Investors last week renewed demand for the shares of Caverton Offshore Support Group Plc (COSG), following the news of award of a contract to it by Chevron Nigeria Limited (CNL).
COSG was awarded a five-year logistics support contract by CNL operator of the Nigerian National Petroleum Corporation (NNPC/CNL Joint Venture, for the provision of aviation services with a two- year renewable option. Confident that the contract would boost the bottomline of COSG going forward, investors increased demand for the shares of the company. The high demand led to a growth of 16 per cent in the stock, rising from N1.00 to N1.16 per share last week.
COSG had explained that the contract was awarded following an extended competitive tendering process. “Caverton emerged successful after scaling through both the technical and commercial evaluation ahead of other bidders. Given CNL’s reputation for very high safety and quality standards, it is safe to say that Caverton’s commitment to safety, quality and continuous improvement contributed in no small measure to this successful bid. Caverton will service this contract with 11 Bell manufactured helicopters in line with CNL’s requirement. As part of the contract, Caverton will provide guaranteed medevac response to CNL 24 hours a day, seven days a week, covering their entire area of operations,” the company had said.
Speaking on the development, the Group Chairman of the Caverton, Mr. Remi Makanjuola said: “We are thankful to our clients, the aviation regulators, our shareholders, our staff and many others who have played a role in our development and success as a company. Special recognition to the Access Bank Group that has supported Caverton on various projects over the years. Caverton Helicopters is poised to continue to work on consolidating its vision to be the leading provider of premium aviation services in sub-Saharan Africa to the oil and gas industry.” Over the past decade, Caverton has worked hard to raise the bar in key areas in this specialised sector: helicopter availability, on-time departure, service and maintenance quality; doing all this while pursuing a robust local content strategy. “The positive impact of these efforts is the growing confidence in our services by the international oil companies and others, resulting in an increasing market share,” the company said.
Stock market operators had said the contract was a good development that will boost the financial performance of COSG, noting that the company would deliver improved returns to investors going forward.
THE Nigerian Stock Exchange, NSE, has assured investors in the capital market that despite the current economic recession, investments in the market would not crumble as witnessed during the global economic meltdown. Addressing participants at a two day workshop on ‘Financial Planing: The Stock Market Option’, organized by the Benue State government in conjunction with the NSE, Senior Manager of the Exchange, Mr. Oliver Achugbue, said numerous measures have been put in place to prevent a recurrence of the crash. Achugbue stated: “Our rules have been strengthened, enforcement is assured and compliance is non-negotiable.
We encourage those investors who left the market during the 2008-2010 crisis to return. “I want to assure willing investors that the market has gotten to the level it can no longer fall as a member of the World Federation of Exchanges, WFE, all rules and regulation are strictly adhered to in line with global guiding practices.” Declaring the workshop open, the Benue State Commission of Finance, Mr. David Olofu, said the training was intended to assist Benue State civil servants better appreciate the Nigerian stock market and its investment opportunities.
Olofu assured that despite the current economic challenges, the government is committed to paying the salaries, pensions and gratuities of its serving and retired workers to enable them take advantage of the investment opportunities in the capital market.| “This training will also help them learn how to find the right balance of spending and saving from their hard earnings that could help them grow their money for tomorrow,” he added.
Capital market operators have advised the Debt Management Office (DMO) to embark on more aggressive awareness creation in order to attract more patronage for the Federal Government of Nigeria Savings Bonds (FSB).
The DMO had last March introduced the FSB on behalf of the federal government as part of its efforts to promote savings culture in Nigeria and improve financial inclusion, particularly amongst retail investors.
The bond is expected to also provide additional funding for the government. However, investors’ participation in the FSB has remained poor despite the increase in the coupon rate (interest rate) on the bond.
For instance, the amount allotted dropped consistently from N2.07billion in March 2017 to N400.57million in July 2017, while the total number of investors also dropped from 2,575 in March 2017 to 779 in July 2017.
The coupon rate on the 2-year Bond, which was 13.01 per cent in March 2017 stood at 13.39 per cent in July 2017 while the coupon rate on the 3-year Bond which was 13.79 per cent in April, the first time a 3-year bond was issued, stood at 14.39 per cent in July 2017.
The coupon rates for the August 2017 offer are 13.535 per cent and 14.535 per cent for the 2-year bond and 3-year bond respectively. This means that the August bond issues carried higher coupon rates than the July issues and represent the highest coupon rates since inception.
But the persistent increase in the coupon rates, have not attracted enough subscription to the bond despite the steady decrease in the inflation rate in the country since January 2017.
Commenting on the development, analysts at FSDH Research said one of the factors responsible for the poor patronage of FSB is we can attribute is the rally that dominated the equity market in Nigeria.
“The Nigerian Stock Exchange All Share Index (NSE ASI) appreciated by 51.47% between March 01, 2017 and August 9, 2017. Many retail investors diverted funds to the equity market to take advantage of capital appreciation. Other factors are: the low awareness of the benefits and characteristics of the Bond; the low liquidity of the Bond at the secondary market and the high yield on the Nigerian Treasury Bill (NTB),” they said.
Speaking on how to increase investors’ patronage, they said the DMO and the stockbrokers can organise investors’ road shows in various cities and schools across the country.
“This will be an avenue to directly engage retail investors on the need for them to hold the bonds in their investment portfolio. The DMO can work with some identified large corporate organisations that have large number of employees to encourage their employees to invest in the Bonds on a monthly basis. The DMO can also work with government agencies to encourage civil servants to invest in the bond,” the analysts stated.
According to them, these strategies should be able to attract a minimum of one million subscribers on a monthly basis. “If this is achieved and the monthly subscription amount increases, the overall weighted average interest rate on the FGN debt will drop,” they said.
The Nigerian stock market recorded a N294bn decline on Tuesday, nearing its lowest level in two weeks.
The market was dragged down by losses in banking, cement and fast-moving consumer goods sectors, as some investors took profits from previous gains in the market, traders said.
The Nigerian Stock Exchange market capitalisation declined to N12.786tn from N13.080tn recorded on Monday, as the NSE All-Share Index closed at 37,096.60 basis points from 37,950.96 basis points.
A total of 391.625 million shares valued at N5.436bn were traded in 5,285 deals.
The ASI, thus, declined by 2.25 per cent, bringing it down to a level that was last seen on August 3, 2017.
The Nigerian equities market continued its negative trend to settle the year-to-date return at 38.04 per cent. Also, the volume of transaction and market turnover declined by 23.88 per cent and 28.69 per cent, respectively. Eleven stocks made the gainers’ list, while and 36 recorded losses.
The market had rallied for eight consecutive weeks and peaked at a 33-month high last week before profit takers took advantage of the gains to sell their holdings.
“The market was just reflecting global trend in the last few days, which has seen many major stock markets falling,” the Chief Executive Officer, Trust Yields Securities, Rasheed Yussuff, was quoted by Reuters as saying.
He said it was normal for the market to experience some bearish moment having been rising for almost two months.
Low stock valuation and the relative stability in the foreign exchange market over the last few months have helped to draw many offshore investors into the equity market, leading to a surge in the domestic equity market.
The equity market has benefitted from the recovery in liquidity on the currency market with the introduction in April of a new forex window for investors to trade the naira at market-determined rates.
Equally, most of the gains over the last two weeks were driven by increases in profitability announced by many major listed companies.
At the close of trading on Tuesday, Morison Industries Plc, PZ Cussons Plc, Stanbic IBTC Holdings Plc, Cement Company of Northern Nigeria Plc and Nascon Allied Industries Plc emerged as the top losers, shedding 8.16 per cent, five per cent, five per cent, 4.96 per cent and 4.96 per cent, respectively.
Berger Paints Plc, GlaxosmithKline Consumer Nigeria Plc, Golden Guinea Breweries Plc, Conoil Plc and Learn Africa Plc emerged the top five gainers, appreciating by five per cent, five per cent, 4.71 per cent, 3.99 per cent and 3.80 per cent, accordingly.
FMDQ OTC Securities Exchange has launched an Investor Protection Fund, IPF, to boost and sustain investors’ confidence in the Nigerian capital market. Following the establishment, Mrs. Titi Helen Lawani, representing the Pension Fund Operators Association of Nigeria, PenOp, was appointed the Chairperson of Board of Trustees, BoT, while Ms. Tokunbo Ajayi, representing the Association of Corporate Trustees emerged the Vice Chairperson of the Fund.
The Exchange, in a statement, said the establishment of the Fund was in compliance with the provisions of Part XIV of the Investments and Securities Act 2007 and represents a major milestone in the achievement of its mandate to provide a secure and credible platform supported by global best practices. “The FMDQ-IPF was established for the purpose of compensating investors who suffer pecuniary losses arising from insolvency, bankruptcy, or negligence of a dealing member of the OTC Exchange, as well as defalcation committed by a dealing member or any of its directors, officers, employees, or representatives in relation to securities, money or any property entrusted to, received, or deemed received by the dealing member in the course of its capital market activities.
“Through this landmark achievement, the OTC Exchange is positioned to support the investor protection mandate of the Securities and Exchange Commission, which guided by the 10-year Nigerian Capital Market Master Plan, launched the National Investor Protection Fund (NIPF) in 2015 for the purpose of compensating investors whose losses are not covered under the Investor Protection Fund administered by securities exchanges,” the Exchange said.
Lafarge Africa is consolidating its operations on the continent to simplify its ownership structure and activities, the Head of Strategy, Wole Adeleke, has said.
He said on Monday that the decision was made three years ago after Lafarge combined its Nigerian business with its South African operations and listed the combined entity, which it renamed Lafarge Africa, on the Nigerian Stock Exchange.
Now seeking approval from the Securities and Exchange Commission to merge the operations of two other wholly-owned units, in a move engineered to consolidate management of the companies with no operational savings, Reuters quoted Adeleke as saying.
In a notice to the stock exchange, Lafarge Africa said its board had asked the company to “undertake a business combination with United Cement Company of Nigeria Limited and Atlas Cement Company Limited.”
“We needed to simply the ownership structure of Unicem. Because Unicem has some significant tax attributes it was decided that Unicem should be merged into Lafarge Africa,” he told Reuters.
Unicem is the third largest cement plant in Nigeria.
Lafarge has been consolidating its businesses in Africa to cut costs and accelerate growth, particularly with arch-rival Dangote Cement, owned by Africa’s richest man Aliko Dangote, expanding aggressively on the continent.
Last month, Holcim Nigeria, now part of Lafarge Africa, said it would pass a resolution in August to dissolve the company after its Swiss-based parent firm merged with French rival, Lafarge in 2015.
It also delisted NSE-listed Ashaka Cement after a buyout of minorities that breached stock exchange’s free float requirement, Adeleke said.
The Nigerian-based business of Franco-Swiss cement group, LafargeHolcim, expects to generate cost saving synergies of N9bn by 2018 in Nigeria, it has said, following the global merger two years ago.
Shares in Lafarge Africa gained 1.69 per cent on Monday, adding to a 44 percent rise so far this year, valuing the cement firm at N329.2bn ($902.3m).
LafargeHolcim Chairman, Beat Hess, said the company was still adjusting its structures in big markets where both Lafarge and Holcim were present following the merger.
Lafarge Africa is raising N140bn in fresh equity and plans to convert some loans into shares as part of a planned rights issue after it reported losses last year.
LafargeHolcim has said it will take part in a capital increase of the Nigerian unit to avoid diluting its nearly 71.4 per cent stake, in a move which would also help simplify the ownership structure in Nigeria.
May & Baker Nigeria Plc said its profit before tax rose by 215 per cent to N139.5m in its half-year financial result of 2017, from N44.2m recorded in the corresponding period of 2016.
According to a statement obtained from the firm on Monday, the firm’s operating profit also rose by 57 per cent.
The firm said, “This margin derives from the 2017 half-year cumulative of N452.2m increase on the N287.8m returned same time last year. The analysis shows that revenue increased by 20.6 per cent from N3.7bn in 2016 to N4.5bn in 2017.
The firm said, figures released to the Nigerian Stock Exchange revealed that its operating expenses from distribution, sales and marketing was N510.83m in June last year.
It added that the statistic for the current period rose to N602.5 with a 17.9 per cent variance, and that its 2017 administrative cost decreased by three per cent to N298.8m from N309.5m in previous year.
In the statement, the company’s earnings per share which trended at 3.07kobo in June 2016, rose to 9.68kobo 12 months after, posting 215 per cent growth.
AxaMansard Insurance Plc’s shares led the losers’ table at the close of trading on Monday, as the Nigerian Stock Exchange market capitalisation soared by N34bn.
The market also recorded additional 27 losers with 23 gainers, as 254.485 million shares worth N5.797bn exchanged hands in 4,600 deals.
Equities capitalisation rose to N12.933bn from N12.899tn, while the All-Share Index closed at 37,525.38 basis points from 37,425.15 basis points.
AxaMansard share price dropped by 4.61 per cent to close at N2.07 from N2.17. Also, Continental Reinsurance Plc, AG Leventis Plc, Africa Prudential Plc and Fidson Healthcare Plc shares slid by 4.32 per cent, 4.17 per cent, 4.15 per cent and 4.13 per cent, respectively.
The Nigerian equities market recorded a 0.27 per cent gain at the close of trading to settle the year-to-date return at 39.63 per cent.
The Cement Company of Northern Nigeria Plc was the best performing stock, advancing by 10.16 per cent to close at N10.84. C&ILeasing Plc, Dangote Flour Plc, Livestock Feeds Plc and Cadbury Nigeria Plc shares followed, gaining 10 per cent, 7.61 per cent, 7.53 per cent and five per cent, accordingly.
Sector performance as measured by the NSE sector indices showed that the NSE food/beverage and the NSE industrial indices closed in the green zone advancing, by 2.18 per cent and 0.59 per cent. However,the NSE insurance, NSE banking and the NSE oil/gas indices declined by 1.99 per cent, 0.20 per cent and 0.18 per cent, accordingly.
“The positive outing witnessed at the close of today’s trading activities may be attributed to continued bullish sentiments towards some heavily weighted stocks particularly in the consumer goods space,” analysts at Meristem Securities said in a post.
The construction of the fertilizer plant in Dangote Refinery and Petrochemical Complex will be completed in January and March 2018, Africa’s richest man and President of Dangote Group, Alhaji Aliko Dangote has said.
Speaking when the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu visited the refinery complex in Lagos, recently, Dangote stated that the first train of the fertiliser plant will commence operations in January next year, while the second line will be completed in March next year.
Dangote said his company was committed to playing its part in the efforts of the minister and the federal government to comprehensively address the energy crisis in the country. “As you are aware, we are currently building the world’s largest single line Refinery, Petrochemical Complex and the world’s second largest urea fertiliser plant.
The Refinery will have the capacity to refine 650,000 barrels of crude oil per day. The petrochemical plant will produce 780,000 metric tonnes of polypropylene yearly, 500,000 metric tonnes of polyethylene while the fertiliser project will produce 3.0 million metric tonnes per annum (mmtpa) of urea,” Dangote said..
Dangote added that his company is also building the largest sub-sea pipeline infrastructure in any country in the world, with a length of 1,100 kilometres, to handle three billion standard cubic feet of gas per day.
According to him, the company also plans to construct a 570 megawatt-capacity power plant in this complex. “As a matter of fact, gas from our gas pipeline will augment the natural domestic gas supply and we estimate an additional 12,000MW of power generation can be added to the grid with the additional gas from our system,” he said.
“We will be adding value to our economy as all these projects will be creating about 4,000 direct and 145,000 indirect jobs. We will also save over $7.5billion for Nigeria annually, through import substitution and generate an additional $5.5billion per annum through exports of the refined petroleum products, fertilizer and petrochemicals. We envisage that these projects, which would cost over $18billion, would be completed in 2019,” he explained. Dangote solicited the support of the federal government to enable his company to achieve these targets.
Dangote commended the minister for the effort he has put into ensuring availability of petroleum products in the country, as well as his present ongoing efforts at revamping our ailing refineries. “In addition, the minister has been championing a comprehensive overhaul of the energy sector in Nigeria, with a view to making us a self-reliant nation. I have no doubt that he will succeed in this quest, given his enviable profile,” Dangote added.
Leading food manufacturing company, Nestle Nigeria Plc has announced a profit after tax (PAT) of N16.5 billion for the six months ended June 30, 2017, showing a jump of 2,987 per cent compared with N536 million in the corresponding period of 2016.
However, the company got a boost from a significant reduction in finance cost made possible by the stable foreign exchange witnessed in that period.
Details of the results show that a revenue of N121.919 billion, up 51 per cent from N80.442 billion in 2016. Cost of sales rose from N47.712 billion to N73.576 billion, while gross profit grew by 47 per cent to N48.343 billion, compared with N32.731 billion.
Marketing and distribution expenses trended upwards, standing at N16.863 billion, from N12.731 billion in 2016. Administrative expenses declined marginally to N4.780 billion, from N4.9177 billion.
Nestle Nigeria recorded a finance income of N5.145 billion in 2016, showing an increase of 529 per cent from N817 million in 2016, while finance cost fell by 50 per cent from N14.891 billion to N7.385billion in 2017.
As a result, net finance cost dipped by 84 per cent from N14.074 billion in 2016 to N2.239 billion in 2017. A further analysis of the net finance cost show that net foreign exchange loss improved from N13.1 billion to N5.175 billion, while finance cost expenses improved from N14.891 billion to N7.385 billion. Hence, net finance cost stood at N2.239 billion in 2017, as against N14.074 billion in 2016.
Consequently, Nestle Nigeria ended the H1 of 2017 with a profit before tax of N24.459 billion, up by 2,629 per cent from N896 million in 2016, while Pat grew faster by 2,987 per cent to N16.547 billion, from N535 million in 2016.
Speaking on the results, Managing Director/Chief Executive Officer of Nestle Nigeria, Mr. Mauricio Alarcon said: “We are particularly pleased with the growth which is an affirmation of the loyalty and trust of our consumers in our brands. The result is also due to the hard work of our people, and our distribution network.”
“The Board and the management remain confident that our strategic roadmap will continue to leverage on the potential of the business and the company will further increase investments behind brand and route-to-market activities while proactively managing input cost pressures.”
Meanwhile, the Nigerian stock market remained bullish, opening the new week with a gain of 0.27 per cent to close at 37,525.38. Similarly, market capitalisation closed higher at N12.93 trillion.