The Nation Newspaper

Category: Equities

  • Foreign investors dump Nigerian equities

    •NSE loses N1.44tr

    Foreign investors are scaling down their Nigerian portfolios as global concerns about Nigeria’s macroeconomic, political and security outlook pressured the stock market to a whooping loss of N1.44 trillion last week.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) dropped to N11.001 trillion at the weekend as against its opening value of N12.437 trillion for the week, representing a loss of N1.44 trillion.

    The All Share Index (ASI), the main composite index that tracks all quoted equities, dropped by 11.54 per cent to 33,216.31 points compared with 37,550.24 points recorded as index-on-board for the week. The spiral decline exacerbated the bearishness that had gripped the market in October.

    Nigerian investors lost an average of 8.88 per cent in October, equivalent to about N1.17 trillion, as the stock market set on a grueling fourth quarter that looks to exacerbate the recession at the equities’ market.

    Aggregate market value of all quoted equities closed October at N12.437 trillion compared with the opening value of N13.607 trillion for the month, representing a loss of N1.17 billion. The ASI closed October at 37,550.24 points as against 41,210.10 points recorded as opening index for the month.

    The decline in October pushed the average year-to-date for the past 10 months to -9.14 per cent. This simply amounted to a loss of N789 billion, although the average decline in market capitalisation was moderated by new listings.

    The average-year-to-date return last week rose to 19.63 per cent.

    Stockbrokers attributed the steep decline to the open market orders by foreign investors exiting their positions in Nigerian equities.

    Analysts at Cowry Asset Management Limited, a top investment banking firm, said the continued onslaught on Nigerian equities was “due to outflows of foreign portfolio investments”.

    A six-month report for the first half ended June 30, 2014 showed that foreign investors accounted for 60.84 per cent of total turnover value in the Nigerian stock market as against 39.16 per cent recorded by Nigerian investors.

    Total foreign transactions stood at N705.15 billion as against N453.91 billion by Nigerian investors. Total transactions during the period thus stood at N1.159 trillion. However, there were more outflows than inflows with net foreign deficit of more than N100 billion. Total foreign outflows stood at N402.63 billion as against foreign inflows of N302.52 billion.

    Earlier reports had indicated general decline in foreign investments as the overall trend continued to show net deficit with outflows more than inflows. While foreign participation declined from 75.25 per cent in April to 45.56 per cent in May, domestic participation more than doubled from 24.75 per cent to 54.44 per cent.

    The five-month report for the period ended May 31, 2014 detailed month-on-month as well as periodic transactions by both foreign investors and Nigerian investors.

    According to the report, the quantity of total foreign transactions dropped by about N47 billion in May to N91.9 billion, its lowest position in four months. Besides, the inflow- the buy side of the foreign transactions, declined by about N24 billion from this year’s high of N65.1 billion in April to N41.3 billion in May, its lowest position in three months.

    Total transactions trended to its high of N201.61 billion in May, driven largely by significant increase in transactions by Nigerian investors, which rose from N45.64 billion in April to N109.75 billion in May.

    Five-month cumulative analysis however still underlined the dominance of foreign investors, who accounted for about 63 per cent of the turnover on the NSE during the period. Aggregate turnover during the period stood at N933.55 billion, consisting of N587.15 billion from foreign investors and N353.41 billion from Nigerian investors.

    Buy-sell analysis of the foreign transactions showed that foreign investors had taken out more than they invested during the period. Foreign outflows stood at N353.41 billion within the period as against inflows of N233.74 billion.

    In April, foreign investors traded N138.79 billion worth of shares including sales transactions of N73.73 billion and buy transactions of N65.06 billion. Total domestic transactions stood at N45.64 billion. Total transactions during the month stood at N184.43 billion.

    The foreign sale-buy trend in April followed the same trend in recent months, although the momentum of buy transactions appeared to be picking up. In the first quarter, nearly two-thirds of foreign portfolio transactions were on the sell side.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that Nigerian investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    Month-on-month analysis showed that there was increase in the momentum of foreign transactions in March 2014, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totaling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March 2014 contrasted sharply with the situation in March 2013 when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January 2014 and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January 2014 to N198.70 billion in February 2014, foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

  • Ecobank grows Q3 net profit by 31% to N52b

    Ecobank Transnational Incorporated (ETI) Plc recorded impressive bottom-line in the third quarter as net profit rose by 31 per cent to about N52.5 billion.

    Key extracts of the interim report and accounts of ETI for the nine-month period ended September 30, 2014 showed that the financial holding company grew its top-line by 16 per cent to N207.75 billion in third quarter 2014 while interest income rose by about 11 per cent to N187.67 billion. Profit after tax rose to N52.49 billion in 2014 as against N39.96 billion in comparable period of 2013.

    Further analysis showed that the company’s cost to income ratio reduced to 66.56 per cent in 2014 from 71.20 per cent in 2013. Additionally, net margin moved to 19.51 per cent as against 17.23 per cent in previous year. Ecobank was aggressive about lending as its loans to deposit ratio jumped to 71.63 per cent from 66.80 per cent while loans and advances were up by 16.55 per cent to N1.97 trillion in third quarter 2014 as against N1.69 trillion by third quarter 2013.

    Deposit from customers also rose by 8.69 per cent to N2.75 trillion as against N2.53 trillion in comparable period of 2013. Total assets rose by 10.69 per cent to N3.83 trillion in 2014 compared with N3.46 trillion in 2013.

    Group chief executive officer, Ecobank Transnational Incorporated (ETI) Plc, Albert Essien, said the company’s strong results for the first nine months of 2014 showed solid revenue growth and a further reduction in our cost-income ratio.

    According to him, the sustained improvement in the company’s Nigeria business, the largest of its 36 countries in Africa, and another strong treasury performance, helped to increase earnings per share by 26 percent.

    Essien noted that the company’s capital position was significantly enhanced recently, with the conversion of $75 million of loans by IFC funds in the third quarter and Nedbank’s subsequent investment of $493 million to reach a 20 per cent shareholding in ETI.

    “The management team and board remain optimistic but vigilant going into the fourth quarter given the macroeconomic and other challenges in some of our countries where we have operations.  We pay particular tribute to the dedication and professionalism of our staff in countries affected by the current Ebola epidemic as they work to serve our clients in very difficult circumstances,” Essien said.

  • Sterling Bank seeks N50b in new capital issues

    Sterling Bank seeks N50b in new capital issues

    Holds EGM tomorrow

    Sterling Bank Plc plans to raise about N50 billion in a new round of capital raising aimed at further deepening the bank’s balance sheet and increase its lending capacity.

    Sterling Bank would be raising about N20 billion through a special placement to identified strategic investors and more than N30 billion in another yet-to-be-specified instrument.

    Shareholders of the bank are expected to meet tomorrow in Lagos to approve new capital raising.

    Shareholders are expected to approve a resolution authorizing the board of directors of the bank to issue about 7.472 billion ordinary shares of 50 kobo each at N2.65 per share to Messrs. Silverlake Investments Limited or such other identified strategic investor.

    In another resolution, the board of the bank is seeking to raise additional capital up to $200 million or its equivalent in Naira. The fund could be raised through any or a combination equity, global depository receipts, quasi equity, convertible loans, medium term notes, bonds and any other debt instrument.

    Besides, the bank plans to explore public offering, rights issue, private placement either as a standalone transaction or by way of a programme, in such tranches, series or proportions, at such coupon or interest rates, within such maturity periods, at such dates and time subject to such terms and conditions, including through a book building process or other processes as the directors may deem fit and subject to the approval of the regulatory authorities.

    The meeting is expected to empower the directors to take any action required to give effect to the resolutions on the capital raising.

    Managing director, Sterling Bank Plc, Mr. Yemi Adeola, said the bank plans to complete its new capital raising before the end of the year.

    “Following our extra-ordinary general meeting billed for November 11, we plan to conclude the ongoing private placement before the end of the year. This will put us in a strong competitive position to achieve our growth plans in coming quarters. In the meantime, we remain focused on efficiency and are optimistic that the full year returns will be in line with our earlier management guidance,” Adeola said.

    According to him, as part of the initiatives to support its retail banking proposition, the bank has re- aligned its business by market segments for a more focused market reach while it has continued to increase its transaction channels and it is on track to deliver additional 21 branches and 500 Automated Teller Machines (ATMs) by the end of the year.

    The new capital is expected to strengthen the bank’s performance, which has successively improved over the periods. Interim report and accounts of the bank for the third quarter ended September 30, 2014 showed that while gross earnings grew by 12.1 per cent, net interest income rose by 32.8 per cent. This further bloomed into 41.3 per cent and 39.2 per cent in pre and post tax profits respectively.

    Gross earnings closed September 2014 at N73.01 billion as against N65.12 billion recorded in comparable period of 2013. Net interest income rose from N24.22 billion in third quarter 2013 to N32.1 billion in third quarter 2014. Profit before tax jumped to N8.50 billion in 2014 as against N6.02 billion in 2013. After taxes, net profit rose from N5.07 billion to N7.06 billion.

    The bank’s pre-tax profit margin rose from 9.24 per cent in third quarter 2013 to 11.6 per cent in September 2014, underlying the improving profitability of the bank.

    Adeola said the performance of the bank was driven by increasing brand acceptability as shown in its growing revenues and reduction in impairment charges.

    He noted that the 41 per cent growth in profit before tax despite pressures on earnings arising from monetary policy changes was driven by improvements in revenues and a 30 per cent reduction in impairment charges.

    According to him, interest income increased by 15 per cent, while interest expense declined by three per cent resulting in a 32 per cent growth in net interest income. The bank recorded a 20 per cent growth in total assets to N847 billion and a 19 per cent growth in deposits to N679 billion with a 100 basis points reduction in cost of funds to 4.9 per cent.

     

  • Stockbrokers mull funding for entertainment industry

    Stockbrokers mull funding for entertainment industry

    The Nigerian entertainment industry was the focus yesterday at the annual conference of the Chartered Institute of Stockbrokers (CIS) with a consensus among key stakeholders that the capital market is the main leverage to unleash the potential of the entertainment industry.

    Key speakers at the conference, with the theme: The Key Catalyst to the Development of the Entertainment Industry in Nigeria, including the director general, Securities and Exchange Commission (SEC), Ms Arunma Oteh and president, Chartered Institute of Stockbrokers (CIS), Mr. Albert Okumagba, agreed that long-term funding from the capital market would provide the much-needed elixir for the development of the entertainment industry.

    According to Oteh, the funding challenge being faced by the entertainment industry in Nigeria can be resolved with long term capital from the stock market.

    She noted that the entertainment industry can provide immense employment and help in solving Nigeria’s unemployment problem if it can surmount the funding challenge adding that SEC has been collaborating with the Nigerian entertainment industry to sensitise Nigerians on the importance of savings and investment.

    “Our plan is to continue to leverage on the industry to teach our children the importance of savings. Since independence Nigeria has had world renowned entertainers. Nigeria is a nation that is grossly misunderstood but the entertainment industry has continued to project a positive image for the country. At the moment, the entertainment industry contributes 4.1 per cent to the nation’s gross domestic products (GDP), this tells you the potential of the industry if it is well funded,” Oteh said.

    She cited the example of United States of America where capital market funding has played prominent role in development of the film industry.

    “In the US, banks raise money from the bond market for lending to movie production houses; the arrangement is typically asset based lending. JP Morgan, one of the largest investment banks in the world has been raising funds for the film industry in the US since 1920. It had expended a $10 billion credit line to the entertainment industry in 2011. There are currently about 20 banks that are raising funds for lending to Hollywood,” Oteh said.

  • First Bank, Union Bank, Lafarge record N120b profit in 9 months

    First Bank, Union Bank, Lafarge record N120b profit in 9 months

    CBN Holdings Plc, the holding company for First Bank of Nigeria (FBN) Limited and its former subsidiaries, has announced a pre-tax profit of about N74 billion for the third quarter, showing its first strong growth momentum in recent period.

    Also, Union Bank of Nigeria (UBN) Plc grew its pre-tax profit by 22 per cent to N8.3 billion.

    Lafarge Africa Plc recorded pre-tax profit of N38.09 billion during the nine-month period.

    Key extracts of the nine-month report of FBN Holdings for the period ended September 30, 2014 showed improvements in the bank’s top-line and pre-tax profit, although net profit remained suppressed by higher tax provisions.

    Group profit before tax rose to N73.75 billion in third quarter 2014 as against N70.07 billion recorded in comparable period of 2013. The bottom-line performance was driven by appreciable improvement in the top-line. The group’s core commercial banking activities picked up considerably during the period with interest income rising from N239.16 billion in September 2013 to N255.72 billion by September 2014. Net interest income rose to N176.49 billion in 2014 as against N172.43 billion in 2013.

    Further analysis of the top-line showed growths across the segments. Fees and commissions incomes rose from N44.05 billion to N51.22 billion while foreign exchange income increased from N5.05 billion to N17.16 billion.

    With 65 per cent increase in income tax expenses from N10.99 billion to N18.12 billion, net profit after tax was slightly depressed at N55.63 billion in September 2014 compared with N59.09 billion recorded in corresponding period of 2013.

    The group’s balance sheet size built up to N4.19 trillion in September 2014 compared with N3.87 trillion recorded as total assets in December 2013. Shareholders’ funds also rose from its 2013 year-end position of N471.78 billion to close September 2014 at N493.67 billion.

    In the same vein, Union Bank of Nigeria recorded gross earnings of N74.8 billion in third quarter 2014 as against N79.9 billion in comparable period of 2013. Profit before tax rose from N6.8 billion to N8.3 billion while profit after tax increased from N7.6 billion to N8.1 billion.

    Group managing director, Union Bank of Nigeria, Mr. Emeka Emuwa said the third quarter activities were focused on continuing and consolidating the bank’s transformation efforts to ensure it maintains strategic focus in key areas and deliver operating results according to plan.

  • Unity Bank boosts capital with N39.2b

    Unity Bank boosts capital with N39.2b

    Unity Bank Plc has listed the supplementary shares from its recent combined rights and special placement offers, adding N39.22 billion in new equity funds to its capital base and similar amount to its market capitalisation.

    Unity Bank listed a total of about 78.45 billion ordinary shares of 50 kobo each at par value at the Nigerian Stock Exchange (NSE), conclusively rounding off its rights issue of 38.45 billion ordinary shares and special placement of 40 billion ordinary shares, both of which were offered at par value. The supplementary listing significantly impacted on the capital base of Unity Bank and its market capitalisation.

    Speaking at the NSE, managing director, Unity Bank Plc, Mr. Henry Semenitari, noted that the bank’s offers were oversubscribed, an indication of the investing public’s confidence in the bank and its growth agenda.

    He pointed out that the rights issue went across the shareholders of the bank and the entire rights were taken by local investors as there were no foreign investors.

    He said the bank decided on the new equity funds in order to accelerate expansion and create value for shareholders.

    According to him, the new equity funds would be used for branch expansion, investing in human capital, and the development of information technology.

    He said the bank would undertake share reconstruction given the size of its current outstanding shares. Yesterday’s listing brought the bank’s total outstanding shares to 116.90 billion ordinary shares of 50 kobo.

    Semenitari said the bank would explore all avenues to recover debts including the use of the Economic and Financial Crimes Commission.

    He also noted that the bank’s capital adequacy ratio was in compliance with regulatory guidelines adding that all the branches that the new management met when it came on board are operational and plans are ongoing to open more branches.

    In his remarks, managing director, APT Securities and Funds Limited, Mr. Garba Kurfi said Unity Bank has a bright future citing the third quarter result recently released by the bank.

    According to him, with the additional capital and the ongoing debt recovery by the bank, and with the bank’s results so far, the bank may likely reward its shareholder in the next two years.

    The third quarter result for the period ended September 30, 2014 showed that Unity Bank made a profit after tax of N11.05 billion, an increase of 856.83 per cent on N1.15 billion recorded in comparable period of 2013.

  • Unity Bank boosts capital with N39.2b new equity funds

    Unity Bank boosts capital with N39.2b new equity funds

    Unity Bank Plc yesterday listed the supplementary shares from its recent combined rights and special placement offers, adding N39.22 billion in new equity funds to its capital base and similar amount to its market capitalisation.

    Unity Bank listed a total of about 78.45 billion ordinary shares of 50 kobo each at par value at the Nigerian Stock Exchange (NSE), conclusively rounding off its rights issue of 38.45 billion ordinary shares and special placement of 40 billion ordinary shares, both of which were offered at par value.

    The supplementary listing significantly impacted on the capital base of Unity Bank and its market capitalisation and to some extent supported the rising aggregate market capitalisation of all quoted equities at the NSE.

    Speaking at the NSE, managing director, Unity Bank Plc, Mr. Henry Semenitari, noted that the bank’s offers were oversubscribed, an indication of the investing public’s confidence in the bank and its growth agenda.

    He pointed out that the rights issue went across the shareholders of the bank and the entire rights were taken by local investors as there were no foreign investors.

    He said the bank decided on the new equity funds in order to accelerate expansion and create value for shareholders.

    According to him, the new equity funds would be used for branch expansion, investing in human capital, and the development of information technology.

    He said the bank would undertake share reconstruction given the size of its current outstanding shares. Yesterday’s listing brought the bank’s total outstanding shares to 116.90 billion ordinary shares of 50 kobo.

    Semenitari said the bank would explore all avenues to recover debts including the use of the Economic and Financial Crimes Commission.

    He also noted that the bank’s capital adequacy ratio was in compliance with regulatory guidelines adding that all the branches that the new management met when it came on board are operational and plans are ongoing to open more branches.

    In his remarks, managing director, APT Securities and Funds Limited, Mr. Garba Kurfi said Unity Bank has a bright future citing the third quarter result recently released by the bank.

    According to him, with the additional capital and the ongoing debt recovery by the bank, and with the bank’s results so far, the bank may likely reward its shareholder in the next two years.

  • Equity market suffers biggest loss since February

    Equity market suffers biggest loss since February

    The nation’s equity market extended losses into the ninth trading day, as the NSE ASI suffered the biggest daily loss since February, declining 201bps to 38,490.67 points just as the Index has so far shed 6.6per cent in October leaving the YTD performance at negative 6.9 per cent. Market capitalisation declined by an additional N260.1bn to N12.7tn.

    The decline was driven by broad selloffs in the market, particularly in Dangote Cement (2.3 per cent), Zenith (4.6 per cent) and Guaranty (3.6 per cent).

    Investors traded 525.2m units of shares valued at N7.7bn in 4,779 deals (a 24.8 per cent and 66.1 per cent increase in turnover and value).

    All sector indices within our coverage closed in negative territory today. The NSE Oil and Gas Index led the declines with 3.9 per cent, paring the YTD gain to 23.6 per cent.

    The decline was majorly driven by maximum losses in Forte Oil (5.0 per cent), OANDO (5.0 per cent) and Conoil (5.0 per cent). Impressive nine months result of Wema failed to lift the overall negative sentiment in banking stocks, as the index shed 3.6 per cent — pressured by sustained selloffs in Guaranty (3.6 per cent) and Zenith Bank (4.6 per cent).

    Similarly, the Industrial Goods Index shed 3.3 per cent as Cement Stocks retreated – Lafarge (5.0 per cent), CCNN (4.9 per cent), Dangote Cement (2.3 per cent) and Ashaka (2.3 per cent). The Insurance Index declined 0.4 per cent while Consumer Goods waned 0.1 per cent.

    Market Breadth as measured by the advancers/decliners ratio closed at 0.2x (11 gainers and 53 losers) significantly below par at 1.0x.

    At the close of trading, 7up (10.2 per cent), Cutix (4.8 per cent and Honeywell (4.3 per cent) led gainers, while Caverton (9.1 per cent), Forte Oil (5.0 per cent) and Lafarge (5.0 per cent) led losers.

  • Forte Oil records over N4b profits

    Forte Oil records over N4b profits

    FOR Forte Oil Plc, the yearend results of September 30, 2014, released Wednesday for the third quarter, showed that the company grossed N4. 016 billion profits after tax.

    The figure represented a 46.72 per cent increase on the N2.737 billion it declared in the corresponding period of 2013.

    Analysis of the results released by the Nigerian Stock Exchange (NSE) yesterday showed that its revenue increased 33.06 per cent to N122.58 billion compared to N92.13 billion recorded in 2013. Similarly, its total assets grew by 20.30 per cent to N125.92 billion as against the N104.68 billion recorded in the same period in 2013.

    Also, its operating profit went up by 72.29 per cent to N6.35 billion in 2014, while its earnings per share declined by 19 per cent to N2.04 from N2.52 in 2013.

    So far, the company has achieved a 134.74 per cent year-to-date (YTD) share price appreciation in the period under review, moving from N92.87 per share at the beginning of 2014 to N218 per share at the close of business on October 15, 2014.

    Following the company’s excellent performance, the NSE recently promoted it to the league of ‘Highly Priced Stock’ and the company was also recently listed in the Morgan Stanley Capital International (MSCI) Frontier Market Index, one of the world’s leading equity index provider.

    Recently at the company facts behind the figure on NSE, its group chief financial officer, Julius Omodayo-Owotuga, said the company’s successful launch of its newly repackaged lubricants and aggressive consumer engagement activities enhanced its market share.

    He added that the company’s continued expansion of its retail network at strategic locations helped to improve market dominance.

    According to him, we also embarked on aggressive growth and expansion of our industrial/commercial customer base to meet our objective of being the supplier of choice. Another factor that enhanced our performance was the strong performance from Geregu Power Plant despite operational challenges.

     

  • Market capitalisation dips by N2.7billion

    Market capitalisation dips by N2.7billion

    The negative trend of the NSE All Share Index was sustained yesterday as the local bourse shed 32bps to close at 40,444.39 points.  This pared the YTD and MTD performance of the Nigerian bourse to negative 2.1per cent and 1.9 per cent apiece.

    The decline was driven by profit taking within the banking basket — Zenith Bank (3.0%), GTBank (1.4 per cent), FBN (2.9 per cent), Stanbic (2.9 per cent) and UBA (2.6 per cent). Also, activity levels measured by volume and value traded declined 65.2 per cent and 55.8 per cent to 242.9m and N2.7bn.

    Most sector indices also closed in the red with the exception of the Industrial Index, appreciating 0.7 per cent on the back of Dangote Cement (0.9 per cent) and Lafarge Wapco (0.8 per cent). The Banking Index led the sector the declines, shedding 1.6 per cent – pressured by profit taking in Zenith Bank (3.0 per cent), UBA (2.6 per cent) and GTBank (1.4 per cent). The Insurance Index equally declined 0.3 per cent driven by price declines in International Energy Insurance (3.5 per cent) and N.E.M Insurance (1.3 per cent).  The Oil and Gas and Consumer Goods Indices both closed flat.

    The Market Breadth, as measured by the advancers/decliners ratio, closed weaker today at 0.5x with 18 gainers and 38 losers. Top gainers at the end of today’s trading session include Ikeja Hotel (9.9 per cent), Champions Breweries (4.9 per cent), AFRIPUD (2.2 per cent), while AG Leventis (9.5 per cent), UBCAP (4.7 per cent) and UAC-PROP (4.6 per cent), topped the losers chart.