The Nation Newspaper

Category: Equities

  • Experts advise investors on low share prices

    Investment and financial experts have advised discerning investors to take advantage of the historic low prices at the Nigerian stock market ahead of the expected rebound of the economy and the capital market  next year.

    At a one-day stock traders and investors summit organised by Investdata Limited in Lagos, experts said the Nigerian economy and the capital market are on the verge of recovering.

    Chief executive officer, APT Securities & Funds Limited, Alhaji Garba Kurfi, noted that the Nigerian Stock Exchange (NSE) has recorded negative double digits growth for the third consecutive year, beginning in 2014 when it was the worst performing equities market in the globe after losing 16 per cent.

    He pointed out that the third year of negative growths negates the history of the Nigerian stock market.

    According to him, many stocks on the exchange are selling at their worst price after listing their shares for trading, just as many recorded their worst prices in decades during the current year, a situation discerning investors would be watching keenly and taking advantage of the rock bottom prices to harness value in the coming months.

    He noted that a situation where market capitalisation of companies listed on the NSE has lost a cumulative N3.2 trillion in 22 months to October 2016 may not arise again in the next 15 to 20 years.

    Managing Director, High Cap Securities Limited, David Adonri noted that the capital market is awash with opportunities for investors whether the economy is growing or not, with falling equity prices an opportunity for bargain hunting.

    He said investors need to reverse their strategy at a time like this and embrace counter-cyclical stocks because they do well at this time.

    “This group is composed of companies with dividends and massive balance sheets or steady business models that are recession-proof. These high yield stocks such as fast-moving consumer goods, pharmaceuticals and tobacco tend to hold up better,” Adonri said.

    According to him, recessions can provide an opportunity to buy assets cheap and the best time to invest, meaning investors can pick up stocks, bonds, mutual funds, real estate, private businsses and more for far less than they could just a few years before.

    “Only those who improve their position in the market will smile next year because those who threw away their assets will come to beg you for them later,” Adonri said.

  • IFC, SEC to implement corporate governance scorecard

    IFC, SEC to implement corporate governance scorecard

    Securities and Exchange Commission (SEC) and the International Finance Corporation (IFC), a member of the World Bank Group, will begin the implementation of the Nigerian Corporate Governance Scorecard in January 2017.

    In 2014, IFC and SEC partnered to develop the Nigerian Corporate Governance Scorecard which was launched in November 2015. Following the launch, both institutions have jointly trained various stakeholders to prepare for implementation. These stakeholders include chief finance officers, company secretaries, audit committee and board chairpersons. The training sessions generated awareness for the new disclosure requirements of SEC. These disclosures will be used annually to assess corporate governance practices of listed companies in the country.

    Both SEC and IFC at the weekend confirmed that the implementation of the Nigerian Corporate Governance Scorecard will start in January 2017.

    Director-General, Securities and Exchange Commission (SEC), Mounir Gwarzo said a major focus of the apex capital regulator is to provide regulatory oversight to ensure public companies comply with best practices in corporate governance and boost their performance.

    “Having built considerable market awareness for the scorecard with IFC’s support, we hope that as companies comply, they will improve their performance and contribute to growth in the nation’s economy,” Gwarzo said.

    According to him, the scorecard will identify strong performers through enhanced disclosure, strengthen investor confidence and encourage foreign investments in the country.

    Country Manager, Nigeria, International Finance Corporation (IFC) Eme Essien Lore noted that IFC works with firms to attract and retain investment by promoting the adoption of good corporate governance practices and standards.

    “We have partnered with SEC over the last two years, developing the corporate governance scorecard and sensitising stakeholders. We hope that as implementation begins in January 2017, the trained officials would translate progress made into ongoing processes that boost performance, attract investments and help the economy grow,” Essien Lore said.

    Corporate governance refers to the structures and processes by which companies are directed and controlled. Companies become more accountable and transparent to investors, which encourages new investments, boosts economic growth, and provides employment opportunities.

    Corporate governance scorecards are quantitative tools used to measure the level of observance of a code or standard of corporate governance. The scorecard was developed using indicators from the SEC code of corporate governance and will assess individual, sectorial and market-wide level of compliance with standards of best practices.

    IFC’s Africa corporate governance programme is funded by the State Secretariat for Economic Affairs (SECO), Switzerland. IFC is the implementing partner for the programme.

  • Dangote Cement, others lift equities to N22b gain

    Nigerian equities remained under a delicate balance of profit-taking and bargain-hunting yesterday at the Nigerian Stock Exchange (NSE) as investors simultaneously sought to lock in profits from the recent rallies by oil stocks while taking positions in leading manufacturing companies and banks.

    With 20 decliners to 19 advancers, a 1.16 per cent rise in the share price of Dangote Cement Plc helped the overall market situation to a positive close with a net capital gain of N22 billion. Dangote Cement, Nigeria’s most capitalised stock, rose by N1.84 to close at N160, offsetting significant losses recorded in major oil and gas companies. Dangote Cement accounts for nearly one-third of the total market capitalisation of all quoted companies at the stock market.

    Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) rose from its opening value of N8.834 trillion to close at N8.856 trillion. The All Share Index (ASI), the benchmark index that tracks share prices at the NSE, also rose by 0.25 per cent from 25,673.80 points to close at 25,739.18 points. The average year-to-date return, though still negative, improved to -10.14 per cent.

    Most sectoral indices closed on the upside. The NSE Industrial Goods Index rode on the back of gains by Dangote Cement to close with a day-on-day return of 0.7 per cent. The NSE Banking Index appreciated by 0.4 per cent while the NSE Insurance Index inched up by 0.3 per cent. However, the NSE Oil & Gas Index depreciated by 0.6 per cent while the NSE Consumer Goods Index declined by 0.5 per cent.

    Forte Oil led the rally with a gain of N8.95 to close at N96.37. UAC of Nigeria followed Dangote Cement with a gain of 40 kobo to close at N16.50. Zenith Bank rose by 25 kobo to close at N14.50 while Flour Mills of Nigeria added 19 kobo to close at N18.49 per share.

    Total turnover stood at 165.99 million shares valued at N1.27 billion in 2,485 deals. The most active stock was Diamond Bank with a turnover of 80.27 million shares valued at N64.29 million.

    “As market performance remains driven by bargain hunting, we expect some end of the week profit taking by investors in the trading session ahead,” Afrinvest Securities stated.

    On the negative side, Total Nigeria topped the losers list with a loss of N27.56 to close at N276.05. Mobil Oil Nigeria followed with a loss of N16.16 to close at N307.15. Unilever Nigeria declined by N2 to close at N46. International Breweries lost 95 kobo to close at N18.05 while Guinness Nigeria dropped by 84 kobo to close at N77.90 per share.

  • Union Bank’s shareholders approve N50b rights issue

    Union Bank’s shareholders approve N50b rights issue

    Union Bank of Nigeria (UBN) Plc plans to raise N50 billion new equity funds from existing shareholders of the bank.

    At an extraordinary general meeting yesterday in Lagos, shareholders of the first generation bank approved five resolutions authorising the board of the bank to raise up to N50 billion through rights issue.

    Shareholders increased the authorised capital of the bank from N9.5 billion consisting of 19 billion ordinary shares of 50 kobo each to N17.5 billion consisting of 35 billion ordinary shares of 50 kobo each by the creation of additional 16 billion ordinary shares of 50 kobo each.

    With this, the memorandum and articles of association of the bank will be amended to reflect the increase in the authorised share capital to N17.5 billion.

    Amendment of the bank’s articles and memorandum of association in order to authorise an increase in the bank’s share capital and the mandate to issue new shares require approval of at least a three-quarter majority of votes present at the meeting. The resolutions yesterday were supported by shareholders representing altogether 99.6 per cent of the votes.

    Chief executive officer, Union Bank of Nigeria (UBN) Plc, Mr. Emeka Emuwa, noted that obtaining shareholders’ approval for the bank’s capital increase is a necessary step towards the rights issue.

    He said the increase in capital will further strengthen Union Bank’s near-term positioning and enable it to realise its long-term growth aspirations.

    “We view the right issue approval as a strong sign of shareholders’ support for Union Bank’s  growth strategy and our plans to scale up operations and strengthen our position in readiness for uptake when the macroeconomic direction changes,” Emuwa said.

    Key extracts of the interim report and account for the Union Bank Group for the nine-month period ended September 30, 2016 showed that group gross earnings rose by 12 per cent to N93.43 billion in third quarter 2015 as against N83.72 billion recorded in comparable period of 2015. Interest income had grown from N66.91 billion to N70.96 billion. Net interest income improved by 19 per cent from N40.27 billion to N48.07 billion. Non-interest income also grew by 35 per cent from N16.67 billion to N22.47 billion.

    Group profit before tax rose by 27 per cent to N13.3 billion in third quarter 2015 compared with N9.6 billion in third quarter 2015. After taxes, net profit also rose from N9.34 billion to N13.01 billion. With these, earnings per share improved from 55 kobo in 2015 to 76 kobo in 2016.

    Key underlying ratios were generally positive. Net interest margin, which underlines the profitability of the core banking operations, improved from 8.1 per cent to 8.8 per cent. Cost-to-income ratio also improved to 63 per cent as against 76 per cent in comparable period of 2015. Return on equity increased to 6.9 per cent as against 5.5 per cent while return on assets improved from 1.2 per cent to 1.6 per cent.

  • Equities lose N1.34tr in November

    Nigerian equities lost a whooping N1.34 trillion in November as tough macroeconomic environment characterized by rising inflation, declining Gross Domestic Products (GDP) and improbable foreign exchange exacerbated major selloff of quoted shares.

    The loss of N1.34 trillion in November compounded the losing streak, with investor losing N701 billion in October. The benchmark index at the Nigerian Stock Exchange (NSE) indicated average month-on-month decline of 13.49 per cent.

    Aggregate market value of all quoted equities closed November yesterday at N8.689 trillion as against the month’s opening value of N10.028 trillion. The All Share Index (ASI), the value-based index that tracks prices at the Exchange, dropped from the month’s opening index of 29,177.72 points to close the month at 25,241.63 points.

    Equities had lost N701 billion in October as share prices of quoted equities continued to fall in spite of the inflow of much expected third quarter earnings of companies. While many had hoped that the last quarter would see a stem of the negative tide that had ruled the market for the most part of this year, the fourth quarter has so far been dominated by negative sentiments.

    Several quoted companies have continued to hit their lowest prices in the past one year while a large segment of stocks have stagnated at nominal value, underlining the widespread downtrend at the stock market.

    Year-to-date analysis indicated that average investors might have lost 11.87 per cent of their investments in the first 11 months of this year, which aggregated to a total market loss of approximately N2.79 trillion. Aggregate market value of quoted companies opened 2016 at N11.478 trillion. The ASI opened the year at 34,657.15 points.

    The performance so far is hitting hard investors, who had been at the top-end of the global decline last year. Nigerian equities had ranked among the worst-performing stocks globally in 2014 with average full-year decline of 16.14 per cent. Aggregate market value of all quoted equities closed 2014 at N11.477 trillion as against its opening value of N13.226 trillion for the year, indicating a loss of N1.75 trillion during the year.

    Against the opening value for 2014, the current market value of all quoted equities represents a loss of N3.2 trillion over the 22-month period.

  • ETI to issue 630m shares to preference shareholders

    Ecobank Transnatio-nal Incorporated (ETI), the financial holding company for the Ecobank Group, will issue about 630.33 million ordinary shares in exchange for 819.42 million preference shares as the group moved to settle one of the outstanding terms of its acquisition of the Nigerian bank, Oceanic Bank International Plc.

    In a regulatory notice filed yesterday at the Nigerian Stock Exchange (NSE), ETI, which is also listed on the Ghana Stock Exchange in Accra and the West Africa Stock Exchange (BRVM) in Abidjan, stated that holders of 819.42 million preference shares had indicated their intention to convert their preference shares into ordinary shares.

    Upon receipt of requisite approvals, the 819.42 million preferences shares will be converted to 630.33 million ordinary shares at an implied conversion price of N21.32 per new ordinary share. Qatar National Bank (QNB), one of ETI’s major shareholders, with 732.28 million preference shares, was among the holders that exercised their conversion option.

    Under the terms on conversion of preference shares approved by all parties to the acquisition of Oceanic Bank, which resolution was passed on September 14, 2011, preference shareholders had the right, exercisable at any time between the third anniversary of the issue date and the fifth anniversary of this date, to convert their preference shares into ordinary shares in the company at the rate of one preference share to 0.76923 ordinary share.

    Preference shareholders, therefore, had the right to convert their preference shares up to Monday October 31, 2016. Out of outstanding of 1.03 billion preference shares as at the end of December 2015, the holders of 819.42 million preference shares exercised their right to convert their preference shares into ordinary shares in the company within the stipulated timeline.

    After the issuance of the new ordinary shares, ETI’s total outstanding shares will increase to 24.73 billion ordinary shares upon conversion.

    Group chief executive officer, Ecobank Transnational Incorporated (ETI) Plc, Ade Ayeyemi said the decision to convert the preference shares to ordinary shares underscored the trust by the preference holders in the Ecobank Group.

    “We appreciate the trust and confidence that the preference shareholders, particularly QNB, have in Ecobank. With the support of all our shareholders, we shall continue to provide the best quality banking services to our numerous clients across the largest banking network in Africa,” Ayeyemi said.

    He said ETI is taking all necessary steps to get the shares converted, issued and listed on the three stock exchanges where it is listed.

  • FCMB grows Q3 net profit by 31% to N13b

    FCMB grows Q3 net profit by 31% to N13b

    FCMB Group Plc recorded considerable growths in the top-line and profitability in the third quarter as the financial services group grew net profit by 30.6 per cent to N13 billion within the nine-month period.

    Key extracts of the nine-month report for the period ended September 30, 2016 showed that group gross earnings rose by 29 per cent to N140.7 billion in September 2016 as against N109.3 billion by September 2015. Non-interest income had increased by 128 per cent from N19.6 billion to N44.8 billion. This increase was driven by 612 per cent increase in foreign exchange income from N5 billion in third quarter 2015 to N35.3 billion in third quarter 2016. Profit before tax rose by 19.4 per cent from N14.18 billion to N11.88 billion. Profit after tax also increased to N12.98 billion in third quarter 2016 as against N9.94 billion in comparable period of 2015.

    FCMB Group includes First City Monument Bank (FCMB) Limited, FCMB Capital Markets Limited, CSL Stockbrokers Limited and CSL Trustees Limited.

    Managing director, FCMB Group Plc, Mr. Peter Obaseki, said the improvements in the key performance indicators of the group to the soundness of ratios, steady buffers against the subsisting adverse operating environment, the group’s sustained revenue momentum and cost optimisation programme.

    He noted that the capital adequacy and liquidity ratios of the bank have held up at 17.6 per cent and 36.8 per cent respectively, adding that the underlying revenue momentum remains strong as the cost optimisation programme of the group led to a marginal drop in operating expenses, despite the inflationary environment.

    “The macro economic conditions in the final quarter remain challenging; we will keep up a conservative stance,” Obaseki said.

    Group managing director, First City Monument Bank (FCMB) Limited, Mr. Ladi Balogun, said the audited results of the bank reveal that the extraordinary performance in second quarter 2016 offset the loss recorded in third quarter of N2.4 billion, thereby resulting in strong year-on-year profit growth.

    He pointed out that in order to avoid an unsustainable, non-cash, spike in earnings from further revaluation gains in third quarter, the bank also significantly stepped up its loan loss provisions as the macroeconomic climate is taking a significant toll on the bank’s borrowing customers across all segments.

    “While our prudential ratios should continue to strengthen into the fourth quarter, modestly buoyed by a tier 2 capital injection of N7.5 billion in November, we do not anticipate improvement in the fourth quarter earnings. Nonetheless, we are pleased with the gains we continue to record in growing our business in areas such as retail banking with a 315 per cent year-on-year growth in profitability and increasing our share of banking activities in the agricultural sector,” Balogun said.

    He noted that in spite of the fact that the banking sector has seen several revenue lines diminish due to external factors; FCMB will be well positioned for a strong rebound in core earnings in the medium term as it builds a more resilient balance sheet.

    “FCMB expects to continue to distinguish itself by delivering exceptional services, while enhancing the growth and achievement of the personal and business aspirations of its customers and all stakeholders,” Balogun said.

     

  • Equities hit 7-month low as CBN holds rates

    Nigerian equities yesterday slipped to their lowest values in the past seven months as the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) decided to retain the benchmark interest rate at 14 per cent. The MPC concluded its two-day meeting yesterday and decided to maintain status quo, implying no change in key monetary policy instruments.

    With the decision of the apex bank, the Monetary Policy Rate (MPR) remains at 14 per cent, with asymmetric window of +200 and -500 basis points while Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) remain at 22.5 per cent and 30 per cent respectively.

    Benchmark indices at the Nigerian Stock Exchange (NSE) dropped for the eighth consecutive trading session as investors continued to sell down their portfolios to cushion the generally tough cash crunch in the country.

    The All Share Index (ASI), the main index that tracks prices at the NSE, dropped by 0.15 per cent from its opening index of 25,499.00 points to close at a seven-month low at 25,461.34 points. The average year-to-date return thus worsened to -11.11 per cent.

    With 17 losers to 11 gainers, aggregate market value of all quoted equities on the NSE also dropped by N13 billion from N8.778 trillion to close at N8.765 trillion. Oil majors continued to lead the downtrend. The NSE Oil & Gas Index dropped by 2.5 per cent. The NSE Consumer Goods Index declined by 0.02 per cent while the NSE Industrial Goods Index and NSE Insurance Index closed flat. However, the NSE Banking Index recorded a modest gain of 0.05 per cent.

    Total Nigeria remained atop the losers’ list with a loss of N13.45 to close at N255.58. Forte Oil also retained its second position with a loss of N8.05 to close at N74.62. PZ Cussons Nigeria dropped by 50 kobo to close at N14.49. Nascon Allied Industries lost 36 kobo to close at N7.19 while Eterna dropped by 25 kobo to close at N2.90 per share.

    Total turnover improved slightly by 7.6 per cent to 120.93 million shares valued at N1.19 billion in 2,397 deals. Diamond Bank was the most active stock with a turnover of 18.33 million shares worth N16.56 million. Access Bank followed with 14.64 million shares valued at N80.76 million. Transnational Corporation of Nigeria placed third with a turnover of 13.7 million shares valued at N9.2 million.

    On the positive side, Mobil Oil Nigeria topped the gainers’ list with a gain of N5 to close at N195.01. Flour Mills of Nigeria followed with a gain of 85 kobo to close at N17.85. Champion Breweries rose by 19 kobo to close at N2.45. Africa Prudential Registrars added 13 kobo to close at N2.78 while Guaranty Trust Bank chalked up 6.0 kobo to close at N21.06 per share.

    Market analysts had generally predicted retention of rates by the apex bank but the absence of additional guidance on the management of the current foreign exchange structure further unnerved the stock market, where foreign portfolio investors hold significant stakes.

    Analysts at Afrinvest Securities noted that the failure of the MPC members to give any guidance or market-friendly opinion on the current administrative structure of the foreign exchange left investors in the wilderness.

    “Thus, with no end yet in sight to the pegged exchange rate regime, we believe sentiment for equities would remain weak in the short to medium term,” Afrinvest Securities stated.

  • Cement, oil stocks push equities to new low

    For the third consecutive trading sessions, Nigerian equities remained on the downtrend yesterday as investors sought to monetize the highly liquid large stocks in the industrial goods and oil and gas sectors. The benchmark indices at the Nigerian Stock Exchange (NSE) indicated average decline of 0.50 per cent, equivalent to a loss of N45 billion.

    Aggregate market value of all quoted equities dropped from its opening value of N8.946 trillion to close at N8.901 trillion. The All Share Index (ASI), which tracks prices at the stock market, also declined from 25,986.81 points to close at 25,857.06 points. The decline yesterday worsened the negative average year-to-date return to -9.72 per cent.

    While the underlying sentiments remained largely negative, the downtrend was driven largely by losses recorded by highly capitalised stocks in the industrial goods and oil and gas sectors. The NSE Industrial Goods Index dropped by 4.1 per cent. The NSE Oil & Gas Index slipped by 0.4 per cent while the NSE Insurance Index declined by 1.0 per cent. However, the NSE Banking Index appreciated by 1.3 per cent while the NSE Consumer Goods Index inched up by 0.02 per cent.

    Lafarge Africa led the 19-stock losers’ list with a loss of N4 to close at N44. Dangote Cement followed with a loss of N2.50 to close at N161.50. Conoil declined by N1.79 to close at N34.11. International Breweries dropped by 89 kobo to close at N19. Forte Oil lost 32 kobo to close at N94. Oando declined by 20 kobo to close at N3.89 while Zenith Bank dropped by 12 kobo to close at N14.38.

    Total turnover stood at 189.72 million shares valued at N905 million in 2,417 deals. Standard Alliance Insurance was the most active stock with a turnover of 95 million shares worth N47.5 million. United Capital followed with 11.33 million shares valued at N28.1 million while FBN Holdings placed third with 11.23 million shares valued at N34.36 million.

    On the positive side, Mobil Oil Nigeria led the nine-stock gainers’ list with a gain of N5 to close at N195. Guaranty Trust Bank followed with a gain of 90 kobo to close at N21.90. Nascon Allied Industries rose by 35 kobo to N7.53. Nigerian Breweries added 31 kobo to close at N142.31 while Custodian and Allied Industries chalked up 18 kobo to close at N3.81 per share.

    “As investor sentiments remain weak, we expect the current downtrend to persist. Nevertheless, in the interim, we believe strategic bargain hunting positions can be taken in fundamentally sound stocks,” Afrinvest Securities stated.

  • UACN launches mandatory takeover for Portland Paints

    UAC of Nigeria (UACN) Plc is launching a mandatory takeover bid to acquire additional equity stake in Portland Paints and Products Nigeria (PPPN) Plc.

    In June 2013, UAC of Nigeria (UACN) PLC, Nigeria’s largest conglomerate, had acquired the majority equity stake of 51 per cent in Portland Paints. Following the acquisition, the board and management of the company were reconstituted. Mr. Larry Ettah, who leads the management at UACN, became the chairman.

    In a regulatory filing at the weekend, UACN indicated that it will be launching a mandatory takeover of up to two million ordinary shares of 50 Kobo each in PPPN at N4.47 Kobo per share. The takeover price represents a premium of 224 per cent on PPPN’s market price of N1.38 at the Nigerian Stock Exchange (NSE).

    The qualification date for the transaction is Wednesday November 16, 2016, the date qualifying shareholders of PPPN will be determined.

    According to the report, qualifying shareholders are the shareholders of PPPN other than UACN whose names appear in the register of members of PPPN as at the qualification date and who are eligible to receive the takeover bid document.

    Ettah recently indicated that PPPN plans to raise new equity funds from existing shareholders to restructure its balance sheet and support its business expansion programme.

    Addressing shareholders, Ettah said the company had embarked on intensive restructuring of its operations in order to strengthen it against challenges that negatively impacted its operations in 2015.

    Ettah explained that PPPN embarked on restructuring as a result of the difficult and challenging economic and business environment in 2015.

    According to him, during the year, the company commenced a process of restructuring the business focusing on internal efficiencies and reviewing its route to market model in a bid to ensure that it builds a sustainable future for the business.

    “We will apply the planned rights proceeds to minimize the debt exposure risks of our business as well as carry out targeted expansion in our operations. The business will focus on its growth brands as well as make the necessary investment in marketing to improve its brands’ awareness and visibility,” Ettah said.

    He however noted that despite the challenges and risks posed by the business environment, the company with its flagship brand Sandtex, will continue to consolidate on the restructuring while seeking growth opportunities to deliver returns to the shareholders.

    Key extracts of the audited report and accounts of the company for the year ended December 31, 2015 showed that turnover dropped to N2.17 billion, 23 per cent lower when compared to the N2.8 billion in 2014. It recorded loss after tax of N233 million in 2015 as against N148.6 million recorded in 2014.

    PPPN- purveyor of the Sandtex brand of paints; was for several years a division of West African Portland Cement (Wapco) PLC, now Lafarge Cement Wapco Nigeria. With the division performing creditably well as a going concern, Wapco initiated the registration of the division as a limited liability company in 1985. Portland Paints became a publicly quoted company in July 2009. One of the most diversified paints manufacturing companies in Nigeria, Portland Paints manufactures and markets decorative, automotive, industrial and marine paints. It also holds sole agency for world-renowned sanitary brands including Armitage Shank, Ideal Standard and Jaquar.