The Nation Newspaper

Category: Equities

  • Guinness Nigeria posts N125b turnover in 2017

    Guinness Nigeria Plc grew its top-line by 23 per cent to N125 billion in 2017 as Nigeria’s second largest brewer staged a major recovery on the back of expanded portfolio and improved cost management.

    Key extracts of the audited report and accounts of Guinness Nigeria for the year ended June 30, 2017 showed that gross profit rose by 16 per cent to N48.3 billion while operating profit doubled by 131 per cent to N10.2 billion.

    Managing Director, Guinness Nigeria Plc, Mr. Peter Ndegwa, said that the company’s results were driven by a relentless focus on executing strategy and keeping costs down.

    He noted that in spite of the challenging economic conditions, the company has remained focused on executing its total beverage strategy which gained further traction with strong growth in its international premium spirits portfolio following first full year of distribution.

    “Our gross profit of N48.3 billion is as a result of volume growth, pricing benefit and a favourable sales mix as we continued to invest in our expanded brand portfolio during the year. Part of that investment includes the N4.7 billion spirits line for locally manufactured spirits which we commissioned in Benin. These strategic acquisitions and expansions have filled the gaps in the spirits brand base allowing us to compete across all categories of the alcoholic beverage market in Nigeria. We remain committed to executing our productivity agenda with a strong focus on cost reduction, distribution and operational efficiencies,” Ndegwa said.

    Chairman, Guinness Nigeria Plc, Mr Babatunde Savage, said that the company remains committed to the Nigerian market.

    “It is pleasing to see that the decisions we have taken in recent years have helped to position the company for sustained business growth. We are grateful for the strong support that our shareholders have afforded us over the years,” Savage said.

    He assured that with its continuing focus on driving performance and determination to positively impact the lives of Nigerians, Guinness Nigeria looks forward to continuing to give Nigerians a reason to celebrate life every day and everywhere.

    In December 2015, Guinness Nigeria became the first total beverage alcohol company in Nigeria when it acquired the rights to distribute International Premium Spirits (IPS) including Johnnie Walker Scotch whisky and Bailey’s liqueur in Nigeria. This was quickly followed in January 2016 by the acquisition of the rights to distribute McDowell’s, a United Spirits Limited (USL) whisky brand.

    British multinational and world’s largest producer of spirits, Diageo, United Kingdom, recently committed to investing additional N21.6 billion in new equity funds in its Nigerian subsidiary-Guinness Nigeria.

    Savage, who confirmed the impending additional investment, said Diageo has indicated that it will commit up to N21.56 billion in new equity funds to the Nigerian subsidiary through the a supplementary capital issue.

    Guinness Nigeria recently opened application list for its N39.7 billion rights issue, paving the way for shareholders to pick up their rights. The rights were also traded on the automated trading system at the Nigerian Stock Exchange. Application list for the rights issue opened on July 24, 2017 and closed on August 30, 2017.

    Guinness Nigeria offered 684.49 million ordinary shares of 50 kobo each at N58 per share to existing shareholders on the basis of five new shares for every 11 shares held as at the close of business on March 15, 2017.

    Savage said Diageo, which holds 54.3 per cent majority equity stake in Guinness Nigeria, had stated that it would fully take up its rights under the rights issue. A full subscription for its rights by Diageo implies financial commitment of N21.56 billion.

  • Investors lose N117b in August downtrend

    Investors in Nigerian equities suffered a net loss of N117 billion in August as a scramble for profit-taking and sell pressure due to financial demand depressed the stock market. Benchmark indices at the Nigerian Stock Exchange (NSE) showed that Nigerian investors recorded average negative return of -0.96 per cent in August, equivalent to a month-on-month capital depreciation of N117 billion.

    Aggregate market value of all quoted equities on the NSE closed August at N12,237 trillion as against N12.354 trillion recorded at the beginning of the month, representing a decline of N117 billion. The All Share Index (ASI)-the value based common index that tracks share prices at the Exchange, also indicated a month-on-month average return decline of 0.96 per cent to close the month at 35,504.62 points as against the month’s opening index of 35,844.00 points. The average year-to-date return declined from 33.37 per cent in July to 32.11 per cent in August.

    The performance in August appeared to underlined a profit-taking trend that followed significant capital appreciation in July 2017, when equities rallied net capital gain of N902 billion as expectations on corporate earnings reports and improved macroeconomic outlook boosted the market to its highest performance in more than 31 months.

    The depreciation in August was particularly driven by considerable declines in share prices in the oil and gas and industrial goods sectors. The NSE Oil and Gas Index slumped by 11.37 per cent in August to bring oil and gas investors to a negative average year-to-date return of -4.40 per cent. The NSE Industrial Goods Index recorded a return of -4.69 per cent in August to cut down the average year-to-date return for the sector to 28.62 per cent. The NSE Insurance Index declined by 2.47 per cent while the NSE Banking Index dropped by 1.27 per cent. However, the NSE Banking Index still showed the biggest eight-month return with a gain of 60.28 per cent while insurance stocks carried a modest 8.91 per cent.

    Against the negative overall market performance, investors in the consumer goods sector recorded impressive gains in August with the NSE Consumer Goods Index appreciating by 11.68 per cent during the period. The average year-to-date return for the sector thus spiraled to 32.87 per cent.

    With the average year-to-date return of 32.11 per cent, investors’ net capital appreciation so far this year dropped to N2.99 trillion as against N3.11 trillion capital gains recorded over the seven-month period. Aggregate market value of all quoted equities and the ASI had opened this year at N9.247 trillion and 26,874.62 points respectively.

    The second half on the whole has seen the market on a positive swing, as a significant rally in July had set the second half on an upswing after equities netted more than N2.2 trillion in capital gains in the first half of the year. The stock market recorded average year-to-date return of 23.23 per cent in the first half, equivalent to net capital gain of N2.2 trillion for the period.

    Aggregate market value of all quoted equities on the NSE closed the first half at N11.452 trillion as against 2017’s opening value of N9.247 trillion, representing net capital gain of N2.205 trillion or 23.85 per cent. The ASI had crossed seven levels to close first half at 33,117.48 points compared with its year’s opening index of 26,874.62 points, representing an increase of 23.23 per cent.

    The rebound represents a major recovery for hard-pressed Nigerian investors, who had lost N3.98 trillion in the past three years. The stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion. Aggregate market value of all quoted equities on the NSE closed 2016 at N9.247 trillion as against N13.226 trillion recorded at the start of trading in 2014, representing a net capital loss of N3.98 trillion.

    Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, had attributed the recovery at the stock market to positive changes in the polity.

    Chukwu said the market recovery was boosted by the introduction of the Investors and Exporters’ foreign exchange window and the narrowing of exchange rates between official and parallel rates due to policy stimulation by the Central Bank of Nigeria (CBN).

  • Union Bank gets SEC’s approval for N50b rights issue

    Union Bank gets SEC’s approval for N50b rights issue

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), has approved the application by Union Bank of Nigeria (UBN) Plc to raise about N50 billion in new equity funds from existing shareholders.

    The Nigerian Stock Exchange (NSE) had earlier approved the offer. The approvals from the regulatory authorities followed earlier resolutions by shareholders of the bank, mandating the board of directors to raise new capital.

    Union Bank yesterday stated that the approvals by the regulatory agencies were the green light for the raising of the tier 1 capital to proceed.

    UBN plans to raise N49.745 billion through a rights issue of 12.133 billion ordinary shares of 50 kobo each at N4.10 per share. The rights issue has been pre-allotted on the basis of five new ordinary shares of 50 kobo each for every seven ordinary shares held as at the close of business on Monday August 21, 2017.

    The bank stated that it anticipates that the rights issue will be open for subscription in September 2017.

    Chief Executive Officer, Union Bank of Nigeria (UBN) Plc, Mr. Emeka Emuwa, said the approval by Sec brought the bank to the final stages of this important transaction.

    He noted that the new capital raising is critical to the bank’s short to medium term business objectives.

    “The capital raised from the rights issue will support our strategy to accelerate business growth and position Union Bank as a leading commercial bank in Nigeria,” Emuwa said.

    Chapel Hill Advisory Partners Limited is Lead Issuing House to the offer while FSDH Merchant Bank Limited and Stanbic IBTC Capital Limited are Joint Issuing Houses.

    Established in 1917 and listed on the NSE in 1971, Union Bank is a household name and one of Nigeria’s long-standing financial institutions.

    Key extracts of the six-month report of UBN for the period ended June 30, 2017 had shown that gross earnings rose by 23 per cent to N73.7 billion in first half 2017 as against N60.1 billion recorded in first half 2016. Profit before tax rose marginally by six per cent from N8.9 billion to N9.5 billion. Customer deposits grew by 15 per cent to N759.3 billion in 2017 as against N658.4 billion in 2016.

  • Conoil: Positioned for sustainable growth

    amidst major divestments and tough operating challenges in the downstream oil sector, Conoil Plc has continued to make considerable investments in demonstration of its long-term strategy and commitment to the downstream oil sector. With steady improvements in earnings and returns to shareholders, Conoil appears positioned for sustained growth

    At the annual general meeting of Conoil earlier this month, the excitement was obvious and shareholders were effusive in their commendation of the board and management of the downstream oil major. On the recommendation of directors of the oil major, shareholders unanimously approved the increase in dividend payout, sustaining a consecutive increase in cash dividend that has marked Conoil out in the downstream sector. Shareholders received total dividend of N2.15 billion for the 2016 business year, representing a dividend per share of N3.10. The company had paid N3 for the 2015 business year, a 200 per cent increase on N1 paid for the 2014 business year.

    The increase in dividend payouts reflected the improvement in the profitability of the company. Key extracts of the audited report and accounts of Conoil for the year ended December 31, 2016 had shown impressive improvements in the bottom-line as the company drew on internal cost efficiency to optimise top-line performance. Profit before tax rose by 24 per cent from N3.45 billion in 2015 to N4.28 billion in 2016. After taxes, net profit rose by 23 per cent from N2.30 billion to N2.84 billion. Turnover had risen from N82.9 billion in 2015 to N85.02 billion in 2016. Earnings per share consequently rose by 23 per cent from N3.33 in 2015 to N4.09 in 2016. The underlying fundamentals showed a more profitable and futuristic company. Pre-tax profit margin-which measures average profit per unit of sale, improved from 4.16 per cent in 2015 to 5.03 per cent in 2016. While the company retained about 10 per cent of net earnings in 2015, the improvement in profitability in 2016 allowed it to increase payout while simultaneously retaining nearly a quarter of net earnings for future business growth.

     

    Improving

    fundamentals

    The performance in 2016 reinforced the positive sustainable growth outlook of Conoil. In 2015, when most companies in the downstream petroleum struggled to stay afloat in the face of downturn in the country’s economy, Conoil bucked the trend, with profits soaring by 125 per cent to N3.45 billion from N1.53 billion in the preceding year. Key extracts of the audited report and accounts for the year ended December 31, 2015 showed that profit after tax rose by 176.5 per cent from N834 million in 2014 to N2.3 billion in 2015. Profit before tax jumped by 125.1 per cent from N1.5 billion in 2014 to N3.4 billion in 2015. Turnover however dropped from N128.35 billion in 2014 to N82.92 billion in 2015, following the industry trend as oil and gas companies struggled with global fluctuations and domestic constraints. Conoil had fallen back on its internal cost management and control to optimise the top-line performance. With this, gross profit margin improved from 10.74 per cent in 2014 to 13.91 per cent in 2015. Pre-tax profit margin had quadrupled from 1.19 per cent in 2014 to 4.16 per cent in 2015. Earnings per share also rose sharply by 177 per cent to N3.33 in 2015 as against N1.20 in 2014.

    Notwithstanding the challenges in the Nigerian downstream oil and gas sector, Conoil has carved a somewhat unique position as the only indigenous downstream oil company with consistent year-on-year dividend payouts over the past 16 years. Over the past 16 years, the company has distributed about N23.2 billion as cash dividends to shareholders in addition to 20 per cent increase in their shareholdings as bonus shares. From a gross payout of N171.5 million in 2001, gross dividend has averaged about N1.5 billion over the past 16 years.

     

    Against the odds

    The performance of Conoil in 2016 belied the tough industry and macroeconomic environment that saw Nigeria, Africa’s biggest economy and the world’s sixth largest crude oil producer, running into historic recession. Most macro variables worsened significantly, GDP growth slumped to -1.56 per cent, inflation reached new height of 19 per cent, the Naira exchange rate hit N465 to Dollar and market capitalisation of the Nigerian Stock Exchange (NSE) contracted to N8.6 trillion from N11.658 trillion. The operating environment was indeed very challenging for companies, industries and manufacturers who battled hard with high cost of doing business as well as the poor state of infrastructure in the country.  Consequently, companies employed various strategies to survive and deliver impressive returns to shareholders who were daily seeing their investments being eroded as the economy spiraled downwards.

    With foreign exchange scarcity, prohibitive cost of funds and the reluctance of commercial banks to give credit lines which hindered marketers’ bid to aggressively import petroleum products, Conoil waded through and made good its pledge to put smiles on the faces of its shareholders with guaranteed returns on investments. The 2016 performance attested to the fact that Conoil had adequately prepared for the challenges, focused on achieving impressive growth and was ready to consolidate its leadership position in the downstream petroleum business.

     

    Shareholders’ voices

    Shareholders said the performance of the company has vindicated their trust in the board and directors of Conoil. Founder, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu said Conoil has demonstrated resilience with its performance, urging the directors of the company to continue to explore ways to grow shareholders’ value.

    President, Renaissance Shareholders’ Association, Ambassador Olufemi Timothy, noted that it was commendable that despite the downturn in the economy; with the attendant sharp increase in operating costs, Conoil still recorded impressive growth in all key areas.

    “Conoil’s performance for the year 2016 was very encouraging. Against the backdrop of a volatile and tough operating environment, the company still recorded strong margins which in turn impacted shareholders positively,” Timothy said.

    Grand Patron, Nigerian Shareholders’ Solidarity Association (NSSA), Chief Timothy Adesiyan, commended the directors of the company for keeping to their promise of maintaining consistent returns to shareholders.

    According to him, given the tight liquidity, rising cost of funds and the inability of petroleum marketing companies to import fuel in the face of little or no supply from the domestic refineries in 2016, Conoil has shown steadiness by growing its profit and increasing dividend payment to shareholders.

    Chairman, Alheri Shareholders’ Association, Kaduna, Alhaji Kazeem Olayiwola, attributed the impressive performance of Conoil to its continuous improvement in its operations noting that Conoil has continued to set standards in fuel retailing with world-class facilities and groundbreaking marketing initiatives that endear it to customers and place it far ahead of competition.

    “I am therefore delighted that this has translated to good dividends to shareholders at a time like this, we sure do have a bright future,” Olayiwola said.

    Looking forward

    In his address to shareholders, Chairman, Conoil Plc, Dr Mike Adenuga Jr, said the performance of the company in 2016 reflected its steadfastness and commitment to internal excellence, cost efficiency, manpower development, strategic planning and proactive investments.

    He added that the results also showed the remarkable support and loyalty that the company enjoys from its customers, patrons, dealers, distributors, transporters, suppliers and other stakeholders.

    He assured shareholders that directors of the company have continued to monitor emerging national and global developments to ensure that Conoil remains ahead of the competition.

    According to him, the company’s overall strategy shall continue to positively impact its current size and status while its investments in the required areas will continue to ensure effective and efficient delivery of its growth objectives.

    He outlined that the company is upgrading and constructing new facilities at its installations to further bolster its competitive edge and broaden its customer base across all segments of the business.

    “We are relentlessly evolving bigger and better business propositions with an eye on the future to continue to deliver excellent results,” Adenuga said.

    The management of Conoil stated that it achieved the impressive results by proactively capitalizing on every emerging opportunity in the sector and also explored new income streams. “We launched initiatives to strengthen our income base in the core segments of the business, especially retail, lubricants and aviation. We also reinforced our sales force with core competencies and consolidated on our dominance in the aviation business while investing in modern equipment and bringing in more strategic customers,” the company stated.

    Already, there are indications that the company is on the path of another resounding performance in the current fiscal year. Conoil posted a 28 per cent increase in turnover to N24.47 billion in the first quarter of 2017. Gross profit jumped to N3.31 billion in first quarter 2017 as against N1.979 billion in first quarter 2016. Profit after tax stood at N174.45 million in 2017 compared with a loss of N944 million in comparable period of 2016.

    On its strategy to improve on the result, the management of oil marketing company assured its investors that it will relentlessly evolve bigger and better business prepositions with an eye on the future to continue to deliver excellent results. Conoil stated that it has consolidated its stronghold on the aviation fuel marketing business in terms of spread, storage capacity and maintenance support. Its impressive storage facilities give the company unmatched capacity to meet the needs of local and international customers. The hi-tech bowsers as well as quality product and service delivery, which are of essence in the industry, are some of the reasons the company continues to attract the best of clientele in that sector.

    There have also been massive investments in the retail segment. The company is currently upgrading about 400 filling stations across the country.

    Conoil, owned by more than 143,000 shareholders and quoted on the Nigerian Stock Exchange (NSE), stands out as a beacon of indigenous ownership and government privatisation. It metamorphosed from the decrepit government-controlled National Oil and Chemical Marketing Plc, which was privatized in 2000. Conpetro Limited had acquired 60 per cent majority equity stake in 2000 and subsequently increased its shareholding to 74.40 per cent. Conoil has benefitted from a focused long-term majority core investor, with the attendant stable board and management. Particularly, the growth-focused and altruistic nature of the core investor led by Dr. Mike Adenuga (Jr.) has contributed greatly to the stability of the downstream oil company in the turbulent oil sector.

    While protracted reform and many lingering controversies continue to hamper the Nigerian downstream sector, Conoil’s commitment to long-term investments, farsighted board and management and local intelligence provide reasonable assurance on the prospects of the oil major in the years ahead.

  • Dangote Cement, Nestle Nigeria drag equities to marginal decline

    Nigerian equities opened yesterday with a broad underlying positive sentiment but losses by the two foremost quoted companies-Dangote Cement and Nestle Nigeria depressed the stock market to a marginal decline.

    While there were 27 gainers to 16 losers, losses by highly capitalised stocks overwhelmed the overall market situation. Nestle Nigeria-the highest-priced stock at the Nigerian Stock Exchange (NSE), recorded the highest loss of N9.99 to close yesterday at N1,200.01. Dangote Cement-the most capitalised quoted company, followed with a loss of N9.38 to close at N215.62. Three other highly capitalised stocks-Stanbic IBTC Holdings, Zenith Bank and Lafarge Africa lost 74 kobo, 53 kobo and 50 kobo to close at N38.11, N24 and N58.50 respectively.

    The benchmark price index for the stock market-the All Share Index (ASI) declined by 0.91 per cent to close at 36,584.44 points as against its opening index of 36,920.56 points. Aggregate market value of all quoted equities on the NSE also dropped from its opening value of N12.726 trillion to close at N12.700 trillion, representing a net capital loss of N26 billion. The average year-to-date return slipped to 36.13 per cent.

    Total turnover stood at 368.38 million shares valued at N6.27 billion in 3,729 deals. AIICO Insurance was the most active stock with 131.01 million shares valued at N74.67 million. Guaranty Trust Bank followed with 61.18 million shares worth N2.48 billion while Zenith Bank ranked third with 22.74 million shares valued at N542.23 million.

    On the positive side, most stocks closed higher as bargain-hunters continued the hunt for value stocks. Beta Glass led the gainers with a gain of N2.51 to close at N59.84. Flour Mills of Nigeria trailed with a gain of N2.49 to close at N31. Nigerian Breweries followed closely with a gain of N2.48 to close at N183.50. Guaranty Trust Bank rose by N1.20 to close at N40.70 while UACN and Unilever Nigeria chalked up 50 kobo each to close at N16.50 and N46 respectively.

  • Why we chose Akwa Ibom for N9b Africa’s largest syringe factory, by foreign investors

    Africa’s largest syringe manufacturing company, Jubilee Syringe Manufacturing Company Limited (JSM), is set for inauguration in Onna Local Government Area of Akwa Ibom State. Foreign investors committed $30 million (about N9.2 billion) to the factory located on four hectares of land in Awa Village.

    Upon opening next month, JSM plans to start production with initial capacity of 350 million units with a target to double this to 700 million units in the first year of operation and one billion units in the second year of operation.

    Speaking during a tour of the factory, its Managing Director,  Zubeyir Gulabi, said the company will achieve initial yearly revenue target of $15 million and its ultimate goal is not only to make Nigeria self- sufficient in syringe production, but also a net exporter of syringe and other medical devices to other countries.

    Gulabi said the foreign investors decided to locate the syringe factory in Nigeria and Akwa Ibom State, particularly because of the enormous potential of the economy with its huge market and the investment friendly policies of the government.

    According to him, Nigeria as the sixth most populous country in the world needs a syringe factory that can serve its domestic medical needs and help to conserve its foreign exchange in addition to helping the economy to grow by creating employment and additional source of reign exchange earnings.

    “You know that investment and money are like a fly that can easily run but Akwa Ibom investment policy convinced my investors to come here. The main attraction is the policy making. The Federal Government is also helping fully by providing what we are asking for the sector. Nigeria has an important future; that is what we believe. This factory is not for the next two to three years, it is for the next 50 years and beyond,” Gulabi, a Turkish said.

    He outlined that the company has been designed for scalable expansion and diversification of its products, noting that while it will concentrate on the production of the main product-Syringe in the meantime, the company could end up with about 20 products by the second year of operations.

    He pointed out that the factory was built on principles of local contents policy of the government with two-thirds of the raw materials available in Nigeria and Nigerian and Akwa Ibom indigenes expected to form 90 per cent of the employees.

    “Nigerian Local Content Act says 70 per cent Nigerian, meaning 30 per cent expatriates. But my board of directors’ decision is this: 10 per cent expatriates maximum, 90 per cent Nigerians. Out of this 90 per cent, minimum of 50 per cent will go to the immediate community where the company is located, 20 per cent will go to non-community members of Akwa Ibom state while the remaining 20 per cent will go to non-Akwa-Ibom Nigerians,” Gulabi said.

    He said that while the company has devised its own marketing strategy as a private business, it hopes to benefit from the friendly policies of the government, including the executive order that prioritises purchase of made-in-Nigeria products by government institutions.

    “We have known Nigeria for a long time. Nigeria needs this product; this product is a very strategic product for national interest. Nigeria is the main market and West Africa countries are the secondary market,” Gulabi, a Turkish, said.

    He pointed out that contrary to negative impression about the security situation within the country, the company has enjoyed immense support from the hosting community, assuring that the company will reciprocate by contributing to the development of the community.

    “We are in the oil community. The clan is very peaceful; all the clan has four neighbouring villages. This is their own factory; they see it like their own. We can go to the village alone anytime without security. We are much secured. On our contributions to the community, we should talk about this one after three years. Go and get a good picture of the villages now, after three years, I don’t think you will be able to recognise the villages. You will see these villages on cable television as the hub of medical devices,” Gulabi said.

  • CBN, SEC mull universal licence for stockbrokers

    Nigeria’s apex financial services regulators have started discussions on a new framework that will expand the scope of operations and allow brokers and dealers at the capital market to have access to the interbank market and the primary official discount window.

    The Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator and the Central Bank of Nigeria (CBN), Nigeria’s apex bank, are leading other stakeholders to open up a new ecosystem for the stockbroking industry.

    The new ecosystem for the main capital market operators was part of the highlights of the discussions at the second quarter meeting of the Capital Market Committee (CMC) meeting held in Lagos.

    The CMC, chaired by the Director General of SEC, consists of chief executives of all registered capital market operators, chief executives of all Self Regulatory Organisations (SROs) including the Chartered Institute of Stockbrokers (CIS); Nigerian Stock Exchange (NSE), NASD OTC Plc, Nigeria Commodities Exchange (NCX) and Central Securities Clearing System (CSCS); two members each from other key stakeholders including included Asset Management Corporation of Nigeria (AMCON), Central Bank of Nigeria (CBN), Corporate Affairs Commission (CAC), Debt Management Office (DMO),  Federal Ministry of Finance, Federal Mortgage Bank of Nigeria (FMBN), Federal Inland Revenue Service (FIRS), Nigerian Deposit Insurance Corporation (NDIC), Investment and Securities Tribunal (IST), Nigerian Investment Promotion Council (NIPC), National Insurance Commission (Naicom), National Pension Commission (Pencom) and FSS2020 among others.

    Director-General, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, who spoke at a briefing on the activities and decisions at the CMC in Lagos, said the CBN and SEC had launched formal discussions on a dual licence model that enables stockbrokers to have access to the discount window of the apex bank.

    He said all parties have shown commitments to the evolution of the new framework, although discussions were still on to determine the scope and comprehensive details of the new framework.

    Gwarzo said the new model will boost liquidity in the capital market and enhance the risk creation and management of stockbrokers as they will be able to have access to the deep pool of capital provided by the discount window.

    He noted that one of the major challenges in the capital market has been access to liquidity and the introduction of dual licence model will significantly address the problem of liquidity and related issues.

    “Our discussion with the CBN is yielding positive result and we commend the Central Bank for their commitment and dedication to the project, but the discussion is still ongoing,” Gwarzo said.

    Capital market -based intermediation has been much less efficient in Nigeria as operators face significant challenges accessing wide sources of funding and thus have very inefficient sales and trading operations or maturity transformation activities.

    The new framework may allow brokers and dealers to undertake and offer similar range of products and services as investment banks. This convergence will strengthen stockbrokers’ potential to capitalise on larger business opportunities, diversify their source of funding and enhance their market making capabilities in the capital market.

    The introduction of the new framework is expected to impact positively on the macroeconomic development as it will enhance the capabilities of domestic capital market intermediaries to contribute towards the development of a more resilient, competitive and dynamic financial system.

    Gwarzo added that the Commission and other stakeholders have also initiated a pilot electronic reporting and circulation system that could save quoted companies between N500 million and N1 billion in costs of printing and dispatch of annual reports to shareholders.

    According to him, the current system of printing and distribution of annual report has proven to be obsolete and ineffective.

    “We have been doing something for the last 50 years which is not helping the companies or even investors,” Gwarzo noted.

    He pointed out that the total number of investors that had registered for e-dividend by the end of July 2017 stood at 2.1 million, including total unique investors by account of 838,671 and total unique investors by Bank Verification Number of 433,164.

    He reiterated the directive of the Commission that all trading of unquoted equities must be done on recognised trading platform, warning that the Commission will no longer accept sales of shares outside recognised trading platform.

    “Our rules stated that no share of public company either listed or unlisted should be trading outside a trading floor registered by SEC. It is an offence for those shares to be exchanged outside a recognised platform,” Gwarzo said.

    He noted that the rule on trading in unquoted securities is in the interest of investors, pointing out that while the company may not necessarily be listed, the market-determined pricing system will enable investors to have fair value for their investments while allowing the financial services regulators to have a comprehensive view of trading activities.

     

  • Regulators mull universal licence for stockbrokers

    Nigeria’s apex financial services regulators have started discussions on a new framework that will expand the scope of operations and allow brokers and dealers at the Nigerian capital market to have access to the interbank market and the primary official discount window.

    The Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator and the Central Bank of Nigeria (CBN), Nigeria’s apex bank are leading other stakeholders to open up a new ecosystem for the stockbroking industry.

    The new ecosystem for the main capital market operators was part of the highlights of the discussions at the second quarter meeting of the Capital Market Committee (CMC) meeting held in Lagos.

    Director General, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, who spoke in Lagos at a press briefing on the activities and decisions at the CMC, said the CBN and SEC have launched formal discussions on a dual licence model that enables stockbrokers to have access to the discount window of the apex bank.

    He said all parties have shown commitments to the evolution of the new framework, although discussions were still on to determine the scope and comprehensive details of the new framework.

    Gwarzo said the new model will boost liquidity in the capital market and enhance the risk creation and management of stockbrokers as they will be able to have access to the deep pool of capital provided by the discount window.

    He noted that one of the major challenges in the capital market has been access to liquidity and the introduction of dual licence model will significantly address the problem of liquidity and related issues.

    “Our discussion with the CBN is yielding positive result and we commend the Central Bank for their commitment and dedication to the project, but the discussion is still ongoing,” Gwarzo said.

    Capital market -based intermediation has been much less efficient in Nigeria as operators face significant challenges accessing wide sources of funding and thus have very inefficient sales and trading operations or maturity transformation activities.

    The new framework may allow brokers and dealers to undertake and offer similar range of products and services as investment banks. This convergence will strengthen stockbrokers’ potential to capitalise on larger business opportunities, diversify their source of funding and enhance their market making capabilities in the capital market.

    Gwarzo added that the Commission and other stakeholders have also initiated a pilot electronic reporting and circulation system that could save quoted companies between N500 million and N1 billion in costs of printing and dispatch of annual reports to shareholders.

  • Equities lose N85b as trading opens

    Equities reopened yesterday with a tinge of profit-taking as investors monetised capital gains that had accumulated in the previous trading sessions. Equities had ended the previous week with a net capital gain of N267 billion.

    Benchmark indices at the Nigerian Stock Exchange (NSE) showed average decline of 0.65 per cent, equivalent to net capital loss of N85 billion within the five hours of trading. The decline pared the average year-to-date return down to 41.21 per cent.

    With 27 losers to 18 gainers, the negative overall market situation was driven by widespread losses, especially within the highly capitalised stocks. The benchmark index for the stock market, the All Share Index (ASI), declined from the opening index of 38,198.60 points to close at 37,950.96 points. Aggregate market value of all quoted equities also declined from its opening value of N13.166 trillion to close at N13.081 trillion.

    Nearly all sectoral indices also closed negative. The NSE Industrial Goods Index declined by 1.1 per cent. The NSE Insurance Index dropped by 0.4 per cent while the NSE Banking Index and NSE Oil & Gas Index depreciated by 0.3 per cent each. Meanwhile, the NSE Consumer Goods Index appreciated by 0.2 per cent.

    Total Nigeria led the losers with a loss of N12.45 to close at N236.55. Dangote Cement followed with a drop of N5 to close at N235. Guinness Nigeria dropped by n1.50 to close at N90. Flour Mills of Nigeria dipped by N1.40 to close at N27.60 while CAP dropped by 59 kobo to close at N34.40 per share.

    Total turnover stood at 316.12 million shares valued at N4.22 billion in 4,113 deals. Access Bank was the most active stock with N169.6 million shares valued at N1.77 billion.

    On the positive side, Seplat Petroleum Development Company led the contrarian stocks with a gain of N9.90 to close at N480. Nigerian Breweries rose by N2 to close at N193. Ecobank Transnational Incorporated added 42 kobo to close at N18. Unilever Nigeria rose by 25 kobo to close at N45.50 while Union Bank of Nigeria chalked up 23 kobo to close at N6 per share.

    “As investors await earnings result from Tier – 1 banking stocks that are yet to publish, we expect the market to trade sideways. However, we advise investors to trade cautiously as we do not rule out the possibility of some profit -taking  in tomorrow (Tuesday)’s trading session,” Afrinvest Securities stated.

  • Equities hit two-year high as investors gain N194b on N114b deals

    Equities hit two-year high as investors gain N194b on N114b deals

    Nigerian equities hit their highest level in two years at the weekend as increased bargain-hunting for quoted shares sustained a bullish trend that had seen investors with N902 billion net capital gain in July. Investors recorded net capital gain of N194 billion last week as bargain-hunters overran a major profit-taking breather that started the week to sustain four consecutive positive trading sessions.

    Major indices at the Nigerian Stock Exchange (NSE) showed increased momentum of activities and continuing investors’ appetite for quoted shares. Average week-on-week gain stood at 1.52 per cent last week, equivalent to net capital gain of N194 billion. The sustained rally over four trading sessions nudged the average year-to-date return to 39.26 per cent at the weekend.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) rose from the week’s opening value of N12.705 trillion to close the week at N12.899 trillion. The All Share Index (ASI)-the common value-based index that tracks share prices at the Exchange, also rose from its index on board of 36,864.71 points to reach a new high of 37,425.15 points at the weekend.

    Investors traded a total 2.52 billion shares worth N114.12 billion in 23,546 deals during the week, compared  to a total of 2.21 billion shares valued at N30.64 billion traded in 26,287 deals in the previous week. Financial services stocks accounted for 1.51 billion shares valued at N16.35 billion in 12,511 deals; representing 59.9 per cent and 14.3 per cent of the total equity turnover volume and value respectively. The industrial goods sector rode on the back of negotiated deals on Dangote Cement to record a turnover of 441.91 million shares worth N89.36 billion in 1,282 deals. The conglomerates sector placed third with a turnover of 184.61 million shares worth N701.67 million in 929 deals.

    The three most active stocks were Dangote Cement, Access Bank and Zenith International Bank, which altogether accounted for 833.97 million shares worth N95.97 billion in 3,203 deals, contributing 33.1 per cent and 84.1 per cent of the total equity turnover volume and value respectively.

    With 38 gainers to 28 losers, most sectoral indices at the Exchange also closed positive. The NSE 30 Index, which tracks the 30 most capitalised companies, recorded a week-on-week average return of 1.24 per cent. The NSE Consumer Goods Index recorded the highest average gain of 4.87 per cent. The NSE Insurance Index appreciated by 2.81 per cent while the NSE Industrial Goods Index inched up by 0.07 per cent. However, the influential NSE Banking Index depreciated by 1.64 per cent while the NSE Oil and Gas Index dipped by 3.05 per cent.

    Low-priced stocks were ahead of the bullish run. C & I Leasing recorded the highest gain, in percentage terms, of 44.9 per cent to close at N1 per share. Dangote Sugar Refinery followed with a gain of 37.3 per cent to close at N14.91. Linkage Assurance rose by 27.1 per cent to 75 kobo. Nascon Allied Industries appreciated by 26.9 per cent to close at N12. Livestock Feeds rallied by 19.2 per cent to close at 93 kobo. Cadbury Nigeria rose by 12.9 per cent to N11.80 while Jaiz Bank gained 12.1 per cent to close at 74 kobo.

    On the downside, Morison Industries led the losers with a drop of 16.9 per cent to close at N1.13. Red Star Express declined by 12.4 per cent to N4.38. Cutix lost 9.9 per cent to close at N2.19. University Press dropped by 9.3 per cent to N2.63. NPF Microfinance Bank dipped by 9.1 per cent to N1.20 while Mobil Oil Nigeria lost 8.3 per cent to close at N232 per share.

    Also traded during the week were a total of 1.166 million units of Exchange Traded Products (ETPs) valued at N16.169 million in 17 deals compared with a total of 1.732 million units valued at N13.711 million traded in 19 deals two weeks ago.

    In the sovereign bond market, a total of 5,850 units of Federal Government bonds valued at N5.702 million were traded in seven deals as against a total of 750 units valued at N0.695 million traded in eight deals in the previous week.