before tax advanced by 12.65% from ₦179.81 bn recorded in Q3 2021 to ₦202.55 bn in the current period. This is attributable to the 0.86% increase in trading income and 27.79% increase in net fees and commission income. Profit after tax went up by 8.55% from ₦160.59 bn in Q3 2021 to ₦174.33bn in Q3 2022 after a 46.85% increase in income tax expenses. Earnings per share advanced by 8.61% from ₦5.11 in Q3 2021 to ₦5.55 in the current period. Consequently, Zenith has a BVPS of ₦37.81, P/BV of 0.67x and P/E ratio of 3.45x.

Kindly find here Weekly Review & Stock Recommendationa.

Thank you.

By All Research, Daily Financial Market Report Comments Off
Read more...
13 Feb

Weekly Market Review & Stock Recommendations -February 13, 2023

Dear Client/Reader,

Global Economic Roundup

Crude Oil Bounces Back As Earthquake In Turkey Creates Supply Concerns

Oil prices are on the rise, with WTI and Brent benchmarks both up around 3% on Tuesday following the devastating earthquake in Turkey. By 12:17 pm ET, WTI had risen $2.54 to $76.55 per barrel—a 3.43% rise on the day. The Brent benchmark was trading up $2.31 per barrel, to $83.30—a 2.85% climb. China’s reopening progress is also pressuring prices upward as the market eyes a demand boost from its zero-Covid transition. Meanwhile, Saudi Arabia has lifted the price of its flagship crude oil for Asian buyers, signaling that OPEC’s leader also views China’s reopening as legitimate. On the supply side, oil export disruptions have created a stir in the market following a pair of major earthquakes that resulted in the deaths of more than 5,000, and Norway’s shutdown of its Phase 1 535,000 bpd Johan Sverdrup oilfield due to a technical fault in a cooling system. The 1 million barrel per day Ceyhan oil terminal in southern Turkey stopped operations on Monday, according to Tribeca Shipping Agency, who added that as a whole, the ports in southern Turkey have been affected by the earthquake. Oil loadings were expected to resume today, but inclement weather caused a disruption in berthing. Key oil pipelines in the country managed to escape damage. 

Black women are gaining ground in the labor market but still face unique barriers

A decrease in the unemployment rate of Black women is heartening, but labor experts warn that the trend shouldn’t create any false notions about equity in the workforce. The unemployment rate for the entire Black population has avoided ticking up since August, coming in at 5.4% in January, according to seasonally adjusted data released by the Bureau of Labor Statistics two weeks ago. January’s drop in Black unemployment was propelled by gains made by Black women, whose unemployment rate excluding teenagers dropped to 4.7% in January from 5.5% in December. Black men, by comparison, saw unemployment tick up to 5.3% in January from 5.1% in December. Both the rate of unemployment for all Black people and for women specifically are at their lowest levels in more than a year. The last time the Black unemployment rate was below 5.5% was in September 2019, while Black women last had a sub-5% unemployment rate in November 2021. The unemployment rates of white, Asian and Hispanic/Latino workers all increased from December to January. Still, Black workers have the highest unemployment rate when compared with white, Asian and Hispanic/Latino workers. 

Bamboo secures digital broker license from SEC 

Bamboo Systems Technology Limited (Bamboo), an online brokerage firm, on Thursday, announced that it has been granted a digital sub-broker license from Nigeria’s Securities and Exchange Commission (SEC). A statement issued by the firm said the new license allows the company to operate in the Nigerian capital market and include Nigerian securities on its platform. “SEC’s issuance of the license to Bamboo ensures oversight of the relationship with its sponsoring broker, Lambeth Capital, while also empowering it to enter into partnerships with multiple brokers to serve its clients,” the statement said. It noted that the license will also enable Bamboo to deepen its relationships with financial service providers to offer its API services. Established in 2019, Bamboo is an online brokerage app that allows Africans to invest in real-time in local and foreign asset classes. On the app, users can invest fractionable amounts in their favourite publicly listed US companies from Tesla to Apple, ETFs, mutual funds, or fixed-income products. According to the statement, Bamboo is focused on its commitment to best practices and allowing its retail investors the ability to trade local securities on the Nigerian Exchange Group. In 2021, the firm said it began the rigorous application process for the SEC’s digital sub-broker license which was introduced that year. This, the brokerage firm said, included a thorough examination of its finances and governance process. Commenting on the development, the Chief Executive Officer (CEO) and Co-founder of Bamboo, Richmond Bassey, said: “We are thrilled to reach this important milestone and are fully committed to our obligations as registered digital brokers.” Since the launch of Bamboo, he said they work to provide the best technology solutions, backed by industry best practices, to allow Nigerian retail investors to access an unprecedented number of digital securities to build long-term wealth. “We are grateful for our collaboration with the SEC, which has shown its dedication to protect investors while allowing for innovation to flourish,” Mr Bassey said.

Some of our recommended stocks are mentioned below;

MTNN:

MTNN Plc FY 2022 results showed an increase in revenue by 21.64% from ₦1.65 trn in FY 2021 to ₦2.01 trn in FY 2022. Operating profit advanced from ₦584.74bn in FY 2021 to ₦733.29bn in FY 2022, reflecting an increase of 25.40%. Profit before tax grew by 22.28% from ₦436.68bn in FY 2021 to ₦533.97bn in the current period, despite a 33.19% increase in finance costs. Profit after tax rose by 20.16% from ₦298.65bn in FY 2021 to ₦358.87bn in FY 2022. EPS increased by 21.27% to
₦17.79 in FY 2022 from ₦14.67 in FY 2021. MTNN has a BVPS of ₦9.14, P/BV of 26.68x and P/E ratio of 13.71x.

NB:

Nigerian Breweries Plc is projected to have a FY 2022 revenue of N576.07bn, up by 31.74% from N437.28bn in FY 2021. Profit after tax is estimated to grow from N12.67bn in FY 2021 to N16.70bn in FY 2022 with an EPS of N2.56

Nigerian Breweries Plc Q3 2022 results showed an increase in revenue by 27.21% from ₦309.28bn in Q3 2021 to ₦393.45bn in Q3 2022. Operating profit advanced from ₦24.74bn in Q3 2021 to ₦35.39bn in Q3 2022, reflecting an increase of 43.06%. Profit before tax grew by 49.89% from ₦12.74bn in Q3 2021 to ₦19.09bn in the current period, as finance income grew by 172.63% and finance cost dropped by 48.82%. Profit after tax rose by 79.58% from ₦8.22bn in Q3 2021 to ₦14.76bn in Q3 2022. EPS increased by 78.43% to ₦1.82 in Q3 2022 from ₦1.02 in Q3 2021. Nigerian Breweries has a BVPS of ₦23.06, P/BV of 1.76x and P/E ratio of 16.75x

Kindly find here our weekly market review and stock recommendations.

Thank you.

By All Research, Weekly Report and Stock Recommendation Comments Off
Read more...
Scroll Up