Amidst the ravaging bears that has pushed the equities market to a 15-month low on Monday, analysts at Afrinvest West Africa have unveiled some stocks that have upside potential to fetch investors significant capital growth.
The stocks are in the banking, consumer goods and industrial goods sectors. In the banking sector, for instance, the said United Bank for Africa Plc was identified to have upside potential of 56 per cent and Zenith Bank Plc 52 per cent. GTBank Plc has 27 per cent growth potential, while Access Bank Plc has 11.3 per cent.
In consumer goods sector, the analysts said UAC of Nigeria Plc has upside potential of 122 per cent; Nigerian Breweries Plc has the potential to gain 60 per cent; PZ Cussons Nigeria Plc 48.5 per cent and Flour Mills of Nigeria Plc 29.9 per cent. In the industrial goods sector, Lafarge Africa Plc can rise by 158 per cent and Dangote Cement Plc 28.5 per cent. According to them, while risk factors remain on the horizon, they are optimistic of an impending bullish streak in the market as equities near trough points.
“We advise investors to be on standby as we perceive the turning point imminent whilst echoing our long term focus on fundamentally sound stocks with attractive entry prices and prospects of, at least, double digit upside potential,” they stressed.
Analysts at Meristem Securities Limited had last week said rather than panic, investors should take advantage of the bear market, noting that the bearish days would be over soon. “With stock prices bottoming out, light gleams at the end of the tunnel. The low prices in the market provide investment opportunities for players in the market, but of course, with a focus on the fundamentally justified stocks,” they said.
The analysts explained that the 2019 elections have posed a major concern for most investors which has caused them to withdraw their funds from the market, thus making profit volume opportunities after the election become more visible. “We believe that after the elections in February 2019, calm will be restored in the market. It is only fair that you don’t get caught sleeping so why not you buy now, ahead of 2019?,” they said.
In buying stocks now, the analysts advised investors to consider the fundamentally justified stocks, stressing that “the market always remembers these stocks and given their very attractive prices now, your patience will be rewarded.” They added that investors should also consider companies which are important to the growth of the economy.
“Consumption is a given and the government will always carry out infrastructural projects and works. Consumer staples and the elephant in the industrial goods sector lead the way here,” they said. Other stocks investors should consider, according to the analysts, are dividend yielding stocks.
“Dividend yielding stocks always provide an extra income stream for their holders. Even when stock prices are falling and there is no capital appreciation, dividend income provides some comfort. With prices on the low end, dividend yield becomes even more attractive,” they said.
The stock market fell further yesterday following losses by bellwether counters.
Consequently, the Nigerian Stock Exchange All-Share Index (NSE ASI) that hit a-15 month low on Monday, went down further by another 0.48 per cent to close lower at 33,449.17, while market capitalisation shed N59.3 billion to close at N12.2 trillion.
However, the decline in the index resulted majorly from losses suffered by bellwether tickers such as Zenith Bank, GTBank, UBA, and Nigerian Breweries Plc among others.
Commenting on the market performance, analysts at Meristem Securities Limited said: “Profit taking activities on some heavyweight counters dictated market direction today, maintaining its downward trend. Although consumer goods heavyweight, Nestle Nigeria Plc gained significantly today, selling pressure still prevailed. We maintain our stance of a negative close to the market at the end of the trading week.”
Dangote Sugar Refinery Plc led the price losers and NAHCO Plc with 10 apiece. Universal Insurance Plc and Sunu Assurance Plc trailed with 9.0 per cent each. Japaul Oil and Maritime Services Plc and Consolidated Hallmark Insurance Plc went down by 8.3 per cent and 7.8 per cent respectively.
Other top price losers included: Niger Insurance Plc (7.6 per cent); Cornerstone Insurance Plc (7.4 per cent); UAC of Nigeria Plc (7.2 per cent); United Capital Plc (7.1 per cent); Standard Insurance Plc (6.9 per cent); GTBank (5.8 per cent) and Skye Bank Plc (5.0 per cent).
In all, 30 stocks shed value, while only 14 stocks appreciated. Law Union and Rock Insurance Plc led the gainers with 10 per cent, followed by Nestle Nigeria Plc with 9.5 per cent.
Regency Alliance Insurance Plc chalked up 9.5 per cent, while Neimeth International Pharmaceuticals Plc garnered 9.0 per cent. Learn Africa Plc, Dangote Flour Mills Plc, WAPIC Insurance Plc went up by 8.9 per cent, 7.0 per cent and 5.1 per cent in that order.
Meanwhile, volume and value of trading increased 9.5 per cent and 17.7 per cent to 150.7 million shares and N1.6 billion respectively. The top traded by volume were GTBank (17.5 million shares ), UBA (15.6 million shares ) and Diamond Bank (13.8 million shares ) while GTBank (N562.8 million ), Nestle (N250.7 million) and Zenith Bank (N236.0 million ) were the top trade by value.
In terms of sectoral performance, the NSE Banking Index led the bears, sliding by 3.0 per cent due to continuous selloffs in GTBank, Zenith Bank and UBA. The NSE Insurance Index shed 0.9 per cent, while the NSE Oil & Gas Index fell by 0.8 per cent.
Shareholders PZ Cussons Nigeria Plc are to receive the 15 kobo dividend recommended by the board of directors for the year ended May 30, 2018 on Friday October 19, 2018. The payment will be after the approval by the shareholders at the annual general meeting (AGM) a day earlier.
PZ Cussons Nigeria Plc disclosed this in a notification to the Nigerian Stock Exchange (NSE). However, the 15 kobo dividend, which amount to N595.572 million is lower than the 50 kobo or N1.985 billion paid last year.
The company had cut the dividend payout due to a decline of 44 per cent in the company’s profit after tax (PAT) for the year.
In its audited results, PZ Cussons reported a revenue of N80.553 billion, up by 3.0 per cent from N78.216 billion recorded in 2017. Cost of sale rose from N50.267 billion to N56.097 billion, bringing the gross profit to N24.455 billion compared with N27.947 billion the previous year.
Sales and distribution costs equally went up to N9.601 billion from N9.095 billion, while administrative expenses hit N6.626 billion compared with N5.637 billion in 2017. Net financing cost increased significantly by 234 per cent to N652 million, from N195 million in 2017.
Consequently, profit before tax fell 52 per cent to N2.313 billion from N4.811 billion, the decrease in PAT was lower due to 66 per cent reduction in taxation, which was N386 million in 2018 compared with N1.125 billion in 2017. As a result, PZ Cussons posted PAT of N1.927 billion in 2018, showing a decline of 44 per cent compared with N3.686 billion in 2017.
Chairman of PZ Cussons Nigeria Plc, Chief Kola Jamodu had said the weaker revenue growth, increased operating expenses due to inflation resulted in a reduction in the group’s PAT.
According to him, there have been no structural changes in the landscape of the segments in which the company operate and the market share of its brands remain strong.
However, he said to buttress and sustain the position of the company in the market, improve efficiency and improve performance of the business into the future, a number of initiatives are being implemented.
“They include: a further streamling and optimisation of product portfolio to bring more focus on key brands and categories and restore margins; optimisation of the operating model to reduce overheads as well as improve the speed at which new products are brought to the market and a review of product costs across all categories with a focus on areas such as packaging reduction and a drive to reduce plastic consumption,” Jamodu said.
The stock market opened the month of September on negative note on Monday. As a result, the Nigerian Stock Exchange (NSE) All-Share Index shed 0.03 per cent to close at 34,837.50. Although it decline was lower than the 0.68 per cent recorded on the last day of August, analysts said the market remained under the strong control of the bears. The market had declined by 5.86 per cent in August reflecting prevailing negative investors’ sentiments. About 1.63 per cent of the decline in the month recorded last week.
Although trading has been bearish over the months due continued sell down by foreign and domestic investors, analysts said the lower-than-expected gross domestic product (GDP) growth released last week sent negative signals to the market.
“News of the apex Central Bank of Nigeria (CBN)’s fine on Stanbic IBTC Bank and Diamond Bank Plc for illegally repatriating funds on behalf of telecommunications company MTN Nigeria also contributed to the market’s negative sentiments,” some analysts had said.
It is expected that some level of bargain hunting will be seen this week, following the low prices of many stocks. However, that is yet to materialise as stocks continue to plummet.
Some other analysts had guided investors to trade cautiously in the short-to-medium term, saying the absence of a positive one-off catalyst and brewing political concerns, continue to cast a shadow on our outlook for risky assets. “However, the likelihood of recovery in the long term remains supported by stable macroeconomic fundamentals,” they said.
A total of 19 stocks depreciated yesterday while 18 appreciated. Jaiz Bank Plc led the price losers with 10 per cent, trailed by Flour Mills of Nigeria Plc with 9.6 per cent, while Transcorp Plc went down by 7.9 per cent. Prestige Assurance Plc, Veritas Kapital Insurance Plc and Mutual Benefits Assurance Plc dipped by 7.6, 6.9 per cent and 6.6 per cent in that order.
On the positive side, Consolidated Hallmark Insurance Plc led the price gainers with 10 per cent, trailed by AIICO Insurance Plc with 9.7 per cent, just as Continental Reinsurance Plc garnered 9.4 per cent.
NPF Microfinance Bank Plc, WAPIC Insurance Plc and Union Diagnostic and Clinical Services Plc appreciated by8.9 per cent, 8.3 per cent and 7.6 per cent respectively.
Meanwhile, activity level waned as volume and value traded fell 65.8 per cent and 68.0 per cent to 131.5 million shares and N3.1 billion respectively. The top traded stocks by volume were Nigerian Breweries Plc (19.1 million), Stanbic IBTC Bank Plc (11.8 million shares) and AIICO Insurance Plc (11.2 million) while Nigerian Breweries Plc (N1.8 billion), Stanbic IBTC Bank (N0.6 billion) and Zenith Bank Plc (N0.1 billion) were the top traded stocks by value.
The Nigerian Stock Exchange said on Wednesday that it had lifted the suspension it placed on the trading in the shares of Standard Alliance Insurance Plc.
It said the firm was suspended on July 5, 2018, for non-compliance with rule 3.1 of the Exchange (Issuers’ Rules) − Rules for filing of accounts and treatment of default filing.
According to the NSE, if an issuer fails to file the relevant accounts by the expiration of the cure period, the Exchange will send to the issuer a second filing deficiency notification within two business days after the end of the cure period.
The bourse added that it would also suspend trading in the Issuer’s securities and notify the Securities and Exchange Commission and the market within 24 hours of the suspension.
It said Standard Alliance Insurance Plc had submitted its audited financial statement for the year ended December 31, 2017.
The Head, Listings Regulation Department, NSE, Godstime Iwenekhai, said, “In view of the submission of its accounts and pursuant to rule 3.3 of the Default Filing Rules, which provides that the suspension of trading in the issuer’s securities shall be lifted upon submission of the relevant accounts, provided the Exchange is satisfied that the accounts comply with all applicable rules of the Exchange.
“The Exchange shall thereafter also announce through the medium by which the public and the SEC was initially notified of the suspension. The general public is hereby notified that the suspension placed in the trading of the company’s shares has been lifted effective today, Wednesday, 29 August 2018.”
United Bank for Africa Plc has said its gross earnings rose by 16 per cent in the second quarter of 2018 financial period.
According to a statement from the bank on Wednesday, its second quarter performance showed strong growth across key performance metrics as well as a significant contribution from its African subsidiaries
It stated, “Despite declining yield environment in two core markets, Nigeria and Ghana, the pan African financial institution delivered double-digit growth in gross earnings, as it recorded a 16 per cent year-on-year rise in top-line to N258bn, compared to N223bn recorded in the corresponding period of 2017. This performance, according to analysts, underscores the capacity of the group to deliver strong performance through economic cycles, even in a challenging business environment.”
According to the report filed at the Nigerian Stock Exchange on Wednesday, UBA, reported strong growth in operating income at N168.5bn, compared to N161.8bn in the first half of 2017, an increase of 4.1 per cent.
It added that notwithstanding the inflation-induced cost pressure in the period, UBA finished the first half of the year strongly, with a profit before tax of N58.1bn.
The bank said the profit after tax also improved to N43.8bn, a 3.4 per cent growth compared to N42.3bn achieved in the corresponding period of 2017; the first half of the year profit, translated to pre-tax and post-tax return on average equity of 23 per cent and 17 per cent respectively.
The equities market rebounded last week with the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) gaining 0.45 per cent after three weeks of decline. Although trading in the week was for only three days due to declaration of Tuesday and Wednesday as public holiday, price appreciation in Dangote Cement Plc lifted the positive performance for the week.
Consequently, the NSE ASI closed higher at 35,426,21, while market capitalisation ended higher at N12.933 trillion.
However, all other indices finished lower, save for the NSE Premium, NSE Insurance, NSE Lotus II and NSE Industrial Goods indices that rose by 3.15 per cent, 0.78 per cent, 1.10 per cent and 1.96 per cent respectively, while NSE ASeM Index closed flat.
At the start of the week, losses in Guaranty Trust Bank Plc, Zenith Bank Plc, Nigerian Breweries Plc and Unilever Nigeria Plc, had depressed the market by 1.7 per cent on Monday.
However, there was sustained bargaining hunting in Dangote Cement on Thursday and Friday. Hence, the market ended the week with a growth of 0.45 per cent.
Performance across sectors was bearish as three of the five indicators declined. Specifically, the NSE Industrial Goods Index and NSE Insurance Index appreciated 2.0 per cent and 0.8 per cent respectively, while the NSE Banking Index shed 3.0 per cent. In the same vein, the NSE Consumer Goods Index and NSE Oil & Gas Index went down by 2.2 per cent and 0.2 per cent in that order.
Meanwhile, investors traded 968.947 million shares worth N10.246 billion in 9,654 deals last week, compared with a total of 1.147 billion shares valued at N12.546 billion that exchanged hands in 16,649 deals the previous week.
The Financial Services Industry led the activity chart with 874.023 million shares valued at N7.671 billion traded in 6,029 deals, thus contributing 90.20 per cent and 74.87 to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 26.818 million shares worth N1.624 billion in 1,476 deals. The third place was occupied by Oil and Gas Industry with a turnover of 24.795 million shares worth N91.439 million in 752 deals.
The price movement chart showed that 15 stocks appreciated last week compared with 16 stocks of the previous week, while 45 equities shed value as against 56 stocks of the previous week.
Newrest ASL Nigeria Plc led the price gainers with 19.1 per cent, trailed by Skye Bank Plc with 18.7 per cent. Veritas Kapital Assurance Plc and FCMB Group Plc added 7.6 per cent each among others.
Conversely, Jaiz Bank Plc led the price losers with 11.1 per cent, followed by Union Diagnostic & Clinical Services Plc with 10.3 per cent.
Stanbic IBTC Holdings has said its profit after tax grew by 17 per cent to N43.08bn in the first half of the year from N24.11bn in the same period of 2017.
The firm’s gross earnings, which stood at N97.20bn last year, surged to N114.21bn this year.
Its profit before tax rose by 74 per cent to N50.73bn from N29.17bn in the corresponding period of 2017, while total assets stood at N1.37tn in June 2018 as against N1.39tn in December 2017.
The Chief Executive Officer, Stanbic IBTC Holdings Plc, Yinka Sanni, was quoted in a statement as saying, “The operating environment in the first half of the year was characterised by rising oil prices, stable oil production level leading to accretion to the country’s external reserves, improved foreign exchange liquidity with attendant interventions from the Central Bank of Nigeria and moderating inflation amid declining yields on money market securities.
“Stanbic IBTC continued to deliver stellar performance over the course of the first half of the year. Profit before tax grew to N50.73bn, representing a 74 per cent growth from prior year on the back of non-interest revenue growth and recoveries from delinquent assets previously impaired. Our credit impairment line has a write back of N5.5bn as at June 2018 as we continue to intensify recovery efforts on previously classified loans.”
He said the group’s interest income increased by six per cent to N59.9bn predominantly driven by loan growth.
Sanni said, “This was offset by increase in interest expense of 26 per cent as a result of interest paid on maturing term deposits and other borrowings. We are making good progress on our drive to reduce cost of funds which has reduced by more than 100 basis points, manifesting in a 15 per cent reduction in interest cost between Q1 2018 and Q2 2018.
“We have seen significant growth in transaction volumes across our digital platforms. The volume of transactions via our mobile banking, SME internet banking, USSD platforms and ATMs have increased by over 100 percent each year-on-year as we continued to drive non-interest income growth. Also, we kicked off the initial stage of implementing a virtual banking proposition.
“Our Africa-China Banking Centre was recently launched and it aims to provide bespoke solutions and address the needs of business communities in both Nigeria and China while leveraging our relationship with Standard Bank and the Industrial & Commercial Bank of China.”
Sanni said the group remained focused on driving long-term value for its clients and shareholders through its balanced and diversified business model, while thanking the various stakeholders for their contributions and support towards the achievement of the half-year results.
The market capitalisation of equities listed on the Nigerian Stock Exchange fell further last week as 56 firms recorded price depreciation.
The NSE All-Share Index and market capitalisation depreciated by 0.51 per cent to close the week at 35,266.29 basis points and N12.875tn respectively.
Similarly, all other indices finished lower with the exception of the NSE Premium, NSE Lotus II and NSE Industrial Goods indices that rose by 0.59 per cent, 0.23 per cent and 1.29 per cent respectively, while NSE ASeM Index closed flat.
Sixteen equities appreciated in price last week, lower than 20 in the previous week. Fifty-six equities depreciated in price, higher than 47 equities of the previous week, while 97 equities remained unchanged as against 103 in the preceding week.
A total turnover of 1.147 billion shares worth N12.546bn in 16,649 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 925.630 million shares valued at N8.333bn that exchanged hands in 15,565 deals the week before.
The financial services industry (measured by volume) led the activity chart with 891.785 million shares valued at N8.251bn traded in 9,187 deals, thus contributing 77.78 per cent and 65.77 per cent to the total equity turnover volume and value respectively.
The consumer goods industry followed with 79.149 million shares worth N2.631bn in 2,931 deals, while the third place was occupied by conglomerates industry with a turnover of 60.294 million shares worth N93.993m in 694 deals.
Trading in the top three equities, namely Nem Insurance Plc, United Bank for Africa Plc and Mansard Insurance Plc (measured by volume), accounted for 360.623 million shares worth N1.967bn in 970 deals, contributing 31.45 per cent and 15.68 per cent to the total equity turnover volume and value respectively.
Also traded last week were a total of 1,793 units of Exchange Traded Products valued at N282,571.59 executed in nine deals, compared with a total of 1,727 units valued at N333,925.78 that was transacted in nine deals the previous week.
A total of 2,647 units of Federal Government Bond valued at N2.725m were traded last week in 17 deals, compared with a total of 7,787 units valued at N8.005m transacted the week before in 11 deals.
Zenith Bank Plc yesterday announced an interim dividend of N9.42 billion for the half year (H1) ended June 30, 2018, following the release of the bank’s results.
The dividend, which translates to 30 kobo per share, is higher than the N7.5 billion or 25 kobo paid in the corresponding period of 2017.
According to notification to the Nigerian Stock Exchange (NSE), the interim dividend would be paid to shareholders whose names appear on the bank’s register on August 17, while payment would be made on August 24, 2018.
The N9.42 billion interim dividends would be paid from a profit after tax (PAT) of N81.7 billion recorded by for the H1, up from N75.3 billion in 2017.
Zenith Bank Plc posted gross earnings of N322.2 billion in 2018, down from N380.4 billion in 2017. Net interest income stood at N154 billion compared with 139 billion in 2017.
Impairment charges fell from N42.4 billion to N9.7 billion, while non-interest income reduced from N118.2 billion to N93.5 billion.
Profit before tax improved from N92.2 billion to N107.4 billion, while PAT stood at N81.7 billion, compared with N75.3 billion in 2017.
Market operators said with higher interim dividend, shareholders should expect a higher final dividend at the end of the year. The bank had paid a total dividend of N2.70 per share for 2017.
The Chairman of the bank, Mr. Jim Ovia, had told shareholders at the annual general(AGM) last despite the challenging operating environment, the bank was able to achieve improved performance in its financial results in 2017.
He said profit before tax rose by 24 per cent from N140bn in 2016 to N174bn in 2017, while total assets of the bank grew by 13 per cent from N4.28tn in 2016 to N4.83tn in 2017.
“This translated into an excellent performance that stands as a testament to the durability and resilience of the brand. Clearly, the results are once again a reflection of the exceptional financial health of the bank and the group,” he said.
Speaking in the same vein, the Group Managing Director, Zenith Bank Plc, Mr. Peter Amangbo, said the management of the bank had made progress in its vision to entrench sustainability in its operations.
He had said the management of the bank would increase the quality of its engagement and be more proactive by anticipating fluctuations in the economy and markets.
