The Nation Newspaper

Category: Equities

  • Fidson optimistic on future growth despite first-half slowdown

    Fidson optimistic on future growth despite first-half slowdown

    The management of Fidson Healthcare Plc has reassured that the healthcare company remains on the path to attaining significant growth in the near future as its focus on its strategies for market expansion, brand building and opportunities that exist through local and international partnerships would lead to better returns for shareholders.

    Against the background of 32 per cent decline in the company’s turnover in the first half of this year, the company stated that the low sales figure was as a result of unavailability of products, a direct consequence of the scarcity of foreign exchange shortage experienced by the manufacturing sector during the period.

    According to the management, Fidson only accessed 30 per cent of its foreign exchange needs in the first six months of the year. The paucity of foreign exchange, for the importation of products and essential raw materials, and macroeconomic headwinds were disruptive to the manufacturers in the pharmaceutical industry including the company’s business.

    Key extracts of the six-month half-year report for the period ended June 30, 2016 showed that sales dropped by 32 per cent from N4.032 billion in first half 2015 to N2.61 billion in first half 2016. Profit-after tax also declined to N39.582 million in 2016 as against N324.206 million recorded in the comparable period of 2015.

    Fidson stated that its cost optimisation strategy, which it embarked on a couple of years ago, continued in 2016 in line with the strategy to drive efficiency in the face of a challenging business environment.

    The management noted that the strategy saw Fidson reducing its operating cost by over 60 per cent in the period under review, assuring that the company will continue to drive efficiency into its processes, which will continue to result in savings on administration expenses.

    Fidson’s growth strategies are premised on the recent move to the company’s new World Health Organisation Good Manufacturing Practice (WHO-GMP), where local production recently commenced. The newly completed state-of-the-art facility will provide several benefits including increased profitability, increased efficiency from economies of scale, increased product offerings as well as job creation with an additional 300 jobs expected to be created.

    Aside from increasing production capacity, the new factory would enhance the company’s business prospects by enhancing its ability to tender for WHO sponsored programmes, which Nigerian pharmaceutical manufacturers are unable to access, losing out to foreign companies in these tenders.

  • FBN Holdings rallies as total asset hits N4.8tr

    FBN Holdings Plc, the holding company for First Bank of Nigeria (FBN) and its former subsidiaries, rallied above average gain at the stock market yesterday as the group reported that total assets had risen to N4.80 trillion by the end of June 2016.

    FBN Holdings’ share price rose by 3.48 per cent to close at N3.57 per share, more than threefold of the average price gain of 1.14 per cent recorded by the benchmark index at the Nigerian stock market.

    At N4.80 trillion, FBN Holdings’ total assets amounted to 50 per cent of the total market capitalisation of all the quoted companies on the Nigerian Stock Exchange (NSE). Aggregate market value of all quoted companies on the NSE rose from N9.489 trillion to close at N9.598 trillion. The All Share Index (ASI), the benchmark index for the stock market, rallied by 1.14 per cent to close at 27,945.02 points as against its opening index of 27,629.90 points.

    Key extracts of the six-month report for the period ended June 30, 2016 showed that total assets rose to N4.80 trillion by June 2016 as against N4.42 trillion recorded in the comparable period of 2015, representing an increase of 9.0 per cent. A sluggish top-line and impairment charges however constrained the bottom-line. Gross earnings declined marginally to N267.9 billion by June 2016 as against N271.3 billion in comparable period of 2015. While interest income had declined by 18 per cent from N205.8 billion to N169.2 billion, non-interest income had jumped by 52 per cent from N61.9 billion to N94.1 billion. Profit before tax meanwhile dropped by 12 per cent from N52.1 billion to N45.9 billion while profit after tax dropped by 11 per cent from N40.1 billion to N35.9 billion.

    Group managing director, FBN Holdings Plc, Mr. UK Eke, said the first half performance demonstrated the resilience of the group when considered against the challenging macroeconomic and business environment.

    According to him, with the tough operating environment further exacerbated by the devaluation of the Naira and the persistent rise in inflation, the gross earnings of N267.9 billion and profit before tax of N45.9 billion were reflection of the strength of the groups’ underlying business as well as improvement in cost control.

    He added that the focus of the group remains on organic earnings generation, divestment of non-core assets and balance sheet efficiency to further enhance capital.

    “We remain focused on leveraging the strength of our diversified business model by exploiting synergy opportunities and cross-selling across our commercial banking, merchant banking and asset management as well as our insurance businesses towards creating sustainable value for our stakeholders,” Eke said.

  • Vetiva to float Nigerian sovereign bond ETF

    Vetiva Fund Managers Limited, which launched Nigeria’s first-ever equity based Exchange Traded Fund (ETF), has obtained regulatory approval to launch Nigerian sovereign bonds-based ETF.

    A regulatory document indicated that the Nigerian Stock Exchange (NSE) has approved the plan by Vetiva Fund Managers to float a public offer for subscription of 10 million units of Vetiva S & P Nigerian Sovereign Bond ETF.

    Vetiva already manages Vetiva Griffin 30 Exchange Traded Fun./d (VG 30 ETF), which tracks the NSE 30 Index. The NSE 30 Index tracks the 30 most capitalised stocks at the stock market. The stocks are selected based on market capitalisation from the most liquid sectors and liquidity is based on the number of times the stock is traded during the preceding two quarters. To be included in the index, the stock must be traded for at least 70 per cent of the number of times the market opened for business.

    ETF is a security that tracks the performance of a specified security or other assets including stocks, basket of assets, indices, commodity prices, foreign currency rates, and derivatives among others. There are many types of ETF. Index-based ETF, like index fund, tracks specified market index.

    Ernst & Young, the third largest multinational professional services firm in the world, had reported that the global ETF industry had 5,042 ETFs, with 10,053 listings, assets of $2.3 trillion, from 215 providers on 58 exchanges as at October 2013. It also predicted annual growth of 15 per cent to 30 per cent globally over the next five years.

    ETFs are essentially index funds that are listed and traded on the Exchange such as shares. Buying and selling ETFs is as simple as buying and selling of shares. Unlike shares and mutual funds, however, the ETFs will trade continuously all day long and allow investors to lock in a price for the underlying stocks immediately, rather than being bought and sold based on end-of-day prices.

    Vetiva Fund Managers Limited is a wholly owned subsidiary of Vetiva Capital Management Limited and is registered with the Securities & Exchange Commission (SEC) to carry out business as fund and portfolio manager.

  • Equities in free fall amidst mixed earnings

    There were nearly six losers for every gainer at the Nigerian stock market on Thursday as investors remained cautious and reluctant about the earnings outlooks of quoted companies. The benchmark index at the Nigerian Stock Exchange (NSE), the All Share Index (ASI), dropped to a new low while market value of all quoted companies depreciated by N77 billion.

    The ASI declined by 0.79 per cent from 28,221.18 points to close at 27,997.29 points, depressing the average year-to-date return to -2.25 per cent. Aggregate market value of all quoted equities declined from N9.693 trillion to close at N9.693 trillion.

    All sectoral indices at the stock market closed in the red, underlining the widespread downtrend that saw 34 losers against six gainers. The NSE Banking Index dropped by 2.6 per cent. The NSE Oil & Gas Index declined by 1.0 per cent. The NSE Insurance Index slipped by 0.3 per cent. The NSE Consumer Goods Index lost 0.2 per cent while the NSE Industrial Goods Index slipped by 0.01 per cent.

    Nestle Nigeria, Nigeria’s highest-priced stock, led the losers with a loss of N15 to close at N835. Cadbury Nigeria followed with a loss of 89 kobo to close at N15.20. Guinness Nigeria dropped by 84 kobo to close at N95.95. Stanbic IBTC Holdings lost 71 kobo to close at N13.49 while Guaranty Trust Bank declined by 70 kobo to close at N21 per share.

    “We expect market performance to remain weak in the interim amid influx of poor second quarter 2016 earnings numbers,” Afrinvest Securities stated.

    Total turnover stood at 227.13 million shares valued at N1.80 billion in 3,426 deals. Skye Bank was the most active stock with 54 million shares valued at N45.89 million. United Bank for Africa followed with a turnover of 41.33 million shares worth N182 million while Zenith Bank recorded a turnover of 21.66 million shares valued at N332.55 million.

    On the other hand, Nigerian Breweries led the gainers with a gain of N1.90 to close at N137. CAP followed with a gain of N1 to close at N36. Tiger Branded Consumer Goods rose by 8.0 kobo to N3.93. Skye Bank added 7.0 kobo to close at 85 kobo. Wema Bank rose by 5.0 kobo to close at 78 kobo while AG Leventis inched up by 4.0 kobo to close at 97 kobo per share.

  • Lafarge Africa optimistic despite first-half slowdown

    Lafarge Africa optimistic despite first-half slowdown

    The management of Lafarge Africa Plc yesterday assured that the cement group would deliver stronger performance in the second half after gas shortages, repair works and foreign exchange (forex) significantly impaired performance in the first half.

    During the first half of 2016, Lafarge Africa recorded many achievements in it continuing corporate consolidation including successful acquisition of the balance of 50 per cent ownership stake in United Cement Company of Nigeria (Unicem), which makes Unicem a 100 per cent subsidiary of Lafarge Africa; and a N60 billion bond raised to refinance Unicem’s Naira-denominated debt at a lower interest rate. The Nation recently reported that Lafarge Africa was also considering plan to restructure and refinance the dollar-denominated portion of Unicem debt. These loans were largely used to fund the expansion projects which will add an additional 2.5 metric tonnes per annum cement capacity to the current production capacity of Unicem.

    Lafarge Africa’s first-half report also indicated that its South African cement operations reported solid volume growth, with cement sales volume growing by eight per cent compared to first half 2015 as well as a steady aggregates volume in first half 2016.

    Key extracts of the unaudited report and accounts for the six-month period ended June 30, 2016 however showed declines in sales and profitability. Turnover dropped to N107.36 billion in first half 2016 as against N152.18 billion in comparable period of 2015. As against pre and post tax profit of N30.85 billion and N27.32 billion respectively in first half 2015, the company recorded pre and post tax loss of N30.18 billion and N30.25 billion in first half 2016.

    Chief executive officer, Lafarge Africa Plc, Mr. Michel Puchercos said recent initiatives have strengthened the operational fundamentals of the cement group, noting that the synergies from these will ensure it continues to deliver good performance with significant upsides as it concludes on the integration journey to form Lafarge Africa.

    According to him, the new company is much stronger and better positioned to deliver operational excellence and improve value to shareholders.

    “The second half of the year is anticipated to be more rewarding. We expect the cement market to be strong mainly driven by the individual home segment with a marginal contribution from the public sector. We expect to benefit from the synergies of our integrated operations, in spite of the gas shortages. Our objective is to deliver innovative and good quality building solutions to meet the specific needs of our customers, while also achieving good value creation for our shareholders,” Puchercos said.

     

  • Skye Bank rallies amid sustained stocks’ depression

    Skye Bank Plc for the second consecutive trading session played the lead contrarian stock at the Nigerian stock market as sell-pressure continued to depress the values of most quoted companies.

    Against average decline of 0.85 per cent yesterday, Skye Bank led the seven-stock gainers’ list with a gain of 9.09 per cent to close at 72 kobo. It had risen by the highest possible percentage change of 10 per cent on Monday, leading the upside in a market that saw average decline of 0.25 per cent.

    Skye Bank’s price appreciation was driven by increased market orders for the shares of the troubled bank, after key institutional customers, including the Lagos State Government, said they would stand by the bank irrespective of the recent forced change in the board and management.

    Skye Bank was again the most active stock yesterday with a turnover of 57.71 million shares, sustaining the lead that started on Monday when it led activities’ chart with a turnover of N138.25 million shares.

    The CBN had on Monday, July 4 took over the management of the bank, claiming that the former board and management voluntarily resigned after they failed to turn around the fortunes of the bank. CBN subsequently appointed Alhaji Muhammad Ahmad, the founding director general of the National Pension Commission (Pencom), as the new chairman and Mr. Tokunbo Abiru, a former commissioner for finance in Lagos state and executive director at First Bank of Nigeria as the new group managing director.

    Skye Bank, which had opened July 4 at N1.05, tumbled to a low of 60 kobo. The recovery followed the appointment of Skye Bank as revenue collector by Kogi State, coming on the heels of a state-wide circular by the Lagos State Government reiterating its commitment and confidence in Skye Bank.

    In a circular circulated to all Ministries, Departments, Agencies and Local Governments yesterday by the Permanent Secretary, Ministry of Finance/Accountant General, Lagos State, Mrs A. S Umar, Lagos State had stated that it remains a stakeholder in Skye Bank, expressing confidence in the new board and management of the bank.

    The circular described the bank as safe and in good financial health, noting that negative rumours making the rounds about the health of the bank were unfounded.

    There were also reports that some hugely indebted customers of the bank might be paying their loans, thus bridging the liquidity gap, one of the major reasons for the apex bank’s takeover.

  • Stockbrokers’ chief harps on investor’s education and training

    Stockbrokers’ chief harps on investor’s education and training

    Chartered Institute of Stockbrokers (CIS) President, Mr. Oluwaseyi Abe, at the weekend stressed the importance of investor education and acquisition of relevant skills as part of the catalysts for the development of the Nigerian capital market.

    Abe, who led the council of the CIS on a courtesy visit to the Nigerian Stock Exchange (NSE) at the weekend in Lagos, said investor education has become more compelling as new products are being introduced into the, noting that the more investors understand the benefits and risks of investment in the capital market, the better for the long-term sustainable development of the market.

    He said the CIS places premium on the need to intensify efforts aimed at creating more awareness on the relevance of the market to all categories of existing and potential investors.

    He pointed out that while the market seemed gloomy at the present, there is hope that it would bounce back.

    He noted that other exchanges such as National Association of Securities Dealers (NASD), FMDQ Plc and Abuja Commodities Exchange have created alternative platforms for stockbrokers to practice, adding that the new trend in the financial market required additional skills on the part of stockbrokers.

    He assured the NSE of continued collaboration of the institute in order to build a strong and virile capital market in Nigeria.

    He urged the stockbrokers to work very closely with the CIS for enhanced professional development in view of the expanding nature of capital market operations, noting that the institute’s Continued Professional Development (CPD) programme had been expanded to bridge the skill gaps and position the stockbrokers to key into emerging opportunities.

    While pointing out that capital market regulators and operators had always worked on the same goal of market development, Abe said collaborative efforts have become more compelling in view of the challenges of globalisation.

    He reiterated that the CIS would always be prepared to partner individuals and institutions that share common values on the growth and development of the capital market.

  • Nigerian Breweries records mixed performance in first half

    Nigerian Breweries records mixed performance in first half

    Nigerian Breweries (NB) Plc, Nigeria’s second most capitalised company, grew its top-line by four per cent but profit after tax dropped by 11 per cent in the first half as the brewer struggled with foreign exchange (forex) and sluggish demand.

    Key extracts of the interim report and accounts for the six-month period ended June 30, 2016 showed that the company recorded a revenue of N157.37 billion for the first half of 2016 as against N151.67 billion declared in the corresponding period in 2015. The results show that the results from operating activities of the company improved by 0.10 per cent from N33.90 billion in the first half of 2015 to N33.94 billion in the corresponding period in 2016.

    Further analysis, however, showed that profit before tax  dipped by 17.64 per cent from N33.99 billion to N25.52 billion while profit after tax dropped by 11.24 per cent to N19.06 billion in first half 2016 as against N21.47 billion recorded in the same period in 2015.

    The Board of Directors of the company blamed the decline in the company’s net profit on forex losses.

    The board stated that despite a lower interest cost from the Commercial Paper Programme, profit after tax declined by 11 per cent, mainly due to foreign exchange losses arising from the rates going up last month.

    In a statement, the board stated that in the first half of 2016, the company was able to deliver top line growth with revenue increasing by four per cent compared to the first six months of 2015, adding that rising inflation combined with higher inputs costs as a result of scarcity of foreign exchange, led to a flat operating profit compared with the preceding year.

     

  • Only 2% of Nigerians invest in stock market, says SEC

    Only 2% of Nigerians invest in stock market, says SEC

    Securities and Exchange Commission (SEC) has said only two per cent of Nigerians, about 3.4 million, are investing in the stock market, but the ongoing implementation of the capital market master plan could increase such participation to four per cent over the next 10 years.

    Securities and Exchange Commission (SEC) Director-General, Mounir Gwarzo, said the successful implementation of the master plan is necessary to attract retail investors to the market.

    He outlined that since assumption of office, his administration decided to implement the plan that the entire market prepared and that is why every year the SEC comes up with some initiatives that the market can drive.

    During a visit to the management of Nigeria Television Authority (NTA) in Abuja, Gwarzo listed some of the achievements in implementing the master plan to include recapitalisation, direct cash settlement, e-dividend, national investors protection fund (NIPF), and corporate governance scorecard among others.

    He emphasised that the only way to attract retail investors back to the market is to ensure that concrete steps are taken to adequately address their concerns, especially the issue of unclaimed dividend.

    “The issue of unclaimed dividends, which according to our records is in excess of N80billion, will also be a thing of the past. These unclaimed dividends came about from dividends of small stakeholders like you and me and we need to ensure that they are claimed,” he said.

  • Fidson Healthcare to open N9b WHO factory

    Fidson Healthcare to open N9b WHO factory

    •Govt urged to prioritise drug manufacturing

    Fidson Healthcare Plc at the weekend took select journalists on a tour of its newly completed World Health Organisation (WHO)-standard manufacturing factory with a call on the government to prioritise domestic manufacturing of drugs.

    Glistering in the daylight sun of Ota, Ogun State, the new plant, arguably the largest pharmaceutical manufacturing facility in Africa, is one of the few that had been shortlisted for WHO certification in Nigeria. The new plant is equipped to produce six distinct product lines-tablets, capsules, oral liquids, creams and ointments, dry powder and intravenous infusions to meet Nigeria and regional medicine needs.

    Operations, Fidson Healthcare Plc Director, Mr Abiola Adebayo, who led the tour, said the factory had gulped N9 billion, with the funding generated through debts and internally generated revenue.

    He said the plant was completed about eight months ago, but it could not start operations immediately because of issues of foreign exchange (forex), which has impeded raw materials sourcing.

    He urged the government to treat medicine as part of national security by implementing policies that will encourage the growth and sustainable development of Nigerian domestic pharmaceutical industry.

    According to him, the government should ensure a stable operating environment that would encourage long-term investments in the healthcare sector while also prioritising local manufacturers in its healthcare policies and transactions.

    He said in spite of the National Drug Policy that stipulates that 70 per cent of the drugs purchased by the government should be from the local industry, many local manufacturers are still not receiving the support of the government, a situation that is compounded by non-payment for supplies by the government.

    He called for a review of the present regulatory environment and regional agreements with a view to protecting the local pharmaceutical manufacturing industry, noting that the ECOWAS Common External Tariff (CET) as it is now, places Nigerian domestic manufacturing in jeopardy.

    According to him, the major issue with the current CET implementation on medicines is the reduction of import duty tariff on finished pharmaceutical products to zero per cent compared with five to 20 per cent duty on raw and packaging materials respectively, thus encouraging importation to the detriment of local manufacturing.

    He said government can protect the local industry by invoking the Import Adjustment Tax of the CET while working on a medium to long-term review of the agreement, adding that Nigeria constitutes 72 per cent of local pharmaceutical industry in the ECOWAS region.

    “We need to take a stand to ensure local pharmaceuticals survive,” Adebayo said.

    Noting that the company had to provide its own infrastructure such as power, water and road in addition to numerous community development initiatives, Adebayo said government should consider the state of Nigerian infrastructure to support domestic manufacturers, who see the operation of Nigerian pharmaceutical industry as a patriotic duty.

    “We need to be protected, we need to be patronised, we need to be paid, we have the quality and we have the same global standards,” Adebayo said.