The Nation Newspaper

Category: Equities

  • Red Star Express declares N236m dividend

    Red Star Express Board of Directors at the weekend announced that it has recommended payment of N236 million to shareholders of the company as cash dividend for the immediate past year. The company had distributed same amount in the previous year.

    Shareholders will receive a dividend per share of 40 kobo, implying a dividend yield of 6.7 per cent on the company’s closing share price of N6. Red Star Express’ share price rose by 5.0 kobo or 0.84 per cent to N6 at the weekend.

    Key extracts of the audited report and accounts of Red Star Express for the year ended March 31, 2018 showed decline in the bottom-line. Group turnover rose from N7.3 billion in 2017 to N8.41 billion in 2018. Profit before tax, however, declined from N653.2 million in 2017 to N610.59 million in 2018. After taxes, net profit dropped from N426.76 million to N347.56 million.

    Red Star Express had secured shareholders’ approval to transit to holding company and raise additional capital. The new capital raising could be raised through debt issue, equity issue or a combination of both equity and debt.

    The Group include three subsidiaries- Red Star Freight Limited, Red Star Logistics Limited and Red Star Support Services Limited. The group principally engages in courier services, mail management services, freight services, logistics, warehousing and general haulage.

    Its Chairman, Dr Mohammed Koguna, has said the company plans to change its operating structure from group to holding company to reflect its business expansion and other emerging opportunities.

    According to him, the change to holding company is necessitated by the various initiatives the company seeks to explore and the need to have a more structured accounting system.

    “These are part of the company’s expansion plans aimed at taking full advantage of business opportunities,” Koguna said.

    Koguna, who owns the largest equity in the company, said the group has identified some growth platforms that will become full subsidiaries in the years ahead.

    “We will continue to be innovative so as to ensure the steady growth of the company, which would bring about sustained progression in terms of returns on investments. Our watchword in the management of both our human and capital resources will be to focus on cost efficiency, and concentrate on opening new horizons that will ensure we remain the market leader in our industry,” Koguna said.

  • NSE adds Oando, Beta Glass to most influential stocks’ group

    The Nigerian Stock Exchange (NSE) at the weekend picked Oando Plc and Beta Glass Company Plc as two of the 30 most capitalised stocks.

    In its half-year review of sectoral indices, the NSE added Oando Plc and Beta Glass to the NSE 30 Index, the influential index that tracks the 30 most capitalised companies at the stock market. Oando and Beta Glass displaced Julius Berger Nigeria and Diamond Bank from the group. Oando also displaced MRS Oil and Gas in the NSE Oil and Gas Index, the sectoral index that serves as barometer for the oil and gas sector.

    There were also major changes in the NSE Insurance Index, which saw the emergence of Consolidated Hallmark Insurance Plc, Sovereign Trust Insurance Plc and Veritas  Kapital Assurance Plc as part of the influential stocks for the insurance sector. The trio of Cornerstone Insurance Plc, Staco Insurance Plc and Standard Alliance Insurance Plc were removed from the insurance index.

    Also, Africa Prudential and Continental Reinsurance were added to the NSE Pension Index, which tracks stocks specially screened in line with pension investment. Julius Berger Plc and Beta Glass Plc were removed from the pension index.

    The NSE Lotus Islamic Index, which tracks select stocks adjudged to meet the stringent Islamic standards of ethical stocks, saw the exit of heavily leveraged Lafarge Africa and addition of Nigerian Aviation Handling Company (Nahco).

    Three other sectoral indices-the NSE Banking Index, which tracks banking subsector; the NSE Consumer Goods Index, which serves as benchmark index for the consumer goods stocks and the NSE Industrial Index, which underscores the building materials and other industrial goods stocks were unchanged.

    The price indices, which were developed using the market capitalisation methodology, are reviewed and rebalanced on a bi-annual basis – on the first business day in January and in July. The composition of the indices after the review thus becomes effective today, July 2, 2018.

    The NSE 30 Index and NSE Industrial Goods Index are modified market capitalisation index with the numbers of included stocks fixed at 30, 50 and 10 respectively. The numbers of included stocks in the NSE Consumer Goods Index, NSE Banking Index, NSE Insurance Index and NSE Oil and Gas Index are 15, 10, 15 and seven respectively.

    The stocks are picked based on their market capitalisation from the most liquid sectors. The liquidity is based on the number of times the stock is traded during the preceding half year. To be included, the stock must be traded for at least 70 per cent of the number of times the market opened for business.

    The NSE began publishing the NSE 30 Index in February 2009 with index values available from January 1, 2007. On July 1, 2008, the NSE developed four sectoral indices with a base value of 1,000 points, designed to provide investable benchmarks to capture the performance of specific sectors. The sectoral indices comprise the top 15 most capitalised and liquid companies in the insurance and consumer goods sectors, top 10 most capitalised and liquid companies in the banking and industrial goods sector and the top seven most capitalised and liquid companies in the oil & gas sector.

    In July 2012, the NSE launched the NSE Lotus Islamic index (NSE LII), which consists of companies whose business practices are in conformity with the principles of Shari’ah with the aim of increasing the breadth of the market and creating an important benchmark for investments as the alternative non-interest investment space widened. All the companies that appear on the Islamic index have been thoroughly screened by Lotus Capital Halal Investment, in accordance with a methodology approved by an internationally recognised Shari’ah Advisory Board comprising of renowned Islamic scholars.

     

  • Stock Exchange begins trading on new structure

    The Nigerian Stock Exchange (NSE) opens today with a new market structure aimed at creating an optimal market design that facilitates improved market depth, liquidity provision and price efficiency.

    The improved market structure, which took effect from today, July 2, 2018, is expected to create a level playing field for all market participants, and allow for the creation of new trading strategies.

    Under the new market structure, market makers and other dealing members will be able to participate across all trading sessions, which will further support competitive pricing, reduced spreads, and best execution.

    Its Chief Executive Officer, Mr Oscar Onyema, said the review of the equities market structure was carried out to support the Exchange’s hybrid market model, which offers the benefits of best execution and tighter spreads to investors.

    “Moreover, it provides potential for cheaper cost of capital to issuers in our market. This market structure is in line with our 2018 to 2021 corporate strategy aimed at boosting retail investor participation,” Onyema said.

    He reiterated Exchange commitment to maintaining a platform that engenders a fair and efficient market in line with global standards.

     

  • Ekocorp to convert directors’ debts to shares

    • Major investor for healthcare firm

    Shareholders of Ekocorp Plc are scheduled to meet on Thursday to consider two proposals of converting some debts to shares and completing a 10-year-old special placement that will see emergence of a new major investor in the healthcare company.

    A Federal High Court has ordered the convening of an extraordinary general meeting for shareholders to consider and if necessary, approve two special resolutions on the debt-to-equity conversion and private placement.

    Under the proposed debt-to-equity conversion, 75 per cent of the debts owed by the company to three major promoters and directors as at 2007 will be converted to ordinary shares at N1 per share. These include N43.82 million debt owed to Dr Sunday Kuku, equivalent of 43.82 million shares under the terms of the conversion; N42.69 million shares owed to Dr Augustine Obiora, equivalent to 42.69 million shares and N27.74 million shares owed to late Dr Alexandria Eneli, equivalent to 27.74 million shares.

    Also, 75 per cent of debt owed to Chief F G A Cole, amounting to N4.32 million will be converted to 4.32 million ordinary shares.

    Shareholders are also expected to approve the allotment of 110.0 million ordinary shares of N4 each to Geoff Ohen Limited through a special placement that has been approved on June 17, 2008.

     

  • CCNN to merge with BUA Cement

    Cement Company of Northern Nigeria (CCNN) Plc and Kalambaina Cement Company- a wholly-owned subsidiary of BUA Cement Company Limited have entered into agreement to merge their businesses in a business combination that will produce North-West Nigeria’s largest cement company.

    Both CCNN and Kalambaina Cement are based in Sokoto. CCNN has a 500,000 metric tonnes per annum cement plant while Kalambaina Cement has a 1.5 million metric tonnes per annum plant, making a combined capacity of 2.0 million metric tonnes per annum.

    In a regulatory filing at the Nigerian Stock Exchange (NSE) yesterday, directors of CCNN and Kalambaina Cement said they have reached preliminary agreement on the merger, subject to approval by shareholders and capital market regulators. Damnaz Cement Company, a subsidiary of BUA International Limited is a majority shareholder in CCNN.

    Managing Director, Cement Company of Northern Nigeria (CCNN) Plc, Alhaji Ibrahim Aminu said that the proposed merger will position CCNN for better competitiveness within its home market and also enable it utilize the more modern plant and equipment of the Kalambaina Cement to boost its market penetration and export potential.

    According to him, the proposed merger provides a compelling opportunity to capture significant synergies and create value for the benefit of the shareholders of both companies in the form of stronger competitive position of the enlarged company, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue.

    “Over the years, we have always delivered exceptional value to all stakeholders and this proposed merger is in continuation of that. We have consistently outperformed the industry in key metrics such as capacity utilization but growth has been hampered over the years due to limited expansion and lack of alternative fuel sources,” Aminu said.

    He noted that Kalambaina Cement plant that uses alternative fuel such as coal, heavy oils and gas would help to solve the power problem with limited downtime and further opportunities for growth and expansion.

    According to proposal, shares of CCNN will be issued and allotted to all shareholders of Kalambaina Cement in exchange for their shares in Kalambaina Cement at an agreed ratio based on CCNN’s 30-day volume weighted average closing price by June 22, 2018 of N25.99 per share.

    A total of 19,811,372 ordinary shares of CCNN will be issued in exchange for 100,000 shares of Kalambaina Cement.

    The business combination is also expected to put BUA Cement businesses in a stronger position to compete effectively and also explore export opportunities in neighboring countries.

    CCNN has shown strong performance in recent period. Key extracts of the interim report and accounts of CCNN for the three-month period ended March 31, 2018showed that sales rose by 24 per cent while profit before and after tax doubled by 119.7 per cent and 110.7 per cent respectively. Total turnover rose from N4.35 billion in first quarter 2017 to N5.39 billion in first quarter 2018. Gross profit grew by 39.7 per cent to N2.26 billion in first quarter 2018 compared with N1.63 billion in corresponding period of 2017. Profit before tax also doubled from N684.98 million to N1.50 billion while profit after tax jumped to N1.08 billion in first quarter 2018 as against N513.74 million in first quarter 2017. Earnings per share thus increased from 41 kobo in first quarter 2017 to 86 kobo in first quarter 2018.

    The first quarter performance placed CCNN on course to consolidate its impressive performance in recent period. The board of directors of the cement company recently announced that it has recommended payment N1.57 billion to shareholders as cash dividend for the 2017 business year  after full-year profit jumped by 157 per cent. A breakdown of the dividend recommendation indicated that shareholders will receive a dividend per share of N1.25 for the 2017 business year. CCNN did not pay dividend for the 2016 business year.

    Also, key extracts of the audited report and accounts of CCNN for the year ended December 31, 2017 showed significant growths in sales and profitability. Turnover rose by 39 per cent from N14.09 billion in 2016 to N19.59 billion in 2017. Gross profit nearly doubled from N4.94 billion in 2016 to N7.61 billion in 2017, representing an increase of 94 per cent.

    Profit before tax jumped by 141 per cent from N1.74 billion in 2016 to N4.20 billion in 2017. After taxes, net profit also leapt by 157 per cent to N3.22 billion in 2017 as against N1.25 billion in 2016. Earnings per share thus improved correspondingly from N1 in 2016 to N2.57 in 2017.

    The balance sheet of the company also improved as total assets grew by 23 per cent from N20.03 billion in 2016 to N24.65 billion in 2017. Shareholders’ fund also increased from N11.49 billion to N14.41 billion, representing an increase of 25 per cent.

    The underlying fundamentals of the company also improved considerably during the year, showing that the positive overall performance was driven by improvement in the operations of the company. Gross profit margin improved from 28 per cent in 2016 to 39 per cent in 2017. Net profit margin also doubled from 9.0 per cent to 16 per cent. Return on capital employed jumped from 11 per cent in 2016 to 22 per cent in 2017.

     

     

  • Financial services stocks worsen equities’ losses

    Nigerian equities continued on the downtrend for the second consecutive trading session yesterday at the Nigerian Stock Exchange (NSE) with nearly three of every four deals closed at discount. Banking and insurance stocks led the decline as investors sought to take profit on large-cap banking stocks.

    Benchmark indices at the NSE indicated average decline of 0.06 per cent, equivalent to a marginal loss of N9 billion. The average year-to-date return now stands at -0.73 per cent.

    The All Share Index (ASI)-the main value-based index at the Exchange declined from its opening index of 37,988.54 points to close at 37,963.93 points. With nearly three losers to every gainer, aggregate market value of all quoted equities also slipped from N13.761 trillion to close at N13.752 trillion.

    Most sectoral indices also closed on the downside, underlining the widespread price depreciation. The NSE Insurance Index declined by 0.8 per cent. The NSE Banking Index dropped by 0.6 per cent while the NSE Consumer Goods Index dipped by 0.2 per cent. However, the NSE Industrial Goods Index rose by 0.9 per cent while the NSE Oil & Gas Index inched up by 0.3 per cent.

    There were 35 losers against 12 gainers. Okomu Oil Palm led the losers with a drop of N1.70 to close at N92.50. Cement Company of Northern Nigeria followed with a loss of N1.20 to close at N23.50 while 11, formerly Mobil Oil Nigeria and Seplat Petroleum Development Company lost N1 each to close at N181 and N650 respectively.

    On the positive side, Total Nigeria led the gainers with a gain of N7.20 to close at N200.50. Stanbic IBTC Holdings followed with a gain of N1 to close at N50 while Lafarge Africa added 95 kobo to close at N40 per share.

    Total turnover stood at 372.24 million shares valued at N3.18 billion in 3,800 deals. Sterling Bank led the activities chart with a turnover of 172.63 million shares valued at N241.03 million. Zenith Bank followed with a turnover of 31.54 million shares valued at N792.74 million while Transnational Corporation of Nigeria placed third with 22.92 million shares valued at N31.98 million.

    Most analysts expected the market to continue on the downtrend, although increased bargain-values across the sectors may trigger a modest rally.

    “Given the softer investor sentiment, we believe the negative performance will be sustained in tomorrow (Thursday)’s trading session. Nevertheless, we do not rule out the possibility of some bargain hunting in market bellwethers by the end of the week,” Afrinvest Securities stated.

    Analysts at SCM Capital stated that they expected “sentiment to remain downbeat in the interim”.

     

     

     

  • Dangote Cement to raise N150b new capital

    Dangote Cement Plc-Nigeria’s most capitalised quoted company and Africa’s largest cement producer, plans to raise N150 billion in new debt capital to finance its business operations.

    In a regulatory filing yesterday, Group Managing Director, Dangote Cement Plc, Engr Joseph Makoju, said the new capital raising would be done through the issuance of commercial papers, whether as a standalone transaction or by way of a programme to be executed in tranches, series or proportions.

    According to the company, the net proceeds from the issuance would be used to finance capital expenditure, working capital and general corporate purposes.

    The proposed N150 billion capital raising comes on the heels of last week’s payment of N178.9 billion cash dividend to shareholders. After the approval of the dividend recommendation at the annual general meeting in Lagos, shareholders received a dividend per share of N10.50, representing an increase of 23.5 per cent on a dividend per share of N8.50 paid for the 2016 business year.

    Key extracts of the audited report and accounts of Dangote Cement for the year ended December 31, 2017 had shown that the group turnover grew by 31 per cent from N615.1 billion in 2016 to N805.6 billion in 2017. Profit before tax increased from N180.93 billion in 2016 to N289.59 billion in 2017. Profit after tax rose from N142.86 billion in 2016 to N204.25 billion in 2017. Earnings per share consequently improved to N11.65 in 2017 compared with N8.78 in 2016.

    The report indicated that while sales from the three plants in Nigeria contributed N552.36 billion to the group’s revenue, the balance of N258.44 billion was accounted for by plants in other African countries. Revenue attributable to Nigeria grew by 29.6 per cent while that from Pan-African operations rose by 32.5 per cent.

    Though group sales volumes were lower by seven percent due to depressed Nigerian market, Pan-African sales volumes went up by 8.4 per cent to 9.4 metric tonnes with strong volume increases in Senegal, Ethiopia and Cameroon and new capacities of 1.5 metric tonnes in Congo and 0.5 metric tonnes in Sierra Leone.

    Chairman, Dangote Cement Plc, Alhaji Aliko Dangote, said the 23.5 per cent increase in dividend was due to improved performance in 2017 and in line with the group’s policy to reward shareholders while retaining reasonable earnings for future growth.

    Dangote’s Dangote Industries Limited (DIL) holds more than 75 per cent controlling equity stake in Dangote Cement.

    Dangote noted that in the face of challenges in doing business in Africa, the group has benefited from diversity that it has created across its businesses and the local knowledge of doing business in neighbouring countries in Africa.

    “Our large capacity, financial strength, vertical integration and prudent management have enabled us to enter markets, gain share and withstand competitive and pricing pressures that have wrought more damage on the smaller, less well-funded manufacturers who initiated them,” Dangote said.

     

  • Union Bank in N1.55b off-market shares deal

    Adeal was struck yesterday for the transfer of about one per cent equity stake in Union Bank of Nigeria (UBN) Plc in an off-market deal valued at about N1.545 billion.

    Transaction report obtained by The Nation indicated that 280.956 million ordinary shares of 50 kobo each of Union Bank were traded in a cross deal at N5.50 per share. The deal was consummated through the negotiated cross deals window of the Nigerian Stock Exchange (NSE).

    The transaction price of N5.50 represents a discount of about 6.8 per cent from the bank’s closing share price of N5.90 per share. UBN’s share price appreciated by 5.0 kobo yesterday, despite average marginal decline of 0.01 per cent recorded by the equities market.

    The transaction volume represents 0.96 per cent of UBN’s outstanding shares of 29.121 billion ordinary shares of 50 kobo each.

    As an off-market, negotiated cross deal, it means that the deal was not subjected to the dynamics of price discovery for the particular period. Off-market trade implied that the deal was sealed outside the floor of the NSE.

    The negotiated cross deal platform of the Exchange is a special-purpose trading platform that is meant for voluminous transaction. By the cross deal, it implies that the buyer and the seller had been prearranged and the transfer at the stock market was a mere perfection of the agreement between the two. The negotiated cross deal allows the parties to the deal to close the deal at reduced cost.

    Most shares of UBN are in the hands of core investors and related. The majority core investors and related party hold more than 85 per cent equity stake in UBN, leaving the bank with a free float of 14.94 per cent.

    The Asset Management Corporation of Nigeria (AMCON) had in 2014 sold a 20.9 per cent equity stake in UBN  in a deal worth more than N25 billion. The deal involved transfer of about 3.538 billion ordinary shares of 50 kobo each at indicative market price of N7.16 per share, totaling N25 billion.

    The NSE had recently extended its deadline for UBN to dilute its concentrated bloc shareholding and free more shares for minority retail investors. UBN was given extended deadline of May 18, 2020 to achieve the 20 per cent minimum free float required for its listing on the main board of the NSE.

    Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market in their securities. The free float requirement for companies on the main board is 20 per cent of market capitalisation while companies on the premium board are required to have free float of 20 per cent or above N40 billion on the date the Exchange receives the company’s application to list. Companies on the third tier board, otherwise known as Alternative Securities Market (ASEM) are required to have 15 per cent free float.

    Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    Thus, free float’s shares do not include shares held directly or indirectly by any officer, director, controlling shareholder or other concentrated, affiliated or family holdings.

    Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation. Besides, it provides the general investing public with opportunity to reasonably partake in the wealth creation by private enterprises.

  • ‘Uncertain time for equities over election risks’

    Preparations for the 2019 general elections would have pronounced impact on the Nigerian equities market, Vetiva Research has said.

    In its Second Half  2018 Outlook Report on the Nigerian economy, key sectors and capital markets, Vetiva Research predicted that average full-year return for Nigerian equities in 2018 will be between -5 per cent and +5 per cent.

    The investment firm however reiterated its positive outlook on the Nigerian equities in the medium to long-term, noting that Nigerian equities have considerable underlying value.

    “Comparable multiples with peers suggest the Nigerian equity market remains undervalued. We maintain a strongly positive post-election outlook on Nigerian equities,” Vetiva stated.

    The report pointed out that the Nigerian economy had underperformed initial expectations following a slowdown in Agriculture and persistent weakness in services.

    The report indicated that pre-election activities will steer the economic environment for the rest of the year, with election spending boosting the economy but also inducing greater inflationary pressure.

    The report stated that despite an improving macroeconomic environment and a semblance of policy stability, Nigeria’s financial markets would likely be steered by the fallout of electoral activities and rising global interest rates.

    Head, Vetiva Research, Olalekan Olabode  that the Vetiva economic growth forecast for the year had been cut to 1.9 per cent  from 2.4 per cent. Apart from these sectors, he highlighted concerns around the oil sector.

    According to him, the dimmer picture begins with the oil sector as infrastructure integrity issues prevent Nigeria from producing at capacity whilst oil prices are expected to trend slightly lower in second half of 2018 on the back of rising global output.

    Chief Economist of Vetiva Capital, Michael Famoroti  highlighted that there are uncertain times ahead.

    “Impending elections are also likely to induce greater economic uncertainty and distract policy and governance at the tail-end of the year, neither of which is positive for confidence or investment,”  Famoroti said.

    He said late budget passage, pre-election spending, and food price pressure could induce higher inflation at year-end.

    Vetiva Research also revisited its top “10 High Conviction Stocks” presented at the beginning of the year, which represent key stocks on the Nigerian Stock Exchange (NSE) that are expected to outperform the market by year-end.

    The report noted that high conviction stocks have so far outperformed the broad market index by 1.5 per cent on a market cap-weighted basis and 7.0 per cent in simple average returns, and maintain these stocks as key picks for 2018.

  • SEC assures foreign investors

    The Securities and Exchange Commission (SEC) has assured foreign investors of the safety of their investments in the Nigerian capital Market.

    Disclosing this when representatives of JP Morgan and Stanbic IBTC visited the Commission in Abuja weekend, Ag. Director General of SEC, Ms. Mary Uduk said all necessary controls are in place to ensure that the market is dynamic, free, fair and transparent for participants.

    Uduk said the Commission has embarked on several initiatives in a bid to ensure that investors in the market derive the benefits therein.

    She said the implementation of the Capital Market Master Plan has led to significant changes in the market. Some of these implemented initiatives are dematerialization of share certificates, recapitalization of capital market operators, establishment of the National Investors Protection Fund and inauguration of its board, as well as launch of the Corporate Governance Scorecard.

    Others are implementation of the e-Dividend Mandate Management System, establishment of Complaint Management Framework, transaction cost reduction, implementation of the direct cash settlement and the introduction of non-interest capital market products.

    The Acting DG disclosed that the Commission has put in place a robust investor protection machinery with severe sanctions on infractions of securities laws.

    “The implementation of this regime has led to the closure of various Ponzi schemes as well as the recovery of millions of naira belonging to innocent investors.

    “SEC champions zero tolerance on infractions and we have a range of sanctions depending on the level of infraction and how egregious the breach is, ranging from warnings, fines, suspensions, withdrawal of registrations and jail terms.

    “The idea is to improve transparency in the market and ensure that investors are safe”.

    On surveillance, Uduk said the Commission has surveillance mechanisms in place to detect possible suspicious trading/market manipulation activities.

    In his remarks, Nick Long, Representative of JP Morgan, expressed satisfaction with the performance of the Nigerian capital market adding that it is one of the reasons why it continues to attract international investors.