The Nation Newspaper

Category: Equities

  • GTB records N215.6b profit in 2018

    Guaranty Trust Bank (GTB) Plc recorded modest growths in the top-line and bottom-line in 2018 with pre-tax profit rising by 9.1 per cent to N215.6 billion in 2018.

    Key extracts of the audited report and accounts of GTB for the year ended December 31, 2018 released yesterday at the Nigerian Stock Exchange (NSE) showed that gross earnings rose by 3.7 per cent to N434.7billion in 2018 as against N419.2 billion in 2017. Profit before tax stood at N215.6 billion in 2018 as against N197.7 billion recorded in 2017, representing an increase of 9.1 per cent.

    The board of the bank has recommended payment of final dividend per share of N2.45, in addition to interim dividend per share of 30 kobo, bringing total dividend per share for 2018 to N2.75.

    Further analysis showed that the bank’s customer deposits increased by 10.3 per cent from N2.062 trillion to N2.274 trillion. However, loan book dipped by 12.9 per cent from N1.449 trillion in 2017 to N1.262 trillion in 2018. Total assets stood at N3.287 trillion while shareholders’ funds totalled N575.6 billion in 2018. In terms of assets quality, non-performing loan (NPL) ratio and cost of risk improved to 7.3 per cent and 0.3 per cent in 2018 compared with 7.7 per cent and 0.8 per cent recorded respectively in 2017. Coverage ratio for NPL stood at 105.1 per cent while capital adequacy ratio closed at 23.4 per cent despite the implementation of IFRS 9.

    Managing Director, Guaranty Trust Bank Plc, Mr Segun Agbaje, said the results reflected the success of the bank’s focus on staying nimble, strengthening customer relationships and driving digital-first strategy.

    According to him, the bank successfully navigated the pressures of challenging and radically changing business environment as it recorded growth across key financial indices while reaffirming its position as one of the best performing and well managed financial institutions in Africa.

    “This result reflects, not just the fundamental strength of our brand, but also our commitment to our values of excellence, creating value for all stakeholders and putting our customers first in everything that we do. Driven by these values, we are building the bank of the future by pairing the best of our business with the massive potential of digital technologies to create Africa’s first integrated and trusted platform; Habari,” Agbaje said.

  • Equities rally N113b gains in opening trades

    Nigerian equities opened this week with a strong rally as investors sought to deepen their positions ahead of the peak period of the earnings season.

    With more than two advancers for every decliner, the equities market closed with net capital gain of N113 billion, equivalent to average gain of 0.95 per cent. The rally nudged the average year-to-date return so far this year to 2.23 per cent.

    Post-listing rules at the Nigerian Stock Exchange (NSE) require quoted companies to submit their annual audited report and accounts to the Exchange not later than 90 calendar days after the relevant year end. Most quoted companies including all banks, insurance companies, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year.  The deadline for the submission of the 2018 annual report and accounts is Friday, March 29, 2019.

    The All Share Index (ASI), the benchmark index at the NSE, closed higher at 32,129.94 points as against its opening index of 31,827.24 points. Aggregate market value of all quoted equities rose from N11.869 trillion to close at N11.982 trillion.

    Most sectoral indices also closed on the upside. The NSE Banking Index appreciated by 2.66 per cent. The NSE Consumer Goods Index rose by 0.43 per cent. The NSE Industrial Goods Index rallied 0.31 per cent gain while the NSE Oil and Gas Index closed flat. However, the NSE Insurance Index dipped by 0.21 per cent.

    There were 25 gainers against 10 losers. International Breweries led the gainers with a gain of N2 to close at N27. Guaranty Trust Bank followed with a gain of N1.70 to close at N37.20. Zenith Bank rose by 55 kobo to close at N24.50. Dangote Flour Mills appreciated by 50 kobo to close at N10.40. Dangote Cement added 40 kobo to close at N197. FBN Holdings rose by 25 kobo to close at N8 while Cutix chalked up 20 kobo to close at N2.25 per share.

    On the negative side, PZ Cussons Nigeria led the losers with a drop of N1.30 to close at N12.15. UAC of Nigeria followed with a loss of 25 kobo to close at N8.25. Dangote Sugar Refinery dropped by 15 kobo to close at N14.50. United Capital and GlaxoSmithKline Consumer Nigeria lost 10 kobo each to close at N3.25 and N11.90 respectively while Livestock Feeds and NEM Insurance dropped by 6.0 kobo each to close at 61 kobo and N2.44 respectively.

    Total turnover stood at 228.48 million shares valued at N2.61 billion in 3,545 deals. Diamond Bank led the activities chart with a turnover of 33.03 million shares valued at N82.11 million. United Bank for Africa (UBA) recorded a turnover of 31.06 million shares worth N239.14 million while Zenith Bank placed third with 28.87 million shares valued at N703.10 million.

    “Amidst the still sensitive political landscape, we still hold the view that the blend of compelling valuation story, together with positive macroeconomic picture, leaves scope for market recovery in the medium-to-long term. However, we guide investors to tread a cautious trading path in the short term,” Cordros Capital stated.

    Analysts at Afrinvest Securities said they believed the positive performance recorded yesterday would persist into subsequent trading sessions as investors continue to take positions in fundamentally sound stocks.

     

  • NSE trains brokers on fixed-income trading

    The Nigerian Stock Exchange (NSE) yesterday held a workshop on fixed income trading as part of its commitment to improve the capacity of dealing members and enhance investors’ participation in the fixed income market.

    The event witnessed over 200 participants across the capital market community. During the workshop, delegates were exposed to the opportunities inherent in the fixed income market, the future potential of the market, and the potential for onboarding retail investors into the capital markets.

    All fixed income securities, with the exception of zero- coupon bonds, provide some form of regular interest payments to investors. This makes the fixed income market especially attractive to investors whose main investment goal is providing themselves with a steady income.

  • Cutix declines further with N300.9m Q3 profit

    Cutix Plc has continued to struggle with tepid sales and declining margins as third quarter net profit dropped by 9.4 per cent to N300.87 million.

    Key extracts of the interim report and accounts of Cutix for the nine-month period ended January 31, 2019 showed that sales rose to N4.13 billion in third quarter ended January 2019 as against N3.84 billion recorded in corresponding period of 2018. Profit before tax however dropped from N510.87 million in 2018 to N462.87 million in 2019. After taxex, net profit dropped from N332.06 million to N300.87 million. With these, earnings per share declined from 37.71 kobo to 17 kobo.

    Cutix has been struggling with depressed bottom-line in recent period. Half-year report and accounts of Cutix for the six-month period ended October 31, 2018 had shown that sales rose marginally from N2.72 billion in October 2017 to N2.78 billion in 2018. However, profit before tax declined from N373.62 million to N344.70 million. After taxes, net profit slipped from N242.85 million in 2017 to N244.06 million in 2018. Earnings per share consequently dropped from 27.58 kobo in October 2017 to 25.44 kobo in October 2018.

    The decline in the bottom-line has raised concerns on the dividend outlook of Cutix, which recently distributed 880.66 million ordinary shares of 50 kobo each as bonus shares to shareholders in addition to cash dividend of N176.13 million.

    Shareholders had received a dividend per share of 20 kobo and a bonus share of one new ordinary share of 50 kobo each for every one ordinary share of 50 kobo each as returns for the year ended April 30, 2018.

    Cutix is an indigenous company, wholly owned by Nigerians. Incorporated in 1982, the company gradually transformed from a private limited liability company formed and owned by friends and family members to become a publicly quoted company.

    Cutix recently invested about N300 million on a new extension of its factory as part of efforts to increase the installed production capacity of the cables-manufacturing company. The new factory extension was expected to impact positively on the production capacity and efficiency of the company and to enable it to further improve its performance notwithstanding the increasing competition in the cables industry.

  • Investors net N433b gain in February rally

    Investors in Nigerian equities netted N433 billion in capital gains in February. The bullish performance in February covered net loss of N326 suffered in January and left investors with net capital gains of N107 billion over the two-month period.

    Despite a streak of month-end profit-taking transactions, benchmark indices at the Nigerian Stock Exchange (NSE) showed average gain of 3.80 per cent in February, equivalent to net capital gain of N433 billion. With this, average year-to-date return, which was down by 1.82 per cent in January, rebounded to a gain of 1.26 per cent.

    The All Share Index (ASI)- the common value-based index that tracks share prices at the NSE closed February at 31,718.70 points as against its month’s opening index of 30,557.20 points. Aggregate market value of all quoted equities also rose correspondingly from its month’s opening value of N11.395 trillion to close the month at N11.828 trillion.

    The ASI had declined by 1.82 per cent to close January 2019 at 30,557.20 points as against the year’s opening index of 31,430.50 points. Aggregate market capitalisation of quoted equities had dropped by N321 billion to close on January 2019 at N11.395 trillion compared with the year’s opening value of N11.721 trillion.

    February was an election month for Nigeria. The Independent National Electoral Commission (INEC) had postponed the presidential and national assembly elections from February 16 to February 23. After the elections, INEC announced President Muhammadu Buhari as the winner of rescheduled presidential election, defeating former Vice President Alhaji Atiku Abubakar. Abubakar has however opted to challenge the results at the election tribunal.

    Many analysts expected the equities market to sustain its rally in March with the combination of corporate earnings and dividends and the reduction in political risk. Post-listing rules at the Nigerian Stock Exchange (NSE) require quoted companies to submit their annual audited report and accounts with the Exchange not later than 90 calendar days after the relevant year end.

    Most quoted companies including all banks, insurance companies, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year.  The deadline for the submission of the 2018 annual report and accounts is Friday, March 29, 2019.

    Market pundits said the successful conclusion of the election has strengthened the outlook for the Nigerian financial markets. The considerable reduction in political risk, which has been a major factor in investment decision-making in the past 12 months, is expected to improve investors’ appetite for Nigerian stocks.

    “Following the conclusion of the 2019 Presidential Elections, we advise investors to take position in fundamentally good stocks trading at cheap prices as we expect improved earnings to buoy performance in the near term,” Afrinvest Securities stated.

    Financial market analyst and Fixed Income Trader, FSDH Merchant Bank, Mr Babajide Sholanke, said the conclusion of the election had cleared the hurdle, while investors await the electoral court process.

    Sofunix Investment and Communications Limited Chief Executive Officer, Mr. Sola Oni, said investors would consider the overall outlook of the economic direction of the government, noting that it would amount “to over dramatisation to link the decline at the equities market yesterday to final announcement of presidential election”. The equities market has rallied more than 6.0 per cent gain this month and many believed investors were taking profits on capital gains.

    “The announcement has put paid to an unusual waiting period for the final results. Regardless of the party that forms the government at any point in time, the critical issue is the economy in general and the financial market in particular.  Any government that manages macroeconomic challenges will ultimately win the heart of the people. The most important thing that any government can do to build investors’ confidence in the capital market is to fix the economy. The economy is the underlying asset while the financial market which comprises both money and capital market is a derivative,” Oni said.

    He noted that economic development is a natural consequence of an enabling environment including infrastructure such as power, road network, airways, waterways, security of lives and property, sanctity of contracts and a host of others.

    CardinalStone Partners Limited, an investment firm, said the conclusion of the election would bring much relief to investors as much of the nation’s economic activity in recent months have been conducted against the backdrop of electoral uncertainty.

    Analysts at CardinalStone Partners said they expected the re-election of President Muhammadu Buhari to lead to sustained implementation of Economic Recovery and Growth Plan (ERGP) to support growth, return of foreign portfolio investors to the equity market and sustained welfare programmes among others.

    “A victory for President Buhari means consolidation of the progress made on economic growth since the recovery from recession and sharp currency devaluation in 2017. The domestic economy has recorded improvements, albeit sluggishly,” CardinalStone Partners stated.

    CardinalStone Partners noted that with enough clarity in the political space following conclusion of the presidential elections, the attractive valuation of Nigerian equities, a slowdown in United State Fed rate hikes and improved emerging market sentiment, foreign investors will show greater interest in the Nigerian stock market.

    “It is noteworthy that the equities market had been the preferred destination for foreign portfolio investments (FPIs) in the last five years, accounting for over two-thirds of total FPI inflows. Only recently did we begin to see a tilt in favour of money market instruments. Given the aforementioned, we foresee renewed interest in Nigerian equities.

    ‘’We expect the rally to begin in the banking sector, owing to its liquidity benefit and spill to other counters on the index, trading at relatively attractive valuations. Both foreign and local investors have already begun taking positions as evinced by average market breadth of two times witnessed in the past three weeks,” CardinalStone Partners stated.

  • New accounting standards to delay insurance companies’ results

    Most insurance companies may miss the month-end deadline for submission of their audited annual reports due to implementation of new accounting standards by the insurance industry.

    Post-listing rules at the Nigerian Stock Exchange (NSE) require quoted companies to submit their annual audited report and accounts with the Exchange not later than 90 calendar days after the relevant year end.

    Most quoted companies including all banks, insurance companies, major manufacturers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year.  The deadline for the submission of the 2018 yearly report and accounts is Friday, March 29, 2019.

    The Nation‘s check at the weekend indicated that not less than four insurance companies have applied and secured a waiver and extension of the deadline for submission of their 2018 results.These included Mutual Benefits Assurance, Guinea Insurance and SUNU Assurances.

    Insurers said the implementation of two new accounting standards by the National Insurance Commission (NAICOM), the primary regulator of the insurance industry, has affected the completion of the auditing process for the annual report and accounts. The insurance companies also envisaged delay in the approval process at NAICOM, which must approve the accounts before the submission to the NSE for onward release to the investing public.

    According to the companies, the recent adoption and implementation of the International Financial Reporting Standards (IFRS) 9 on Financial Instruments and IFRS 4 (as amended) on Insurance Contracts by NAICOM will delay the auditing process.

    The companies noted that NAICOM had recently released the guidance on the implementation of the two accounting standards, with the consultative meeting with the insurance companies held as recent as February 12.

    “These events have affected the finalization of our audited financial statements and we envisage that the primary regulator would not have approved the financial statements by March 30, 2019,” one of the insurance companies stated.

    The insurance sector is the most populous sector at the Exchange. Despite the delay, the NSE Insurance Index recorded the highest gain last week at the NSE, playing the contrarian with a gain of 3.01 per cent during the week that saw other main and sectoral indices closing negative.

    The rules allow the Exchange to grant specific waiver to relevant companies or a general waiver of the deadline under some specific circumstances. General waiver is usually given in the event of general disruption to industrial activities such as strike, national crises, many public holidays and other circumstances that in the judgement of the Exchange may significantly impact the 90-day timeline given to companies to prepare and submit the audited report.

    A market source said defaulting companies may mount pressure on authorities at the Exchange to consider a general waiver citing the disruption caused by national elections.

    Fines for failure to submit reports and accounts within the stipulated timeline range from N100,000 to as high as N100 million.

    Under the rules at the Exchange, late submission under the first instance of 90 days could attract N9 million, the additional period of 90 days will attract N18 million while such delay beyond the first 180 days to the next 180 days could attract as much as N72 million, bringing fines payable by a defaulting company within a year to N99 million.

    In addition to the monetary fines, a defaulting company will be tagged with the “Below Listing Standard” (BLS) or any other sign or expression to indicate that the company has failed to submit its accounts within the stipulated period and this tag shall remain for as long as the company fails to file its accounts.

    Where a company fails to file its accounts after the expiration of the first 90 days, the NSE will send such a company a “second filing deficiency notification” within two business days after the end of the first 90 days. In addition, the Exchange will suspend trading in the company’s shares and notify the Securities and Exchange Commission (SEC) and the market within 24 hours of the suspension.

    Where a company fails to also file its accounts after the second additional period of 90 days, bringing the default days to 180, days, the Exchange may take further appropriate actions including cautioning shareholders that the company’s listing is under threat of delisting and eventual delisting.

  • United Capital grows profit to N6.22b

    United Capital Plc drew on operating efficiency and steady growth in the top-line to grow its profit to N6.22 billion in 2018.

    Key extracts of the audited report and accounts of United Capital for the year ended December 31, 2018 showed that profit before tax rose by 12 per cent from N5.55 billion in 2017 to N6.22 billion in 2018. However with 58.8 per cent in taxes, profit after tax dipped marginally to N4.34 billion in 2018 as against N4.36 billion in 2017. Total turnover improved by four per cent to N9.26 billion compared with N8.92 billion in previous year. Operating income had grown from N7.0 billion in 2017 to N7.2 billion in 2018.

    With earnings per share of 72 Kobo, the board of directors of the company has recommended payment of N1.8 billion as cash dividend for the 2018 business year, representing dividend per share of 30 kobo. The dividend payout represents a dividend yield of about 9.0 per cent, which most analysts considered attractive.

    The report also showed that the investment and finance group leveraged on cost saving techniques to deliver a 10 per cent reduction in operating expenses.  Net trading income also grew by 43 per cent on the back of increased gains from the sales and purchases of financial instruments. Net interest margin quadrupled by 428 per cent from N143.52 million in 2017 to N757.48 million in 2018. Total assets rose to N148.70 billion in 2018 as against N136.60 billion in 2017.

    Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade said the result showed modest improvement in the performance of the company despite the challenges in the operating environment.

    He said the company’s continuous dedication to providing optimum satisfaction to its wide clientele base has necessitated the need for it to be creative and innovative in its operations, and this is evident in the reduction in its operating expenses.

    He noted that the investment and finance group implemented the new IFRS 9-Financial Instruments, which required the reclassification of most of its financial assets.

    According to him, the standard necessitated the impairment of some assets based on the expected credit loss model, leading to recognition of an impairment charge of about N3 billion, which significantly impacted the shareholders’ fund.

    “We are confident that there will be marked improvement this year and years to come. This confidence stems from the various strategic initiatives we are currently implementing which are designed to create value for the various stakeholders,” Ashade said.

    United Capital is the first investment bank to be listed on the Nigerian Stock Exchange (NSE). The group includes subsidiaries in trusteeship, securities and asset management business.

     

  • Stock market rallies on successful polls

    Nigerian equities market broke into a major rally on Monday as the Independent National Electoral Commission (INEC) began the collation and announcement of results of Saturday’s presidential and national assembly elections.

    With more than three advancers for every decliner, the overall market situation at the Nigerian Stock Exchange (NSE) was exceedingly positive. There were visible improvements in investors’ appetite for Nigerian equities across the sectors.

    Benchmark indices showed average gain of 0.57 per cent yesterday, equivalent to net capital gain of N68 billion within the five-hour trading session. The rally nudged the average year-to-date return to 4.04 per cent.

    Most analysts expected the Nigerian stock market to witness considerable rally after the national elections. INEC had conducted the first phase of presidential and national assembly elections on February 23, 2019. The second and last phase of gubernatorial and state house of assembly elections are scheduled for March 09, 2019.

    Cordros Capital attributed the rally at the stock market to the conduct of the weekend general election noting that “sentiments in the Nigerian equities market turned positive” on the basis of clearer political system.

    “We observed cautious trading in today’s trading session as investors await the results of the 2019 Presidential elections. We expect market direction this week to be largely determined by the outcome of the election,” Afrinvest Securities stated.

    The All Share Index (ASI)- the common value-based index that tracks share prices at the equities market, rose from its opening index of 32,515.52 points to close at 32,700.12 points. Aggregate market value of all quoted equities also increased correspondingly from its opening value of N12.126 trillion to close at N12.194 trillion.

    All sectoral indices also closed on the upside, underlining the widespread bargain-hunting across the sectors. The NSE Consumer Goods Index rose by 1.26 per cent. The NSE Insurance Index appreciated by 1.13 per cent. The NSE Banking Index rose by 0.85 per cent. The NSE Oil & Gas Index improved by 0.05 per cent while the NSE Industrial Goods Index inched up by 0.02 per cent.

    “If we have a smooth election, the immediate market reaction will be bullish and increase in market activities, both in terms of volume and value. This will further be supported with the fact that the risk premium of the economy would have reduced,” Managing Director, GTI Asset Management Limited, Mr Amos Aledare said.

    According to him, the reduced political risk, relative peace and stability in the economy and other fiscal and monetary factors could stimulate foreign investors’ interest in the Nigerian market.

    There were 25 gainers against eight losers at the NSE yesterday. Nigerian Breweries led the gainers with a gain of N3.20 to close at N83.20. 11 followed with a gain of N2 to close at N180. Dangote Flour Mills added N1 to close at N11.05. NASCON Allied Industries rose by 65 kobo to close at N18.90. Dangote Sugar Refinery chalked up 50 kobo to close at N15.50 while Union Bank of Nigria appreciated by 35 kobo to close at N7.25 per share.

    On the negative side, Total Nigeria led the losers with a drop of N5 to close at N190. Flour Mills of Nigeria followed with a loss of 20 kobo to close at N20 while Access Bank, FBN Holdings and PZ Cussons lost 5.0 kobo each to close at N6.35, N8.30 and N12.30 respectively.

    Total turnover stood at 219.7 million shares valued at N5.5 billion. Nigerian Breweries was the most active stock with a turnover of 42.71 million shares worth N3.55 billion. Diamond Bank followed with 30.8 million shares worth N75.5 million while Access Bank placed third with 20.71 million shares valued at N131.4 million.

    Many analysts remained cautious citing the need for clearer macroeconomic direction.

    “In the absence of a positive catalyst, as well as the still tense political milieu, we guide investors to trade cautiously in the short term. However, stable macroeconomic fundamentals and compelling valuations remain supportive of recovery in the mid-to-long term,” Cordros Capital stated.

  • BOC Gases joins Linde Group

    Linde Plc, the parent company of Linde Group, now holds indirect beneficial ownership in BOC Gases Nigeria Plc.

    The beneficial ownership arose from the merger between Linde AG, a company registered in Germany and listed on the Frankfurt Stock Exchange and Praxair Inc, a company registered in the United States of America and formally listed on the New York Stock Exchange.

    With the merger, Linde Plc, a company registered in Ireland and listed on the Frankfurt and New York Stock Exchanges, became the parent company of Linde AG and Praxair Inc.

    As a result of the merger, which was concluded in October 2018, Linde Plc through its 92 per cent majority equity interest in Linde AG now holds an indirect beneficial interest in BOC UK and also an indirect beneficial ownership in BOC Gases Nigeria.

    BOC Gases Nigeria Company Secretary Gabinus Oriseh confirmed that following the merger, BOC UK will continue to hold all the shares it currently holds in BOC Gases Nigeria and that none of these shares will be transferred by BOC UK to any other person as a direct consequence of the merger.

    BOC UK holds 249.747 million shares or 60 per cent majority equity stake in BOC Gases Nigeria.

     

  • SEC shuts Lagos firm over illegal activities

    A Securities and Exchange Commission (SEC) has sealed off the premises of Growing Circle in Lagos for allegedly engaging in illegal fund management activities.

    SEC stated that Growing Circle was shut down for carrying out investment operations that falls within fund management without registration with the Commission.

    According to the Commission, the company’s activities constituted an infraction of the Investments and Securities Act (ISA), 2007 as they do not have registration with the SEC. SEC has powers according to Section 13 (w) of ISA 2007 to shut down any company carrying out capital market activities without due registration.

    SEC stated that the closure was to end unlawful activities of the company against unsuspecting investors and therefore urged investors to ensure they only deal with fund managers that are registered with the Commission.

    The mode of operation of the company is that for a new entrant, registration is N10,000 and the person is not entitled to products while the second category has a registration fee of N16,000 that entitles the registrant to receive products.

    For anyone to come under the company, he has to come under an up liner since the company engages in networking business.  For the networking business, the least stage is a starter point with minimum registration of $50 with an incentive of $15 for a member who introduced two down liners.

    It was gathered that the company also engages in free seminars at its head office for people to learn more about the products and the money making business with an unbeatable compensation plan and huge bonuses.

    SEC disclosed that however, after registering, the members claim they do not get any products from the company and all efforts to retrieve their funds proved abortive, hence the complaint to the SEC.

    While the company claimed to have a factory in Ogun state, the said factory could not be located even though the products were on display at their Lagos office.

    “The accounts of the company have been frozen, the promoters have been arrested by the Nigeria Police Force and are undergoing interrogation. The Commission wishes to notify the investing public that the company is not licensed to carry out investments business of any type and as such its operations are illegal. The SEC therefore advises the public to exercise due diligence and caution in the course of making investment decisions adding that valid licence of lawful operators could be obtained on the Commission’s website by members of the public to confirm the licences of firms with which they intend to carry out investment activities,” SEC stated.