Chief Executive Officer of Chapel Hill Denham Advisory Limited, Mr. Bolaji Balogun has said the listing of MTN Nigeria Communications Plc will encourage many other large unlisted companies in telecommunications and other sectors to list on the Nigerian Stock Exchange (NSE).
The NSE last Thursday listed the shares of MTN Nigeria, adding N1.8 trillion to the market capitalisation of the exchange. MTN is the second largest stock on the NSE now after Dangote Cement Plc.
Balogun, whose company and Stanbic IBTC Capital, acted as joint financial advisers to MTN on the successful listing, said it was significant.
“The listing is very significant firstly because it is adding almost N1.8 trillion to market capitalisation. It would be the second largest company by market capitalisation on the exchange and more importantly, it will also bring more of Nigeria’s best companies on to the exchange and give a wider group of Nigerians the opportunity to participate in its share holding,” he said.
According to him, there are very few companies in Africa today that generate $1 billion of free cash flow, explaining that MTN is one of those special companies and “I am really pleased we have it on the stock exchange.”
“This listing would encourage many other large unlisted companies both within that sector and as well as other sector to start to think about the Nigerian stock market,” Balogun added.
An excited Chief Executive Officer of NSE, Mr. Oscar Onyema had said they were delighted to welcome MTN Nigeria to the exchange.
He said: “The listing is a promising development in the country’s telecommunications sector and we encourage other players in the sector to explore the different opportunities in the capital markets for raising long term capital. Having MTN Nigeria listed in our market is a testament of the exchange’s commitment to building a dynamic and inclusive market and creating channels for sustainable investment. This listing will promote liquidity for MTN Nigeria, enhance its value and increase transparency, as our platform remains one of the best avenues for raising capital and enabling sustainable growth for national development.”
The listing will create a new telecoms and technology asset class for investors and provide an opportunity for a wider group of Nigerians to participate in the MTN investment story opportunity.
The listing has made it possible to broaden the public shareholder base over time and will enable MTN Nigeria shareholders to freely to trade their shares on the NSE.
The Nigerian Stock Exchange has said the number of retail investors has increased to three million.
The Divisional Head, Trading Business, NSE, Mr Jude Chiemeka, while speaking at the Maiden Edition of the Retail Investor Workshop tagged ‘Investment masterclass: Making your money work,’ said the NSE aimed to provide vital and strategic information targeted at equipping existing and prospective investors with useful skills to effectively manage and grow financial resources at their disposal, as well as present retail investment opportunities available in the capital market.
Chiemeka said, “Nigeria has a population of over 190 million people and is the second largest economy in Africa. However, the current financial inclusion indices of 48 per cent leave much to be desired.
“Financial inclusion is a priority of stakeholders in the capital market and the Nigerian Stock Exchange makes it a primary concern to contribute towards the achievement of Nigeria’s National Financial Inclusion Strategy of reducing the proportion of adult Nigerians that are financially excluded to 20 per cent in the year 2020.
“Currently there are about three million retail investors in the Nigerian capital market, representing only three per cent of the total adult population in the country.”
He said the Exchange recognises the need to improve investor participation and was leveraging recent capital market initiatives such as the tiered Know Your Customer requirements for capital market investments, as well as promoting the introduction of globally competitive investment products with low entry thresholds, to achieve financial inclusion goals.
Chiemeka added that the initiatives had begun to yield positive results as the market had, in recent times, witnessed an upturn in retail investor participation.
He added that the market data from 2019 showed that retail investors outperformed institutional investors by eight per cent in January, and again by two per cent in March 2019.
He said, “The Retail Coverage Department of the NSE will be rolling out measures directed at encouraging retail investor involvement in the capital markets. Over the next few years, various investment workshops will be held across the country, starting with this one here in Lagos.
“Investors can look forward to regular engagements targeted at promoting financial literacy, building investor confidence, as well as the introduction of innovative and technology-driven solutions to stimulate investor participation.”
The Securities and Exchange Commission has said the commodities trading ecosystem is capable of playing a strong role in the nation’s diversification efforts as being championed by the present administration.
The acting Director-General, SEC, Ms Mary Uduk, while speaking at a capacity building programme for judges and top management members of the Investment and Securities Tribunal in Abuja on Monday, said it was important to organise the commodities market to enhance its efficiency, growth and competitiveness.
She added that the commodities market would play a strong enabling role in food security, employment generation and economic diversification, which she described as the main thrust of the government.
Uduk, who was represented by the acting Executive Commissioner, Operations, SEC, Mr Isyaku Tilde, said there were a lot of benefits in promoting commodities exchanges and the ecosystem in general “as they provide a transparent pricing mechanism, promote attractiveness of agribusiness, foster financial inclusion and improve quality of agricultural output and profitability as well as government revenue.”
She said as part of its implementation of the 10-year Capital Market Master Plan, SEC constituted a technical committee on commodities trading ecosystem, whose mandate was to identify challenges of the existing framework/infrastructure and develop a road map for a vibrant ecosystem.
According to her, the technical committee set up to develop a road map for reviving the commodities trading ecosystem came up with over 40 recommendations to be implemented in four phases between 2018 and 2025.
She said, “The report observed the knowledge gap that exists within the ecosystem and recommended the need for capacity building on the commodities trading ecosystem to stakeholders and to the general public.
“To ensure the implementation of these initiatives, SEC constituted an implementation committee consisting of institutional members to drive the process. The training became necessary because the IST statutorily has jurisdiction over securities-related matters and this includes the commodity trading market.”
According to her, the successful implementation of the technical committee’s report will lead to more activities in the market and resolve disputes.
“It is without a doubt that investors’ protection is at the heart of market regulation. This implies that the most important participant in the capital market is the investor, hence, the overriding need for strong regulation and adequate safeguards coupled with an efficient dispute resolution mechanism,” Uduk added.
The Chairman, IST, Mr Isaiah Idoko-Akoh, commended SEC for organising the training programme, adding that with the way the market was progressing, the commodity market had become a very important aspect.
He said the IST had seen the growth of commodities exchanges in other jurisdictions and hoped to have a similar interface to assist in moving the nation’s economy forward.
MTN Nigeria is to be officially introduced on the Nigerian Stock Exchange (NSE) on Thursday as the telecom company has concluded all relevant processes which will enable it list on the Nigerian bourse, two officials told Daily Trust yesterday. The NSE and MTN officials who pleaded anonymity confirmed to our reporter that the telecom operator’s 20.3billion shares are expected to start trading this week. ‘’Yes, I can confirm that we are listing this Thursday’’, a top MTN official told Daily Trust yesterday. ‘’All I can say is that Nigerian investors will start trading in MTN sometime this week’’, a top NSE official familiar with the MTN listing said.
The telecommunication giant last week said it had completed the registration of 20.3billion ordinary shares of N0.02 each with the Securities and Exchange Commission (SEC). It said the successful completion of the process set in motion the next steps in the company’s intended listing by introduction on the Nigerian Stock Exchange (NSE). MTN CEO, Ferdi Moolman, said, “I am excited we have achieved another milestone in our listing process, and we want to thank the SEC and the Corporate Affairs Commission (CAC) for supporting us through the process.
We have now begun to engage with the NSE to complete the listing process.” The South African telecoms giant had in April announced its conversion from a private company to a public company. The conversion to a public company is a legal requirement and a key milestone in the preparatory process for MTN’s listing on the NSE, Mr. Moolman, had said in a statement in April. Moolman said MTN’s intended listing on NSE would create a new telecom asset class for investors and provide a wider group of Nigerians with a chance to participate in the MTN investment opportunity. He had also said it was a re-affirmation of the company’s long-term commitment to expanding investment opportunities for Nigerians, in addition to providing everyday services to them.
Nigerian Breweries Plc has recommended total dividend of N19.401 billion for the 2018 financial year.
This amounted to dividend of N2.43 per ordinary share of 50 kobo each.
The company attributed the 100 per cent dividend payout as a demonstration of its strong balance sheet and robust cash flow.
Managing Director of the Company, Mr. Jordi Borrut Bel, disclosed this at its Pre-AGM press briefing in Lagos recently.
Bel said the company had earlier paid an interim dividend of N4.8 billion in October 2018, which amounted to 60 kobo per share. The final dividend would therefore be N14.6 billion, which comes to N1.83 per share.
An analysis of the company’s results showed that it recorded a net revenue of N324.38 billion for the 2018 financial year as against N344.53 billion recorded in 2017.
Bel explained that the marketing and distribution expenses for the 2018 financial year increased by 4.8 per cent relative to the cost incurred in 2017, and administrative expenses also experienced a 4.4 per cent declined from N21.75 billion to N20.78 billion, which was largely informed by elimination of bad costs.
He also disclosed that though the excise duty tariff imposed by federal government at 43 per cent increase took serious toll on the business, it was difficult for the company to pass the cost to consumers in view of weak purchasing power.
A further analysis of the company’s audited results showed that profit after tax increased sharply from N14.79 billion, to 19.43billion between the third quarter and the fourth quarter of the 2018 financial year respectively.
Borrut Bel stated that despite the double digit inflation and other operating challenges which affected the company’s performance, the impact was reduced by cost-saving measures deployed through cost leadership initiatives.
The new, enlarged Cement Company of Northern Nigeria (CCNN) is a stronger platform to capture significant synergies and create value for the benefit of the shareholders in the form of stronger competitive position, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue.
The above were the words of assurance by the Chairman of BUA Group and CCNN, Alhaji Abdul Samad Rabiu after shareholders of CCNN and Kalambaina Cement Company Limited approved the merger of both companies last year. Both firms have BAU Group as parent company but were operating separately before they decided to merge their operations last year.
Rabiu had assured stakeholders of improved benefits post merger. And going by the first quarter(Q1) financial results of CCNN ended March 31, 2019, the shareholders are in for better days.
First financial performance
A look at the performance of CCNN three months after its merger has shown that revenue jumped by 213 per cent from N5.394 billion in the corresponding period of 2018 to N16.886 billion in 2019. This was the highest in the history of the company and it reflected the impact of the increased combined capacity and the gradual realisation of the synergies following the successful completion of the merger with Kalambaina Cement Company Limited.
Volumeincreased by 233 per cent to 411,945 metric tons(mt). Increase in volume sold based on the increased plant capacity from 500,000MT 000metric tonsto 2,000,000mt and improved capacity utilization of the new plant, showing a combined capacity utilisation of 82 per cent.
Also, a strong domestic demand and a ready growing export market to neighbouring countries remain a positive driver for the increase in sales volume experienced in Q1.
Gross profit rose by 239 per cent to N7.689 billion, from N2.263 billion in 2018. In the past four years, CCNN has been spending less on input cost to produce each unit of products. This was maintained in Q1 of 2019 as cost of sales ratio fell to 54.45 percent in March 2019 from 58 percent in the corresponding period of 2018, and 62.50 percent in 2017.
Equally, the improvement in operating performance is due to the new cement plant for which energy costs is cheaper due to coal usage.
CCNN recorded a surge of 255 per cent in profit before tax (PBT) to N5.348 billion in 2019, compared with N1.504 billion in 2018, while profit tax followed same growth trajectory, rising by 235 per cent to N3.636 billion, from N1.083 billion in 2018.
In last five years, CCNN’s profit has been growing steadily with some little slowdown. For instance, between 2015 and 2016,profit after tax fell to N632.04 million to N242.52 million. However, profit began to rise after the country. Hence, CCNN has recorded a surge 236 per cent to N3.636 billion in Q1 of 2019, as against N1.08 billion the previous year.
A further analysis of the performance indicated that the cement firm has been able to turn each Naira invested in sales into higher profit as net margin increased to 21.50 per cent in March 2019 from 20.10 per cent in March 2018, 11.80 percent in 2017, and 6.80 percent in 2016.
Pre-tax profit margin also followed the similar pattern, increasing to 31.70 percent in March 2019, from 27.90 percent in 2018, 15.70 percent in 2017, and 9.40 percent in 2016.
Operating profit margin increased to 31.90 per cent in March 2019 from 26.30 per cent in March 2018, 16.40 percent in 2017, and 10.60 percent in 2016.
CCNN is liquid and it can easily pay off its current liabilities as current ratio improved to 1.5 7 times in March 2019 from 1.50 times the previous year. This implies that CCNN has 1.57 more current assets than current liabilities.
Besides, CCNN has reduced debt in its capital structure as total debt (long and short term) fell by 33.90 percent to N348.61 billion in March 2019 from N52.43 billion the previous year.
Also, the company has CCNN has enough cash to pay debts, reward shareholders in form of dividend, and fund future expansion plans as net cash flow from operating activities surged by 1,881 per cent to N7.31 billion a year ago.
Bright future outlook
Many market analysts have expressed high optimism that CCNN has huge potential to deliver sustainable growth and increase shareholders’ wealth going forward. According to them, there many benefits the manager has brought.
Before now, Rabiu had said the expanded CCNN would remain the market leader in its regional market of North West Nigeria, which is the third largest market for cement in Nigeria by consumption, whilst continuing to explore the huge opportunities that exist in the export markets of Niger, Burkina Faso and the west African region.
“Traditionally, the huge cost of transportation to CCNN’s home region from other cement plants in Nigeria – the nearest being about 900km away – has always given us a strategic advantage in that region over competing cement companies and brands. The expanded entity will leverage on the cost and energy efficiency of the newly commissioned Kalambaina Plant whilst providing additional value through its products in terms of better quality, higher yields and a stronger cement than competing premium cement brands,” he said.
The merger brought the total installed capacity of the new firm to two million metric tonnes per annum(mtpa) and is expected to bring the total capacity of BUA’s cement operations to eight million mtpa as the group has completed its three million metric tonnes per annum Obu II Cement Plant in Okpella, Edo State.
The merger also provides the company other energy sources and broadens its energy mix. CCNN is the only cement plant in Nigeria that relies solely on LPFO and diesel.
Also, merger has provided opportunities for CCNN to expand into new markets, some with export potential such as Burkina Faso, and the Republics of Niger and Benin.
Rabiu had assured that the company’s commitment towards Nigerian economy remains strong, noting that the merger would further boost that commitment.
He said: “Our commitment towards the Nigerian economy remains strong and this new entity further deepens the capital market and is a pointer to the continued resurgence of the Nigerian economy. We remain committed to delivering exceptional value to stakeholders at all times. Innovation, efficiency and best-in-class technology will continue to be the key drivers of our cement business.”
Trading at the stock market remained bearish last week as a combination of profit-taking in bellwethers and negative reactions to financial results released by companies for the first quarter ended March 31, 2019, dominated sentiments of investors.
Consequently, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) fell by 1.78 per cent to close lower at 29,212.00, while market capitalisation shed N197 billion to be at N10.979 trillion. The year-to-date decline of the NSE ASI worsened to 7.1 per cent as last Friday.
Just like the previous week, the market traded for four days and the bears and bulls controlled two days each. But the bears had the upper hand, leading to a decline of 1.78 per cent at the end of the week.
Trading had started on Monday on a negative note with the NSE ASI falling 0.73 per cent following losses by Guaranty Trust Bank Plc, Stanbic IBTC Holdings Plc and Dangote Cement Plc. The negative trend was sustained on Tuesday with a higher decline of 1.23 per cent due to sell-off in Dangote Cement Plc, Nestle Nigeria Plc, Stanbic IBTC among others.
But the market rebounded on Thursday and Friday, appreciating by 0.04 per cent and 0.14 per cent in that order. However, the gains in the two days were not enough to offset the losses of Monday and Tuesday.
By the close of the week, three of the five major sectors declined led by the NSE Industrial Goods Index that fell 3.0 per cent. The NSE Banking Index trailed with 1.3 per cent, just as the NSE Consumer Goods Index went down by 0.3 per cent.
On the positive side, the NSE Insurance Index rose 1.3 per cent, followed by NSE Oil and Gas Index that appreciated by 0.02 per cent.
Commenting on the market, analysts at Afrinvest (West Africa) Limited said: “We view the market as lacking drivers for a sustained bullish run and so expect the market to continue to trade sideways, with profit-taking and bargain-hunting activities dominating an equal amount of trading session over the short term.”
In their analysis, analysts at Meristem Securities Limited said the negative performance last week was partly due, “to the string of negative first quarter results, which cut across the different sectors of the market.”
According to Meristem, the poor earnings performances were further pointers to weak consumer spending in the economy, even as many of the companies face different operating challenges.
“It is therefore cheery news that the National Assembly passed the 2019 Budget, which includes provisions for the implementation of the new minimum wage. This should strengthen consumer spending, which has been faltering since the exit from recession. On the downside, however, it portends upside inflation risks, with the possibility of constraining the Monetary Policy Committee’s easing posture,” they said.
Meanwhile, an analysis of the other markets in Africa, showed that Nigeria was the second highest loser following Ghana that recorded a decline of 2.4 per cent. Kenya’s NSE 20 went down by 0.6 per cent, while Mauritius’ SEMDEX shed 0.4 per cent. Morocco’s Casablanca MASI closed with a marginal decline and ending its four week’s bullish run. The Egypt EGX30 emerged as the lone gainer last week, rising by 0.3 per cent.
Among the BRICS markets, three of the tracked indices trended southwards. The two markets that closed in the positive territory are South Africa and Russia. The South Africa FTSE/JSE All Share rose 0.5 per cent after President Cyril Ramaphosa said government won’t cut jobs at state power utility Eskom. Similarly, Russia’s RTS marginally inched higher by 0.1 per cent.
Conversely, China’s Shanghai Composite and India’s BSE Sens shed 0.3 per cent following the expiry of Iranian Oil Sanction Waivers on May 2nd, 2019. Also, the Brazil Ibovespa closed the week 0.3 per cent lower.
In Asia and the Middle East, performance was mixed with the bears dominating. The Saudi Arabia’s Tadawul ASI led decliners with 0.7 per cent followed by Thailand’s SET Index and Qatar’s DSM 20 which dipped 0.3 per cent each.
On the positive side, United Arab Emirates ADX General Index led gainers up 2.8 per cent trailed by Turkey’s BIST 100 that added 0.3 per cent.
Following the United States(US) Federal Reserve Bank’s stance on interest rate, performance across the developed market was mixed. In the US markets, the S&P 500 and NASDAQ fell 0.3 per cent each. The UK FTSE All Share index dipped 0.5 per cent, while the France’s CAC 40 declined 0.5 per cent.
On the other hand, the Hong Kong Hang Seng led gainers, rising 1.6 per cent. Germany XETRA DAX followed with gain of 0.5 per cent, while Japan’s Nikkei 225 was flat.
Market turnover
Meanwhile, investors traded 1.470 billion shares worth N15.498 billion in 18,092 deals last week compared with 1.432 billion shares valued at N15.089 billion that exchanged hands in 15,342 deals the previous week. The Financial Services Industry remained the most active, leading the activity chart with 610.138 million shares valued at N5.828 billion traded in 8,012 deals; thus contributing 41.5 per cent and 37.61 per cent to the total equity turnover volume and value respectively.
The Conglomerates Industry followed with 227.766 million shares worth N777.211 million in 1,558 deals, while the third place was Consumer Goods Industry with a turnover of 154.760 million shares worth N4.496 billion in 3,622 deals. Trading in the top three equities namely, Transnational Corporation of Nigeria Plc, Cement Company of Northern Nigeria Plc and Japaul Oil & Maritime Services Plc accounted for 403.650 million shares worth N2.103 billion in 1,124 deals, contributing 27.46 per cent and 13.57 per cent to the total equity turnover volume and value respectively.
A total of 1.190 million units of Exchange Traded Products (ETPs) valued at N10.967 executed in 12 deals compared with a total of 4,800 units valued at N45, 578.70 transacted the previous week in nine deals.
A total of 14,589 units of Federal Government Bonds valued at N15.164 million were traded last week in 12 deals as against a total of 41,150 units valued at N43.977 million transacted the previous week.
Price gainers and losers
The price movement chart showed that 32 stocks appreciated higher than 30 stocks the previous week, while 44 equities depreciated in price, higher than 40 equities of the previous week.
Japaul Maritime and Oil Services Plc led the price gainers with 39.2 per cent, trailed by Julius Berger Nigeria Plc with 19.6 per cent, while Forte Oil Plc and Jaiz Bank Plc garnered 19.6 per cent and 12.5 per cent respectively. UACN Property Development Company Plc and Transcorp Plc chalked up 12 per cent and 11.6 per cent in that order.
Other top price gainers included: Caverton Offshore Support Services Plc (11.5 per cent); Courteville Business Solutions Plc, Veritas Kapital Assurance Plc (10 per cent apiece); and Dangote Flour Mills Plc (9.9 per cent).
On the contrary, Goldlink Insurance Plc led the price losers with 18.1 per cent, trailed by First Aluminium Nigeria Plc with 12.5 per cent, while Royal Exchange Plc and Total Nigeria Plc went down by 11.5 per cent and 10.9 per cent respectively.
Other top price losers were: Afromedia Plc (10 per cent); MCnichols Plc; Academy Press Plc (9.1 per cent apiece); NPF MFB Plc (9.0 per cent); Cutix Plc (8.7 per cent) and Oando Plc (8.4 per cent).
