The Nation Newspaper

Category: Equities

  • May & Baker targets N27b turnover

    May & Baker targets N27b turnover

    May & Baker Nigeria Plc would more than quadruple its turnover to N27 billion in the next five years as the company consolidates plans to become one of the 10 largest conglomerates in Nigeria.

    In a preview of the prospects of the company during a factory tour to the company’s manufacturing complex in Ota, Ogun State, by capital market stakeholders, group managing director, May & Baker Nigeria Plc, Mr Nnamdi Okafor said the company has laid the groundwork for growth and would going forward harness the potential of the diversification of its business.

    Audited report of the company for the year ended December 31, 2011 showed a turnover of N4.8 billion, a 4.5 per cent increase from N4.6 billion recorded in 2010. Profit after tax stood at N255.5 million, up by 32.5 per cent from N192.9 million attained in 2010.

    Okafor outlined that the company would collaborate with international partners as part of measures to generate more funds and technical support, noting that the management is in “a hurry to achieve results.”

    He said four firms have already indicated interest to take advantage of the state-of-the-equipment available at company Pharma Centre, a WHO-standard pharmaceutical manufacturing plant ensconced in the Ota complex.

    According to him, the company would continue to diversify to cover all areas of healthcare and wellness while growing a West African brand of international standard.

    He said the company has done well in the past seven years with decent revenue, profit and dividend records while it has also engaged in rapid diversifications and made many bold fixed assets investments profile.

    “Our goal now is to turn our good company into a great company with consistently impressive profit and loss accounts and balance sheet. We need to build a wall of perceived invincibility and perpetuity around us with strong brand and strong institution,” Okafor said.

    He outlined that the company’s turnaround strategies would entail recapitalisation of its business and improvement in its ability to compete in current businesses.

    He added that the company would step up marketing and research and development efforts while also improving on its operational efficiency through process re-engineering and automation of its processes.

    At the recent Annual General Meeting (AGM) of the company, chairman, May & Baker Nigeria, Lt. Gen, Theophilus Danjuma (rtd), said the company was hopeful improving significantly on dividends to shareholders as it begins to reap from the benefits of its investment in the ultramodern pharmaceutical manufacturing centre.

    He said the dividend payout of 10 kobo per share being paid for the 2011 business year would serve as benchmark for future returns, assuring shareholders that the board and management would continue to identify new areas of investments for future growth.

    “We are very positive about the future of our company. We intend to aggressively drive our business diversification and market penetration and expansion strategies, leveraging on the potentials of our newly completed world class manufacturing plant,” Danjuma said.

    He intimated the shareholders that May & Baker is currently working on a number of new products, which are expected to be launched before the end of this year.

  • Investors stake N16b on equities

    Investors stake N16b on equities

    THE Nigerian stock market recorded a turnover of 1.859 billion shares valued at N16.35 billion exchanged hands in 28,383 deals last week, indicating a show down from turnover of 2.184 billion shares valued at N17.495 billion tradedin 27,786 deals two weeks ago.

    The Financial Services sector dominated the activity chart recording the highest trading volume of 1.422 billion units of shares valued at N10.579 billion in 17,662, representing 76.50 per cent, 64.70 per cent and 62.23 per cent, of the volume, value and number of deals executed on the stock market during the week.

    The conglomerates sector followed with 120.099 million shares valued at N271.453 million in 911 deals. The top two sectors accounted for 1.542 billion shares valued at N10.850 billion in 18, 573 deals, thus accounting for 82.96 per cent, 66.36 per cent and 65.442 per cent of the volume, value and number of deals respectively.

    Similarly, the banking sub sector was the most active with 1.262 billion shares. Activity in the sub sector was mostly driven by shares of UBA Plc, First Bank of Nigeria Plc and Zenith Bank Plc which accounted for 481.427 million shares, representing 38.16 per cent, 33.85 per cent and 25.90 per cent of the turnover recorded by the sub sector, sector and total volume for the week.

    Also traded during the week were 4,700 units of NewGold Exchange Traded Funds (ETFs) valued at N12.488 million traded in 12 deals in contrast to a total of 2,200 units valued at N5.959 million.

    The NSE All-Share Index swapped in eight deals penultimate week, which opened the week at 27,287.85 closed at 27,296.35, thereby appreciating 8.50points or 0.03 per cent. Market capitalisation of equities increased by N 2.710 billion (0.03 per cent) to close at N8.698 trillion.

    Also, the Bloomberg NSE Consumer Goods and NSE-Lotus II Indices appreciated by 0.46 per cent and 3.54 per cent, respectively, while Bloomberg NSE 30, Bloomberg NSE Banking, Bloomberg NSE Insurance and Bloomberg NSE Oil and Gas indices declined by 0.07 per cent (+40.03 per cent YTD), 0.57 per cent ), 3.95 per cent and 3.20 per cent.

  • Unity Bank begins sale of 9 subsidiaries

    Unity Bank Plc has started divesting from its non-core banking subsidiaries with a view to complying with the new banking regulatory regime introduced in 2010 by the Central Bank of Nigeria (CBN).

    Under the CBN’s Scope of Banking Activities and Ancillary Matters No 3, 2010, banks are required to fully concentrate on core banking functions. The new model requires banks to either sell all non-core banking businesses or form a holding company to hold such non-core banking businesses including activities such as insurance, asset management and capital market operations.

    Most banks including Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank (GTB) Plc, Skye Bank Plc, Sterling Bank, Zenith Bank, Unity Bank and Wema Bank have chosen to divest from non-banking subsidiaries.

    Unity Bank at the weekend indicated it has commenced and made appreciable progress in the divestments from non-core banking subsidiaries.

    In a regulatory filing with the Nigerian Stock Exchange (NSE), the bank indicated that it has already sold three subsidiaries including Unity Registrars Limited, Pelican Prints Limited and Northlink Insurance.

    It indicated it was about completing the deal for Caranda Management Services Limited, which sale process was just about 14 per cent to complete. Two other subsidiaries- Hexadix Properties Limited and Unity Bank Bureau De Change Limited have also started discussions with potential new investors with the processes almost 39 per cent and 27 per cent completed respectively.

    Unity Bank also informed that it has identified a buyer for the purchase of Unity Investment & Capital Limited, while Newdevco Investments & Securities Company Limited and Unity Kapital Assurance Plc are currently being packaged for sale to identified buyers.

    The bank stated that it intended to conclude the whole divestment process on or before December 31, 2012.

  • FMCG stocks lead equities’ rally with 301.27% return

    Fast moving consumer goods (FMCG) companies are ahead in the upswing at the Nigerian Stock Exchange (NSE) with a sectoral year-to-date return of 301.27 per cent, almost 10 times of the average overall market return of 31.63 per cent.

    The NSE Consumer Goods Index advanced by 1.94 per cent last week as several FMCG stocks including Nestle Nigeria, Guinness Nigeria, Cadbury Nigeria and Nigerian Breweries dominated the top gainers’ list.

    The NSE Banking Index indicated the second highest year-to-date return of 61.91 per cent after rising by 7.70 per cent last week. The NSE 30 Index, which tracks the 30 most capitalised stocks, reflected significant rally by major companies with average return of 40.14 per cent over the nine and a half months. It rose by 3.89 per cent last week.

    The NSE Lotus Islamic Index- which tracks a portfolio of Shari’a-compliant stocks indicated average year-to-date return of 34.10 per cent after the ethical index had risen by 2.03 per cent last week. The NSE Insurance Index showed slight recovery with a gain of 1.59 per cent last week but its year-to-date return remained negative at -1.80 per cent. The NSE Oil and Gas Index slipped by 0.34 per cent last week, worsening the average return so far this year to -26.02 per cent.

    The benchmark index at NSE, the All Share Index (ASI), rose by 3.20 per cent last week to close at 27,287.85 points while aggregate market capitalization of all equities increased by N275.586 billion to close at N8.695 trillion.

    Nestle Nigeria led the advancers with a gain of N10 to close at N625 per share. Guinness Nigeria rose by N4.40 to close at N281.60. Ashaka Cement gained N2.75 to close at N19.50. Cadbury Nigeria rose by N2.44 to close at N30 while Nigerian Breweries added N2.15 to close at N142.

    Altogether, 50 stocks recorded capital gains last week as against 25 stocks that suffered depreciation, indicating a ratio of two gainers to one loser.

    Total turnover stood at 2.184 billion shares worth N17.495 billion in 27,786 deals. The financial services sector accounted for 1.736 billion shares valued at N12.268 billion in 16,453 deals. The consumer goods sector followed with 166.772 million shares valued at N3.570 billion in 5,443 deals.

    Turnover was largely driven by activity in the shares of Access Bank Plc, Zenith Bank Plc and Fidelity Bank Plc which altogether accounted for 569.875 million shares, representing 26.09 per cent of total turnover for the week.

  • Nestle Nigeria leads equities as investors gain N138b

    Nestle Nigeria leads equities as investors gain N138b

    Nestle Nigeria set a new market-wide all-time high of N615 value per share last week as investors pocketed about N138 billion in new capital gains.

    Nestle Nigeria led a compact but impactful pack of fast moving consumer goods companies that provided impetus for further market recovery. Other major gainers during the week included Guinness Nigeria, Cadbury Nigeria, Flour Mills of Nigeria, Nigerian Breweries and GlaxoSmithKline Consumer Nigeria (GSK).

    Nestle Nigeria’s share price improved by N35, representing an increase of 6.03 per cent. Guinness Nigeria followed with a gain of N17.20 to close at N277.20. Cadbury Nigeria added N3.62 to close at N27.56. Flour Mills of Nigeria gained N3.32 to close at N64.99 while Nigerian Breweries and GSK added N2.85 and N2 to close at N139.85 and N38 respectively.

    Gains by 48 stocks added N138 billion to aggregate market capitalisation of quoted equities, which rose from opening value of N8.282 trillion to close at N8.420 trillion. The All Share Index also reflected the gain with closing index of 26,442.67 points as against its opening index of 26,011.64 points.

    Total turnover stood at 4.76 billion shares worth N40.472 billion in 20,364 deals, a marked improvement from a total of 1.70 billion shares valued at N14.54 billion exchanged in 24,202 deals in previous week. The consumer goods sector accounted for 3.261 billion shares valued at N32.447 billion in 3,902 deals.

    The financial services sector followed with 905.262 million shares valued at N6.236 million in 11,327 deals.

    Turnover was largely driven by the transfer of majority equity holdings in Dangote Flour Mills Plc. The flour mills accounted for 3.178 billion shares, representing 66.78 per cent total turnover for the week.

    On the secondary over-the-counter bond market, investors staked N198.96 billion on 185.76 million units through 991. This represented a slowdown from the previous activity level, when investors staked N247.31 billion on 229.84 million units in 984 deals.

  • What’s the next level for Nestle Nigeria?

    What’s the next level for Nestle Nigeria?

    Nestle Nigeria opens today with a year-to-date gain of 29.6 per cent, about 7.4 percentage points above the average return of 22.22 per cent at the Nigerian stock market. For a highly capitalised company with locked in volumes in the hands of core investors and long-standing buy-and-hold minority investors, this is a significant capital appreciation.

    With record personal and countrywide new high month-on-month, Nestle Nigeria is unarguably the best performing stock. At current market consideration of N577.50, is latest high, Nestle Nigeria is nearly twice the value of the closest-priced stock. All through the ups and downs, the stock has consecutively increased its share price in the past eight months.

    The 2012 performance reflected the historic trend of the food and beverages stock over the years. While the market tottered on the negative, Nestle Nigeria has consistently delivered positive full-year returns.

    As the recession shook the market in 2009, it more than doubled its share price from a low of N104.50 to a high of N247.72 and eventually closed at N239.50. The closing price for 2009 became the lowest price for 2010 as the company’s share price rose to a high of N401 and eventually closed the year at N368. In 2011, as the market stumbled with a negative year-to-date return of 19.5 per cent, Nestle Nigeria posted a positive return of 20.92 per cent, setting a new high of N470 per share.

    The company’s share price closed at N445.66. Besides setting new highs, Nestle Nigeria has also continuously set a higher low, indicating strong resilience that reassures on the share price. Lowest market value per share rose from N104.50 in 2009 to N239.50 and N367.83 in 2010 and 2011 respectively. It has maintained a down limit of N400 so far this year.

    Relating earnings to price

    Nestle Nigeria’s upwardly share price reflected the company’s strong fundamentals. With a dividend per share of N12.55 in 2009, bonus of one for five shares and cash dividend per share of N12.55 for the 2010 business year and another N12.55 for the 2011, Nestle Nigeria has consistently declared profit and made returns to shareholders over the decades. This sense of reliability reinforces the blue chip status of the stock. Latest audited report and accounts for the year ended December 31, 2011 still showed strong fundamentals, although the company appeared to be struggling with operating and interest expenses.

    Total assets rode on the back of significant increase in fixed assets to N76.94 billion compared with N60.35 billion in 2010, an increase of 27.5 per cent. Nestle Nigeria had sustained appreciable growth in sales during the year but rising costs, especially surging finance expenses, counterbalanced sales growth, leaving the company with profit growth of 1.6 per cent in 2011 as against 32.4 per cent in 2010.

    Total sales rose by 22.3 per cent from N80.11 billion to N97.96 billion. Profit before tax was almost unchanged at N18.54 billion in 2011 as against N18.24 billion in 2010. Profit after tax rose by 33.4 per cent from N12.60 billion to N16.81 billion. With these, basic earnings per share improved by 11 per cent from N19.08 in 2010 to N21.20 in 2011. Net assets per share rose by 32 per cent from N22.50 in 2010 to N29.62 in 2011.

    Dividend expectation

    But while the fundamental performance in 2011 showed a mixed-grill, Nestle Nigeria appears set for improved performance in 2012. Already, the board of the company has forecast that turnover would rise to N112.97 billion in 2012 while profit before tax and profit after tax could be N19.77 billion and N16.89 billion respectively. This implies possible earnings per share about N21.30 for 2012.

    But emerging results indicate that the company may surpass the fundamental targets for this year. Interim report for the first quarter ended March 31, 2012 showed a net profit of N6.17 billion in 2012 as against N2.57 billion in comparable period of 2011. Profit before tax had risen from N3.46 billion in first quarter 2011 to N7.35 billion in 2012. Turnover stood at N28.67 billion in 2012 as against N20.38 billion in 2011.

    By the second quarter, the food and beverages company witnessed substantial growths in sales and profitability. Turnover rose by 27 per cent to N56.68 billion by the six-month period ended June 30, 2012 as against N44.62 billion recorded in comparable period of 2011. Profit after tax jumped by 51.6 per cent to N9.85 billion in 2012 as against N6.49 billion in 2011. This indicated net earnings per share of N12.42 in first half 2012 compared with N8.18 in corresponding period of 2011.

    With these, Nestle Nigeria has made enough within the first half to cover its full-year dividend for 2011. Besides, the earnings outlook appeared strong. Given the first half performance, there is possibility that the company may surpass its modest full year profit forecast by double digit, giving the dividend-paying stock a new impetus for sustained rally.

    Besides, in a market still characterised by uncertainties and questions about corporate governance, Nestle Nigeria’s overall image of stability and consistency will continue to be major attraction. The compact nature of the outstanding shares of the company and the preponderance of buy-and-hold retail investors that see the stock as their nest eggs will also continue to mediate the share price fluctuation, making it resistant to downtrend.

    Most investors holding the free float shares don’t easily sell off. As a consistent dividend-paying stock, Nestle Nigeria provides cushion against the downturn at the secondary market. With recent huge investments in new factory and innovations, the company appears to have operational supports to drive fundamentals and by extension, market consideration.

    However, the general recovery at the stock market might embolden and turn the attention of investors to valuable low-priced stocks, with temptation to capitalise gains from stocks such as Nestle Nigeria to spread to other equities. But for investors in Nestle Nigeria, the assurance of the irreversible low is quite more certain.