Archives March 2019

Transcorp Assures Stakeholders of Superior Value Delivery

The President /Chief Executive Officer of Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Valentine Ozigbo, has said the conglomerate with interests and investments in hospitality, power, oil and Gas and others, remains committed to deliver superior value to all stakeholders.

Ozigbo, stated this while presenting the company’s ‘Facts behind the figures’ to stockbrokers and the investing public at the Nigerian Stock Exchange (NSE) in Lagos.

According to him, the management would focus on cost management strategies to ensure marked improvement in the 2019 financial year.

Transcorp grew its revenue for the year ended December 31, 2018 by 30 per cent to N1014.16 billion, while profit after tax soared by 94 per cent to N20.6 billion, from N10.6 billion in 2017.

Ozigbo, said the businesses has been well positioned to continue to perform profitably and deliver value to numerous investors.

He said: “Today, we own and manage the best business hotel in Africa, and are intent on improving tourism in Nigeria and beyond. We own and manage one of the most strategic power assets in Nigeria, and aim to meet the power needs of one out of every four Nigerians, and through this, help in poverty eradication and improving Nigeria’s competitiveness.

“Our businesses are contributing unprecedented revenue and profits in the history of the group and we are also stronger in corporate governance and now consistently among the first three companies quoted on this exchange, who each year successfully finalise their audited accounts and organise their AGMs.”

He said plans were in motion to ensure that the conglomerate grows by leaps and bounds based on the strategic investments in the last couple of years.

“We will deepen our play in the sectors we currently operate in, operationalise our oil asset and invest in more sectors. With the support of the stakeholders, especially the entire capital market community, we will be that conglomerate Nigerians will be proud of,” Ozigbo said.

Transcorp has so far injected about $1 billion in power projects with a combined capacity of 700 megawatts and was among those who bid for Afam Electricity Generation Company.

Meanwhile, the stock market sustained its bearish run for the third as the NSE All-Share Index fell 0.67 per cent to close at 30,829.45. Similarly, volume and value dipped 8.5 per cent and 16.6 per cent to 131.4 million shares and N1.4 billion respectively.

Source:© Copyright Thisday Online

Merger: NSE Places Diamond Bank Shares on Trading Suspension

The Nigerian Stock Exchange (NSE) Wednesday placed a full trading suspension on the shares of Diamond Bank Plc following the Court sanction of the scheme of merger between the bank and Access Bank Plc.

In a notification to market operators, the NSE explained that the suspension was required to prevent trading in the shares of Diamond Bank in order to determine the bank’s shareholders who would qualify to receive the scheme consideration.

“The bank obtained the Court sanction of the Scheme on Tuesday, 19 March 2019, being the effective date of the scheme. The bank’s shareholders passed a resolution approving the merger between Diamond Bank and Access Bank Plc at the Court ordered meeting of the bank held on Wednesday, 6 March 2019. The Scheme will result in the delisting of Diamond Bank Plc from the Daily Official List of The Exchange,” the NSE explained.

Shareholders of the bank had approved the merger early this month.

Commenting on the votes by shareholders, Chief Executive Officer of Diamond Bank, Uzoma Dozie, said: “I am happy that the shareholders of Diamond Bank have supported this merger. The merger will bring together the complementary retail and corporate banking capabilities of two of Nigeria’s leading banks, creating Africa’s largest retail bank by customer base and Gateway to the World.”

The merger would involve Access Bank acquiring the entire issued share capital of Diamond Bank in exchange for a combination of cash and shares in Access Bank. Based on the agreement reached by the boards of the two financial institutions, Diamond Bank shareholders will receive a consideration of N3.13 per share, comprising of N1.00 per share in cash and the allotment of two new Access Bank ordinary shares for every seven Diamond Bank ordinary shares held as at the Implementation Date.. Immediately following completion of the merger, Diamond Bank would be absorbed into Access Bank and it will cease to exist under Nigerian law. Also, the current listing of Diamond Bank’s shares on the NSE and the listing of Diamond Bank’s global depositary receipts on the London Stock Exchange will be cancelled, upon the merger becoming effective.

Meanwhile, trading at the stock market continued on bearish note for the third consecutive day. As a result, the NSE All-Share Index depreciated by 0.13 per cent to close at 31,040.84, while market capitalised shed N15.5 billion to be at N11.6 trillion.

Also, volume and value of trading fell 22 per cent and 30.1 per cent to 223.6 million shares and N2.2 billion respectively.

Source:© Copyright Thisday Online

FG to Auction N100bn Bonds March 27

The federal government will auction by subscription N100 billion worth of bonds on March 27, the Debt Management Office (DMO) has said.

The DMO said in a circular on its website on Tuesday in Abuja, that the five-year re-opening bonds of N40 billion to mature in April 2023 was offered at 12.75 per cent.

It said that the seven-year re-opening bonds also of N40 billion to mature in March 2025 would be auctioned at 13.53 per cent.

It added that the 10-year bonds, also re-opening, of N20 billion which would be due in Feb. 2028, would be auctioned at 13.98 per cent.

According to the DMO, units of sale is N1,000 per unit, subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The DMO explained that the bonds are backed by the full faith and credit of the Nigerian Government, with interest payable semi-annually to bondholders, while bullet repayment will be made on maturity date.

According to the News Agency of Nigeria, the country issues sovereign bonds monthly to support the local bond market, create a benchmark for corporate issuance and fund its budget deficit.

Source:© Copyright Thisday Online

Access Bank’s Full Year Profit after Tax Rises 58% to N95bn

Access Bank Plc last Friday announced a growth of 58 per cent in its profit after tax (PAT)for the financial year ended December 31, 2018. In the audited results, Access Bank Plc’s gross earnings rose 15 per cent to N528.7billion in 2018, up from N459.1billion in 2017, with interest and non-interest income contributing 72 per cent and 26 per cent respectively.

Profit before tax (PBT) for the period was N103.2billion, showing 32 per cent growth from N78.2billionin 2017 while return on average equity (ROAE) stood at 19.0 per cent with a return on asset of 2.1 per cent in 2018. Profit after Tax(PAT) grew to N95.0 billion from N60.1 billion in 2017.

Based on the performance, the bank has proposed a final dividend of 25 kobo per share bringing total dividend for the year to 50 kobo per share.

A further breakdown of the results showed that asset base of the bank remained strong and diversified with growth of 21 per cent to N4.95trillion in December 2018 from N4.10trillion in December 2017. Loans and advances stood at ₦N2.14 trillion as at December 2018, compared with N2.06 trillion in 2017.

Customers’ deposits increased by 14 per cent to N2.57trillion in December 2018, from N2.25trillion in December 2017. Capital adequacy ratio (CAR) was at 20.8 per cent, taking into consideration the regulatory transitional arrangement of IFRS 9 implementation.

In his comments on the bank’s performance, Group Managing Director/CEO, Herbert Wigwe said:“2018 marked a significant year of progress for the Bank amidst an unfavourable macro climate. We made solid progress throughout 2018 in line with our 2018-2022 five-year strategy, and we remain committed to the achievement of our strategic imperatives going forward; as we continue to invest in our people and technology in order to improve operational efficiency and service touch points with earnings growth in 2019.”

He said that the contribution of the bank’s subsidiaries to group profits grew 116 per cent to N27.9billion, underlined by the effective implementation of overall strategy.

Wigwe said:“In pursuit of our vision to be one of the leading banks in Nigeria, we took accelerated strides in the last quarter of the year towards achieving our overall retail strategy. The merger with Diamond Bank will enable us to fully entrench ourselves in the retail market with a view to lowering our funding cost. This transaction is anticipated to be completed by April 2019, resulting in the creation of an enlarged, efficient and digitally led tier 1 retail banking franchise.” .

Source:© Copyright Thisday Online

NSE All-Share Index Appreciates 0.31% as Stock Market Recovers

The announcement of corporate earnings and declaration of dividends by more companies as well as the abating political risks combined to lift the Nigerian stock market last week compared with a decline the previous week.

The equities market measured by the benchmark indicator, the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) appreciated by 0.31 per cent last week, compared with a decline of 2.12 per cent the preceding week. In the same vein, market capitalisation rose by same margin to close higher at N11.905 trillion. However, while other indices finished higher the NSE Insurance, NSE Consumer Goods, NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods indices depreciated by 1.30 per cent, 1.02 per cent, 2.56 per cent, 1.09 per cent and 1.72 per cent respectively.

In their comments on the market performance, analyst at Cordros Capital Plc said: “We reiterate our view that the blend of a compelling valuation story, together with positive macroeconomic picture leaves scope for a market recovery in the medium term. However, we guide investors to tread the cautious trading path in the short term.”

Daily Performance

The market had opened on Monday, which was also the first trading month of March on a positive note as bellwether stocks lifted the NSE ASI by 0.95 per cent to close higher at 32,129.94, while market capitalisation added N112.9 billion to close at N12.98 trillion yesterday.

In all, 25 stocks appreciated compared with 10 others that depreciated. McNichols Plc led the price gainers’ table with 9.8 per cent, followed by Cutix Plc with 9.7 per cent, while NPF Microfinance Bank Plc garnered 9.7 per cent. Wema Bank Plc and Sovereign Trust Insurance Plc chalked up 9.0 per cent and 8.7 per cent respectively.

Zenith Bank Plc and Dangote Cement Plc, which have declared dividends for 2018 financial year, were also among the price gainers. Equally, Access Bank Plc and Diamond Bank Plc, whose shareholders wet to endorse the merger of the two financial institutions appreciated in price.

Conversely, PZ Cussons Nigeria Plc led the price losers with 9.6 per cent, trailed by Livestock Feeds Plc with 8.9 per cent. Consolidated Hallmark Insurance Plc shed 7.1 per cent, just as Law Union and Rock Insurance Plc, United Capital Plc and UAC of Nigeria Plc went down by 5.4 per cent, 2.9 per cent and 2/.9 per cent respectively.

However, activity level reduced as volume and value traded dipped 33.0 per cent and 30.3 per cent to 227.8 million shares and N2.6 billion respectively. The most traded stocks by volume were Diamond Bank (33.0 million shares), UBA (31.1 million shares) and Zenith Bank Plc (28.9 million shares) while the top traded stocks by value were Zenith Bank (N703.1 million), Dangote Cement (N510.8 million) and GTBank (N391.0 million).

In terms of sectoral performance, three of five sectors tracked closed in the green. The NSE Banking Index rose 2.7 per cent, while the NSE Consumer Index and NSE Industrial Goods Index advanced 0.4 per cent and 0.3 per cent respectively.

The market sustained the positive performance on Tuesday, gaining 0.14 per cent to close at 32,173.66, just as market capitalisation added N16.3 billion to close higher at N12 trillion. Gains in GTBank Plc, Union Bank of Nigeria Plc and Zenith Bank Plc drove the market northwards.

Similarly, activity level strengthened as value and volume traded advanced by 32.5 per cent and 75.8 per cent to N3.5 billion and 400.5 million shares respectively.

The most active stocks on Tuesday in value terms were GTBank (N1.2 billion, Zenith Bank Plc (N65.0 million), FBN Holdings (N359 million) while Diamond Bank (119.8 million shares), FBN Holding Plc (44.3 million units) and UBA (40.8 million units) led by volume.

In terms of sector performance only two of five indices tracked closed in the green. The NSE Banking Index rose 0.92 per cent due to buying interest in GTBank, Union Bank of Nigeria Plc and Zenith Bank Plc. Also, the NSE Consumer Goods Index advanced 0.3 per cent higher following gains in Dangote Flour MillsPlc, Dangote Sugar Refinery Plc and Honeywell Flour Mills Plc.

On the negative side, the NSE Insurance Index shed 0.3 per cent while the NSE Industrial Goods Index and NSE Oil & Gas Index went down by 0.3 per cent and 0.1 per cent respectively.

The market fell on Wednesday as profit taking set in after three days of bullish performance. Consequently, the NSE ASI lost 0.16 per cent to close at 32,121.74, while market capitalisation shed N19.4 billion to close at N12 trillion. In the same vein, trading volume and value fell by 48 per cent and 19.6 per cent to 208.3 million shares and N2.8 billion.

The losses were extended into the second day on Thursday with the NSE ASI declining by 0.2 as a result of depreciation by Dangote Cement Plc, Nigerian Breweries Plc and GTBank Plc. Market capitalisation shed N26.9bn to N11.9 trillion, thereby moderating the year-to-date growth to 2.0 per cent.

But activity level was mixed as volume traded advanced by 4.9 per cent to 218.5 million shares while value traded fell 1.7 per cent to N2.7 billion. The top traded stocks by volume were Zenith Bank (34.8 million shares), Access Bank Plc (29.2 million shares) and FBN Holdings (29 million) while top traded by value were Zenith Bank (N859.7 million), GTBank (N850.1 million) and FBN Holding (N235.9 million).

In line with the trend, performance across sectors was bearish as all sectors closed in the red. The NSE Insurance Index and NSE Oil & Gas Index with 1.0 per cent apiece. The NSE Industrial Goods Index shed 0.4 per cent, while the NSE Consumer Goods Index lost 0.2 per cent. Also, the NSE Banking Index closed the day 0.1 per cent lower.

Market Turnover

A look at the market turnover, investors traded of 1.290 billion shares worth N13.873 billion in 17,307 deals were traded last week by investors on the floor of the exchange in contrast to a total of 1.752 billion shares valued at N19.681 billion that exchanged hands the previous week in 22,319 deals.

But the Financial Services Industry remained the most traded with 1.084 billion shares valued at N11.612 billion traded in 11,169 deals. Hence, the sector contributed 84.06 per cent and 83.7 per cent to the total equity turnover volume and value respectively.

The Conglomerates Industry followed with 57.699 million shares worth N93.347 million in 810 deals, while the third place was Consumer Goods Industry with a turnover of 56.938 million shares worth N938.881 million in 2,627 deals. Trading in the top three equities namely, Zenith Bank Plc, Diamond Bank Plc and FBN Holdings Plc accounted for 460.632 million shares worth N5.754 billion in 4,087 deals, contributing 35.70 per cent and 41.47 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 2,971 units of Exchange Traded Products (ETPs) valued at N766,883.30 executed in seven deals compared with a total of 101,254 units valued at N577,835.06 that was transacted the preceding week in 19 deals. Similarly, a total of 15,496 units of Federal Government Bonds valued at N15.750 million were traded last week in 12 deals compared with a total of 25,740 units valued at N26, 597 million transacted two weeks ago in 22 deals

Price Gainers and Losers

Meanwhile, 24 equities appreciated in price during the week, lower than 26 in the previous week, while 37 equities depreciated in price, lower than 38 equities of the previous week. Wema Bank Plc led the price gainers with 9.7 per cent followed by Cutix Plc with 9.7 per cent, just as Sovereign Trust Insurance Plc chalked up 8.7 per cent.

International Breweries Plc and NPF Microfinance Bank Plc garnered 8.0 per cent and 7.6 per cent, while Cadbury Nigeria Plc and Dangote Flour Mills Plc appreciated by 5.7 per cent and 5.5 per cent respectively.

Other top price gainers included: GTBank Plc (5.1 per cent); WAPIC Insurance Plc (5.0 per cent) and Transcorp Plc (4.8 per cent).

Conversely, Mutual Benefits Assurance Plc led the price losers with 14.8 per cent, trailed by PZ Cussons Nigeria Plc with 13.3 per cent. Veritas Kapital Assurance Plc shed 12.5 per cent, just as Livestock Feeds Plc and Academy Press Plc went down by 11.9 per cent and 10 per cent in that order.

Other top price losers were: Etranzact Plc (9.9 per cent); University Press Plc (9.7 per cent); Red Star Express Plc (9.0 per cent); Japaul Oil & Gas Plc (8.7 per cent); and United Capital Plc (8.3 per cent).

Source:© Copyright Thisday Online

Stanbic IBTC Grows Profit After Tax by 54% to N74 Billion

Stanbic IBTC Holdings Plc, a member of Standard Bank Group, has announced gross earnings of N222.4 billion, for the financial year ended December 31, 2018, up from N212.4 billion it achieved in 2017. A breakdown of the figures showed that net interest income rose to N102.604 billion from N89.182 billion. Net fee and commission income also improved from N59.1 billion to N69.845 billion. Operating expenses increased from N86.02 billion to N95.60 billion, while staff cost rose from N36.283 billion to N43.0 billion. Profit before tax rose from N61.166 billion in 2017 to N88.152 billion in 2018, while profit after tax appreciated by 54 per cent to N74.4 billion compared with the N48.4 billion recorded in 2017.

The group’s total assets grew by 20 per cent to N1,663.7 billion compared with the N1,386.4 billion in December 2017. Customer deposit grew by seven to N807.7 billion from N753.6 billion in the corresponding year. The bank was able to reduce its toxic assets appreciably, as gross non-performing loans decreased by 50 per cent to N17.7 billion compared with N35.3 billion in 2017. The non-performing loans figure is even more impressive when viewed against the 14 per cent (N458.9 billion in 2018 – N403.9 billion in 2017) increase in gross loans and advances achieved in the financial year.

The Chief Executive, Stanbic IBTC Holdings Plc, Mr Yinka Sanni, said the balance sheet size was impacted by “growth in risk assets and financial investment portfolio,” a reflection of investment expertise and quality management, which saw its non-interest revenue rose by 15% to N102.6 billion from N89.2 billion in 2017. According to Sanni, “Strong growth in fees and commission income as well as write-backs, which resulted from recoveries made on previously written off loans and reversals on some non-performing loan, contributed to the strong showing.”

Stanbic IBTC said performances across its three divisions, Corporate and Investment Banking, Wealth Management businesses, and Personal & Business Banking, were strong and contributed to the turnover.

“As a financial institution we will continue to leverage on our universal financial services capability, unrelenting focus on cost control, digitization and client centricity to ensure that we continue to grow our capacity to provide incomparable high quality end-to-end financial solutions to our customers in a sustainable manner,” he assured.

Stanbic IBTC Holdings Plc, member of Standard Bank Group, is a full service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management.

Source:© Copyright Thisday Online

Seplat Petroleum‘s Profit After Tax Falls to N45 Billion

The shares of Seplat Petroleum Development Company Plc fell 3.5 per cent yesterday as investors reacted negatively to the audited results of the company for the year ended December 31, 2018. The shares fell from N619.00 to N596.90 per share.

The firm, which is listed on the Nigerian Stock Exchange (NSE) and London Stock Exchange (LSE) yesterday released its audited results. Although the company recorded higher revenue, profit after tax (PAT) fell by 44.6 per cent.

Specifically, Seplat posted revenue of N228.4 billion in 2018, up by 65.2 per cent from N138.3 billion recorded in 2017. Cost of sales rose 48 per cent from N73.4 billion to N108.6 billion, while gross profit jumped by 84.6 per cent to N119.8 billion from N64.9 billion in 2017. Net finance cost fell by 31.8 per cent to N14.3 billion, from N20.9 billion in 2017.

Profit before tax (PBT) increased by 499 per cent from N13.5 billion to N80.6 billion. However, PAT fell from N81.1 billion to N44.9 billion due to debt of N35.7 billion in 2018, compared with a tax credit of N67.7 billion in 2017. The board of directors has recommended a dividend of N18 per share.

The Chairman of Seplat, ABC Orjiako had disclosed plan of the company to invest more in its gas business in last year so as to boost revenue and deliver more returns to investors.

“Our strategy to diversify and grow our sources of income through the expansion of our gas business continues to gain momentum. Since the government launched various initiatives to stimulate investment in the gas sector, including opening the Domestic Supply Obligation (‘DSO’) price to commercial market forces, Seplat has been at the forefront of gas commercialisation and made substantial investments in support of the government’s energy agenda,” he said.

The Chief Executive Officer of Seplat, Austin Avuru had said the company registered strong cash flow performance and significantly strengthened the balance sheet the previous year.

“Our proactive and decisive management coupled with the strong underlying fundamentals of the business have seen us emerge from an exceptionally challenging period a much fitter and stronger business that is well equipped to deliver long-term value for our shareholders,” he said.

Meanwhile, the the three-day bullish run in the domestic equities market was halted yesterday as the NSE All-Share Index declined 0.16 per cent to close at 32,121.74.

Source:© Copyright Thisday Online

Dangote Cement Maintains Leadership

Investors who patronise the stock market in order to get regular dividend payment annually has Dangote Cement Plc among stocks in their baskets. The cement firm, which is the highest capitalised on the Nigerian Stock Exchange (NSE) has remained consistent in payment of dividend. This is has endeared the stock to many investors.

For instance, for the financial year ended December 2016, the company paid a dividend of N8.70 per share. It raised the dividend to N10.50 in 2017.
Last week when the company released its results for 2018 financial year, shareholders were not disappointed as Dangote Cement further raised the dividend to N16 per share.

Financial performance
Dangote Cement Plc in its audited results recorded revenue of N901.21 billion, with Nigerian operations accounting for N618.30 billion, representing an increase of 11.9 percent over N552.36 billion in 2017. Pan-African operations recorded revenues of N263.26 billion, an increase of 9.6 percent over N258.44 billion posted in the corresponding period in 2017. Profit after tax stood at N390.32 billion, up from N204.25 billion while earnings per share rose from N11.65 to N22.83. The company directors are proposing a dividend of N16 per share.

A further analysis of the performance showed that Dangote Cement maintained its dominance of the Nigerian market, accounting for 65 per cent of the total volume sold in the domestic cement sector in 2018. The company also exported 800,000 metric tonnes (MT) of cement to West African countries, strengthening Nigeria’s position as a cement exporting country, creating jobs in the economy, and earning foreign exchange.

The company sold a total of 23.54 MT of cement across Africa indicating an increase of 7.4 per cent over 21.92 MT sold in 2017. Nigerian operations accounted for 14.18 MT representing an increase of 11.4 per cent over the volume of 12.72 metric tonnes sold during the preceding year. The increase in the Nigerian volume is attributable to higher building activities as the economy recovered from recession. The sales volume in Nigeria was quite significant given the turbulent market situation as the election period approached and people usually hedge in the construction industry during such periods.

Commenting on the results, Group Chief Executive Officer, Dangote Cement, Joe Makoju, said: “This is a record financial performance by Dangote Cement, driven by a strong increase in our home market, Nigeria, despite heavy rains and uncertainties about the election.
“Although Pan-African volumes were unchanged in 2018, I am confident that we will see an increase in 2019, driven by higher volumes in Tanzania, Ethiopia, Congo and Sierra Leone. Now that we have gas turbines operating in Tanzania we will also see increased profitability in the Pan-Africa region and this will help to improve overall Group margins.”

Dangote Cement is Africa’s leading cement producer with nearly 46metric tonnes per annum (mtpa) capacity across Africa. It is a fully integrated quarry-to-customer producer, with a production capacity of 29.3mtpa in the home market, Nigeria. The Obajana plant in Kogi state, Nigeria, is the largest in Africa with 13.3 mpta of capacity across four lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12 mtpa, while Gboko plant in Benue state has 4 mtpa.

Through recent investments, Dangote Cement has reduced Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighbouring countries. The company has operations in Cameroon (1.5mtpa clinker grinding), Congo (1.5mtpa), Ghana (1.5mtpa import), Ethiopia (2.5mtpa), Senegal (1.5mtpa), Sierra Leone (0.5Mta import), South Africa (2.8mtpa), Tanzania (3.0mtpa), Zambia (1.5mtpa).

Analysts’ assessment
Looking at the revenue of Dangote Cement, analysts at Afrinvest West Africa said recovery in volumes supported the growth. According to them, revenues grew faster at 11.9 per cent to N901.2 billion, 1.2 per cent ahead of their estimates.
The analysts explained that unlike the previous year, this performance was mainly driven by a 7.4 per cent increase in volumes to 14.2mtpa, although this was entirely due to Nigerian operations (+11.4 per cent) despite unfavourable weather conditions in third quarter (Q3) of the year. Volume growth was flat for Pan-Africa operations (+0.1 per cent), but higher cement prices (9.5 per cent) supported stronger revenues.

They added that margins were dragged by elevated operating expenses. Cost to sales grew at a slower pace relative to revenue, settling at 9.1 per cent to N383.3 billion, slightly above their estimate by 1.7 per cent. This translated to a lower cost to sales ratio of 42.5 per cent (2017: 43.6 per cent), reflecting improved cost efficiency.
“However, the operations expenses(OPEX) margin was higher at 21 per cent (2017: 19.3 per cent), reflecting a broad-based expansion in operating expenses by 22 per cent, which was 6.3 per cent higher than our estimate. The group’s earnings before interest tax and depreciation and amortization (EBITDA) expanded by 12.1 per cent to N435.6 billion, broadly in line with our estimates which was 0.7 per cent weaker. However, due to higher OPEX, EBITDA margin marginally moderated to 48.3 per cent (2017: 48.5 per cent), pulled lower by pan-African operations as EBITDA margin for Nigeria remained resilient at 64.3per cent (2017: 65.3%). The group’s net finance costs surprised at 3.7x our expectation mainly due to a significant 76.2% contraction in finance income. Consequently, profit-before-tax expanded only by a marginal 3.9 per cent to N300.8 billion, 10.2 per cent below our estimate,” they said.
Afrinvest stated that the biggest boost was seen in profit-after-tax which expanded by 91.1 per cent to N390.3 billion. The investment firm explained that the impressive result was buoyed by tax credits of N89.0 billion, following optimism that the group would secure the approval of the Nigerian Investment Promotion Commission on the two-year extension for Ibese lines 3 & 4 and Obajana line 4, for which taxes had previously been charged.

“Due to the marked rise in PAT, earnings per share almost more than doubled to N22.8 from N11.7 in the previous year. Consequently, the Group announced a dividend of N16.0 per share, 52.4 per cent above the previous year and translating to a dividend yield of 8.2 per cent (based on the closing price of N192.5 on 26/2/2019).
“Based on this, the pay-out ratio was weaker at 70.1 per cent, compared with an average of 93.5 per cent between 2016 and 2017,” they said.

In computing their valuation, the analysts stated that they were optimistic of sustained outperformance in earnings over the medium-term.
“In FY:2019, we expect a 10.4 per cent expansion in revenues to N995 billion, supported by a recovery in volumes in Nigeria and for Pan-African operations. We expect smoother operations in Tanzania due to the recent installation of gas turbines and improved Sub-Sahara Africa (SSA) growth to support pan-African volumes. Given our improved expectation of the group’s performance over the medium-term, we revised our target price slightly upwards to N263.1. This translates to an upside potential of 34.7 per cent based on the closing share price of N195.3 on 28/02/2019, and we attach a “BUY” rating,” they said.

Sectoral improvement
Recently, Afrinvest stated that companies in the cement industry have the capacity to deliver higher returns to shareholders going forward. The investment banking firm said although the companies suffered the pains of a slowing economy, there is great improvement.
“The steep currency devaluation recorded between 2014 and 2017 led to an increase in costs, given the exposure of energy costs and debt to foreign currency risk. Combined with the moderation in the spending power of consumers, high costs led to a steep increase in cement prices, which in turn affected volumes of cement sold. The implications were a broad-based decline in margins across companies, with overall profitability barely growing over a five-year period,” the firm said.
However, it added that in recent times, the cement sector is starting to recover.

“Energy costs have been diversified and foreign exchange (FX) risks are now limited. We are optimistic of a recovery in volumes which will boost revenues, and that lower energy costs will support a fast-paced expansion in profitability in 2018. “Over the medium-term, we believe the cement sector remains well placed to deliver superior returns given the wide infrastructure gap in Nigeria. However, we expect the sector to grow at a gradual pace, given the lack of reforms to drive growth back to long-term trend,” Afrinvest said.
According to the analysts, based on their measured positive outlook, they believe there is still value in cement companies.

“The overall sector is currently priced at a discount with a P/E ratio and EV/EBITDA ratios of 12.5x and 14.0x per cent, which is below the average of 23.1x and 15.9x respectively for select emerging markets and frontier markets peers. Across companies under our coverage, we have issued “BUY” rating to Dangote Cement and “SELL” to Lafarge. For Cement Company of Northern Nigeria Plc (CCNN), we are waiting on the combined books of the newly merged entity before revising our valuation. Lafarge Africa which had high exposure to foreign currency debt has gotten new debt terms that will ensure lower finance costs and a return to profitability,” they said.

Source:© Copyright Thisday Online

Renewed Buying Interest in Bellwethers Lifts Market by 0.95%

The equities market opened the month of March on a positive note as bellwether stocks lifted the Nigerian Stock Exchange (NSE) All-Share Index (ASI) by 0.95 per cent to close higher at 32,129.94, while market capitalisation added N112.9 billion to close at N12.98 trillion yesterday.

The market had closed last week with a decline but renewed buying interest in bellwethers such as Guaranty Trust Bank Plc, Zenith Bank Plc Dangote Cement Plc, United Bank for Africa Plc, Access Bank and International Breweries Plc buoyed the positive performance yesterday.

In all, 25 stocks appreciated compared with 10 others that depreciated. McNichols Plc led the price gainers’ table with 9.8 per cent, followed by Cutix Plc with 9.7 per cent, while NPF Microfinance Bank Plc garnered 9.7 per cent. Wema Bank Plc and Sovereign Trust Insurance Plc chalked up 9.0 per cent and 8.7 per cent respectively.

Zenith Bank Plc and Dangote Cement Plc, which have declared dividends for 2018 financial year, were also among the price gainers. Equally, Access Bank Plc and Diamond Bank Plc, whose shareholders are to meet today to endorse the merger of the two financial institutions appreciated in price yesterday.

It is believed the combination of the two banks provides an exciting prospect for all stakeholders in both businesses and will create a financial institution with the scale, strength and expertise to capitalise on the significant opportunities in Nigeria and sub-Saharan Africa more broadly

Meanwhile, PZ Cussons Nigeria Plc led the price losers with 9.6 per cent, trailed by Livestock Feeds Plc with 8.9 per cent. Consolidated Hallmark Insurance Plc shed 7.1 per cent, just as Law Union and Rock Insurance Plc, United Capital Plc and UAC of Nigeria Plc went down by 5.4 per cent, 2.9 per cent and 2/.9 per cent respectively.

However, activity level reduced as volume and value traded dipped 33.0 per cent and 30.3 per cent to 227.8 million shares and N2.6 billion respectively. The most traded stocks by volume were Diamond Bank (33.0 million shares), UBA (31.1 million shares) and Zenith Bank Plc (28.9 million shares) while the top traded stocks by value were Zenith Bank (N703.1 million), Dangote Cement (N510.8 million) and GTBank (N391.0 million).

In terms of sectoral performance, three of five sectors tracked closed in the green. The NSE Banking Index rose 2.7 per cent, while the NSE Consumer Index and NSE Industrial Goods Index advanced 0.4 per cent and 0.3 per cent respectively.

Source:© Copyright Thisday Online

 

Equities Market Declines Further Despite High Trading Volume

The Nigerian equities market extended its negative performance last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) declined further by 2.12 per cent to close at 31,827.24.

Similarly, market capitalisation fell by same margin to close at N11.869 trillion. Last week’s decline was worse than the 0.61 per cent of the previous week.

However, volume and value of shares improved as investors traded 1.752 billion shares worth N19.681 billion in 22,319 deals compared 1.481 billion shares valued at N17.647 billion that exchanged hands the preceding week.

Apart from the NSE ASI that declined, all other indices finished lower with the exception of the NSE Insurance and NSE Industrial Goods indices which rose by 3.01 per cent and 0.93 per cent respectively while the NSE ASeM index closed flat.

Given the conclusion of the presidential elections, which reduced the political uncertainty, it was expected that the market would witness a positive performance last week. Also, the release of corporate earnings by firms for the year ended December 31, 2018, was expected to stimulate demand for stocks. But reverse was the case.

According to some market operators, investors were not a hurry to return to the market despite the conclusion of presidential election.

“Only investors whose focus is long-term will not put so much emphasis on political risk because they know the market would bounce back once a president is sworn in May,” a broker, Mr. Sam Oguntayo said.

The current performance of the market does not come to many stakeholders as a surprise because they had projected that the market would stabilise and recover in the second half of the year.

In her opinion, the Group Chief Executive Officer of Emerging Africa Capital Group, Mrs. Toyin Sanni, had said the general expectation was that the first half 2019 would be more of the same as last year because investors would adopt a wait-and- see approach due to the elections.

“Investors will wait to see how the elections are accepted and confirm that there will be peace in the post-election period up till May 29, which will be the day the new government will be sworn into office,” she said.

According to her, investors generally just want stability and peace, stressing that the parameters remain positive for Nigeria from a long-term perspective.

“Nigeria remains an attractive because of its size, demographics because of the continued activities of SMEs which are the drivers of this economy, because of how we have embraced the digital economy as a people and a nation because we are still a resources rich country.

“But investors would want to see that there is a stable government, there is peace and government is accepted by the people, investors will want to see they can expect the right economic policy and the policies will be implemented in a consistent manner,” she had explained.

More companies announced their results last week, recommending dividends. Dangote Cement Plc and African Prudential Plc reported their results, declaring dividends of N16 and 50 kobo per share respectively.

Dangote Cement Plc posted a revenue of N901.21 billion, with Nigerian operations accounting for N618.30 billion, representing an increase of 11.9 percent over N552.36 billion in 2017.

Profit after tax stood at N390.32 billion, up from N204.25 billion while earnings per share rose from N11.65 to N22.83.

Commenting on the results, Group Chief Executive Officer, Dangote Cement, Joe Makoju, said: “This is a record financial performance by Dangote Cement, driven by a strong increase in our home market, Nigeria, despite heavy rains and uncertainties about the election. Although Pan-African volumes were unchanged in 2018, I am confident that we will see an increase in 2019, driven by higher volumes in Tanzania, Ethiopia, Congo and Sierra Leone. Now that we have gas turbines operating in Tanzania we will also see increased profitability in the Pan-Africa region and this will help to improve overall Group margins.”

Market Turnover

Meanwhile, a further analysis of the market turnover for the week showed that the Financial Services Industry remained the most traded, recording 1.377 billion shares valued at N11.311 billion traded in 14,180 deals. The sector contributed 78.63 per cent and 57.47 per cent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 115.142 million shares worth N168.128 million in 1,126 deals. The third place was Consumer Goods Industry with a turnover of 113.079 million shares worth N6.051 billion in 2,993 deals. Trading in the top three equities namely, Diamond Bank Plc, Access Bank Plc and Zenith Bank Plc accounted for 594.377 million shares worth N4.757 billion in 4,315 deals, contributing 33.93 per cent and 24.17 per cent to the total equity turnover volume and value respectively.

Also traded during the week were a total of 101,254 units of Exchange Traded Products (ETPs) valued at N577,835.06 executed in 19 deals compared with a total of 23,701 units valued at N3.020 million that was transacted previous week in four deals.

Similarly, a total of 25,740 units of Federal Government Bonds valued at N26,597 million were traded last week in 22 deals compared with a total of 5,845 units valued at N6.158 million transacted two weeks in 18 deals.

Price Gainers and Losers

The price movement chart showed that 26 equities appreciated in price during the week, lower than 34 in the previous week, while 38 equities depreciated in price, the same as the previous week. Cornerstone Insurance Plc led the price gainers with 19.0 per cent, trailed by Livestock Feeds Plc with 15.5 per cent. Veritas Kapital Assurance Plc with 14.2 per cent. C & I Leasing Plc went up by 9.9 per cent just as Neimeth International Pharmaceuticals Plc 9.8 per cent. Neimeth last week announced the appointment of a new managing director, Mr. Matthew Azoji, a development stakeholders said would consolidate the performance of the company going forward.

The new MD graduated from the Obafemi Awolowo University, Ile-Ife, Osun State, where he obtained his B. Pharm (first class honours). He went on to obtain an MBA (Marketing) from the Enugu State University of Science and Technology, Enugu, and an Advanced Management Programme (AMP) from the Lagos Business School; Pan Atlantic University, Lagos. With his wealth of experience in the Pharmaceutical Industry, Azoji is expected to drive the activities of the company towards a greater future.

A.G Leventis Nigeria Plc was also among the price gainers, chalking up 9.6 per cent. Newrest ASL Nigeria Plc, which has applied for voluntary delisting chalked up 9.3 per cent. Niger Insurance Plc and PZ Cussons Nigeria Plc garnered 9.0 per cent and 8.3 per cent in that order.

Conversely, Transcorp Plc led the price losers with 14.4 per cent, followed by NPF MFB Plc with 12.7 per cent. Oando Plc shed 11.5 per cent, while Unilever Nigeria Plc and Goldlink Insurance Plc went down by 10.0 per cent and 8.3 per cent respectively.

Wema Bank Plc and Eterna Plc shed 8.3 per cent apiece, just as Japaul Oil & Maritime Services Plc, Access Bank Plc and FBN Holdings Plc dipped by 8.0 per cent, 7.8 per cent and 7.1 per cent in that order.

Source:© Copyright Thisday Online