Category: Equities

 Taofik Salako, Deputy Group Business Editor

TRANSNATIONAL Corporation of Nigeria (Transcorp) Plc is optimistic several measures taken to address operating constraints and improvement in the operating environment would lead to continuing growths in the years ahead.

Against the background of the decline in the performance of the group in 2019, the management of Transcorp explained that the group performance was partly impacted by the decline in turnover in the power business due to gas supply, transmission and technical issues during the period.

President, Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Valentine Ozigbo, said the company contended with significant operational challenges in 2019, including severe gas shortages, mandated reduction in generation from the National Control Center and importantly, revenue exposures from delayed payment of receivables in our power business.

He outlined that the company has taken several actions aimed at proactively and sustainably addressing these issues including activation of its gas supply and aggregation agreement, guaranteeing gas supply to its power plant in Ughelli and proactive engagement with gas transporter to prevent further vandalism of gas pipelines.

He said the company has also engaged regulatory agencies to review regulatory actions negatively impacting power evacuation from its plant while carrying out preventive maintenance of its turbines.

“The actualisation of these steps, as well as improvement in market payment for electricity generation, will facilitate our projected revenue expansion in 2020 and in coming years. This is in addition to even more significant contributions from our hospitality business, which is expected to benefit from the planned introduction of new service offerings,” Ozigbo said.

He noted that the discharge of the hotel from the Bureau of Public Enterprise (BPE) post-privatisation monitoring in the outgoing year, further speaks to its operational excellence and top-line corporate governance.

Transcorp cut its dividend payout by half after net profit dropped by 82 per cent in 2019. Key extracts of the audited report and accounts of Transcorp for the year ended December 31, 2019 had shown declines in all key performance indicators. Turnover dropped from N104.16 billion in 20198 to N76.35 billion in 2019.

Profit before tax slumped to N7.9 billion in 2019 as against N22.4 billion in 2018. Profit after tax also dropped from N20.63 billion in 2018 to N3.70 billion in 2019. Earnings per share consequently declined from 23 kobo in 2018 to 4.0 kobo in 2019.

The Board of Directors of the conglomerate has recommended payment of a dividend per share of one kobo for the 2019 business year compared with a dividend per share of two kobo paid for the 2018 business year.

Transcorp Hotels Plc, a publicly quoted subsidiary of the conglomerate, recorded net profit of N614 million in 2019 as against N3.71 billion in 2018. Profit before tax for the year ended December 31, 2019 had dropped from N5.04 billion in 2018 to N1.12 billion in 2019.Turnover however rose from N17.43 billion in 2018 to N20.41 billion in 2019. Transcorp Hotel declared a dividend per share of 7.0 kobo for the 2019 business year.

 

 

 Taofik Salako, Deputy Group Business Editor

 

 

NIGERIAN equities continued their steep price depreciation yesterday as Nigerian and global markets remained choked under the combined impact of the pandemic Coronavirus and the crude oil crash orchestrated by the wrangling between Saudi Arabia and Russia.

Benchmark indices at the  stock market indicated average decline of 3.7 per cent yesterday, equivalent to net capital depreciation of N457 billion. This brought net losses in the past four days to N1.87 trillion. The sustained decline depressed the average year-to-date return to -15.5 per cent.

The All Share Index (ASI)- the benchmark value index that tracks all share prices at the Nigerian Stock Exchange (NSE)  declined from its opening index of 23,572.75 points to close at 22,695.88 points. Aggregate market value of all quoted equities at the NSE depreciated from its opening value of N12.284 trillion to close at N11.827 trillion. The ASI had opened Monday at 26,279.61 points while market capitalisation opened at N13.695 trillion.

With 44 losers against three gainers, all sectoral indices closed on the negative. The NSE Banking Index declined by 8.5 per cent. The NSE Insurance Index dropped by 5.2 per cent. The NSE Consumer Goods Index depreciated by 2.7 per cent. The NSE Industrial Goods Index dropped by 0.9 per cent while the NSE Oil and Gas Index declined by 0.8 per cent.

The momentum of activities slowed down as turnover dropped by 23.9 per cent to 1.06 billion shares worth N9.81 billion in 5,501 deals. Zenith Bank was the most active stock with a turnover of 433.16 million shares worth N4.70 billion.

“We expect trading activities to close negative for the week,” Afrinvest Securities stated.

MTN Communications Nigeria led the losers with a drop of N10.30 to close at N93.20. Okomu Oil Palm dropped by N6.10 to close at N55.30. Presco declined by N4.45 to close at N40.45. Nigerian Breweries dropped by N3.30 to close at N29.70 while Flour Mills of Nigeria and Julius Berger Nigeria declined by N2.20 each to close at N19.80 and N20.20 respectively.

On the positive side, the three gainers were Stanbic IBTC Holdings, with a gain of N10.30 to close at N93.20; Sky Aviation Holding Company, with a gain of 23 kobo to close at N2.57 and Caverton Offshore Support Group which rose by 21 kobo to close at N2.31.

 

Taofik Salako, Capital Market Editor

 

ACCESS Bank at the weekend declared a total dividend of N23.1 billion as cash payouts to shareholders as the commercial banking group released its audited financial statements showing double-digit growths in incomes and profitability.

The board of the bank recommended distribution of N14.22 billion as final dividend for the 2019 business year in addition to interim dividend of N8.89 billion earlier paid by the bank, bringing total dividend for the year to N23.11 billion.

Shareholders will receive a final dividend of 40 kobo per share in addition to interim dividend of 25 kobo per share, representing a total dividend per share of 65 kobo. The dividend per share of 65 kobo represents an increase of 30 per cent on total dividend of 50 kobo per share paid for the 2018 business year.

Key extracts of the audited report and accounts for the year ended December 31, 2019 showed that the top-line rose by 26.1 per cent while pre-tax profit rose by 11.8 per cent. The top-line performance was driven by a leap of 40.9 per cent in the bank’s core banking interest income. Gross earnings rose to N666.75 billion in 2019 as against N528.74 billion recorded in 2018.  Profit before tax increased from N103.2 billion in 2018 to N115.4 billion in 2019. Profit after tax improved from N94.9 billion to N97.5 billion.

The balance sheet showed a stronger market share as customers’ deposits rose by 65.9 per cent from N2.56 trillion to N4.26 trillion. Total assets jumped from N4.95 trillion in 2018 to N7.15 trillion in 2019. Shareholders’ funds also increased from N482.64 billion to N601.66 billion.

Access BankGroup Managing Director, Mr. Herbert Wigwe has said the bank’s performance was a reflection of its sustainable business model and effective execution.

He said the bank’s focus on retail gained momentum during the year as continued investments in its channels platform resulted in contribution to gross fee and commission income.

According to him, the strong retail contribution demonstrates the effectiveness of the bank’s continued drive around low-cost deposits, on the back of an innovative digital platform.

“Additionally, we will remain disciplined in our efforts to deliver enhanced shareholder value, as we continue to realise the synergies from our newly expanded franchise,” Wigwe said.

 

Taofik Salako, Capital Market Editor

APPLICATION list for the ongoing N16 billion rights issue by UACN Property Development Company (UPDC) Plc will close on Friday, March 13. Application list had opened Monday, February 10.

UPDC is offering 15.96 billion ordinary shares of 50 kobo each to its shareholders at a price of N1 per share. The rights issue was pre-allotted on the basis of 43 new ordinary shares for seven ordinary shares held as at the close of business on September 30, 2019.

Shareholders of UPDC had earlier approved a resolution authorising the board to raise up to N16 billion in new capital through issuance of equities, bonds and other convertible and nom-convertible securities. Shareholders also approved a resolution empowering the board to obtain a N16 billion bridging finance from its parent company, UAC of Nigeria (UACN).

Nigeria’s oldest surviving conglomerate, UAC of Nigeria (UACN) Plc had unveiled a massive restructuring programme that would see the unbundling of its publicly quoted real estate subsidiary, UPDC and its associated company- UPDC Real Estate Investment Trust (UPDC REIT).

Under the first part of the multi-structured restructuring plan, UPDC will float a rights issue of N15.96 billion to reduce outstanding debt to a level that it is serviceable from recurring cashflows. After this, UPDC will unbundle its shareholding in UPDC REIT by directly transferring the shares to its shareholders on the basis of post-rights issue shareholdings. Thus UPDC’s shareholders will become direct shareholders in UPDC REIT.

On the second part, UACN will unbundle its majority equity stake in UPDC by directly transferring its shareholdings in the real estate company to UACN’s shareholders, thus making the existing UACN’s shareholders the direct owners of shares in UPDC. UACN will also unbundle the shares of UPDC REIT allocated to it under the UPDC-UPDCREIT transaction to its shareholders, thus making UACN’s shareholders direct owners in UPDC REIT.

“On the account of UPDC’s unbundling of its interest in the UPDC REIT, post the implementation of the respective strategic initiatives described above, each UAC shareholder will hold shares in three separate entities-UAC, UPDC and the UPDC REIT benefitting from the future prospects of each,” UACN and UPDC stated in a statement on the proposed transactions.

 

Taofik Salako, Capital Market Editor

 

First City Monument Bank (FCMB) Limited, a member of the FCMB Group Plc, has concluded arrangements to launch its maiden issuance under its N100 billion commercial paper (CP) issuance programme.

In a regulatory filing yesterday, the bank stated that it would be raising N20 billion in the first tranche of the N100 billion CP programme. The net proceeds of the 269-day instrument will be used to support the bank’s short-term funding needs.

According to the bank, the CP will serve as additional funding sources for its operations.

Many companies have increasingly turned to CP to raise short-term debt capital as the primary equities market struggles with investors’ apathy.

Union Bank of Nigeria (UBN) had recently floated a N20 billion short-term debt issuance aimed at strengthening the working capital of the commercial bank.

UBN raised N20 billion through the issuance of 180-day and 268-day commercial paper (CP). The new issuance was issued under the bank’s N100 billion Commercial Paper (CP) Programme, which was launched in 2018.

The bank had issued its debut issuance of Series 1 and 2 through which it successfully raised N24.3 billion in January 2019. The new issuance, Series 3 and 4 is targeted at institutional investors including pension and non-pension asset managers, as well as eligible high net-worth investors.

Flour Mills of Nigeria Plc also raised N5 billion in new short-term capital through the issuance of commercial papers (CPs). Flour Mills of Nigeria raised up to N5 billion in the 11th series of its N100 billion CP programme.

Flour Mills of Nigeria offered 270-day CP with effective yield of 9.50 per cent and a discount rate of 8.8777 per cent. The maturity date for the debt issue is September 8.

Nigeria’s most capitalised quoted company and Africa’s largest cement producer, Dangote Cement Plc had in mid 2019 issued new commercial papers to raise N50 billion in new short-term capital. Dangote Cement raised N50 billion in the eighth to 10th series of its N150 billion CP programme. The leading cement company will use the net proceeds to support its short-term funding.

Dangote Cement offered 90-day CP with effective yield of 12.5254 per cent and a discount rate of 10.51 per cent under its 8th series. The 9th series CP was a 180-day instrument with effective and discount yield of 12.5254 per cent and 13.35 per cent respectively. The 10th series CP was a longer tenor 270-day CP with effective and discount yield of 12.6862 per cent and 14.00 per cent.

 Taofik Salako, Capital Market Editor

 

MERISTEM Wealth Management Limited has opened acceptance list for initial public offering (IPO) for two Exchange Traded Funds (ETFs), providing investors with opportunity to diversify their assets and benefit from professionally managed funds.

Meristem Wealth Management Limited, the wealth management subsidiary of Meristem Group, is offering 50 million units of N10 each in its Meristem Growth Exchange Traded Fund and another 50 million units of N10 each under its Meristem Value Exchange Traded Fund.

The Meristem Growth Exchange Traded Fund will track growth stocks on the  stock market while the Meristem Value Exchange Traded Fund will track value stocks, both providing investors opportunities to earn above average returns from the basket of underlying stocks.

Meristem explained that the ETFs are style indices which provide investors with a wide array of diversified stocks, professionally selected after satisfying the criteria.

Managing Director, Meristem Wealth Management, Sulaiman Adedokun; said Meristem is seeking new and innovative ways to create wealth opportunities for clients.

He explained that as a way of adding unique value to investors, Meristem Growth ETF is designed to track growth stocks while Meristem Value ETF will track value stocks.

“This strategy avails investors a dual purpose, with an investment style that allows them to meet specific need using abroad product portfolio,” Adedokun said.

He noted that the Meristem ETF can be described as “The Jack of the Trade” as it offers investors opportunities to achieve their investment desires in the equity market while shielding them from excessive risk.

According to him, the Indices being tracked by the ETFs are reviewed semi-annually, to ensure that all stock selected under each index keeps delivering on their promise.

Head, Asset Management, Meristem, Taiwo Yusuf explained that all ETFs earn the underlying dividends of their constituent stocks and the dividends are paid net of all fees.

Head, Wealth Management, Meristem, Damilola Hassan added that Meristem ETFs offer hassle-free and cost-effective investment option to investors.

“With a minimum of N10,000, investors can have access to a wide range of stocks across different sectors including banking, industrial goods, conglomerate, agricultural sectors and a host of others that meet their investment style criteria,” Hassan said.

According to her, with the Meristem Growth and Value ETF, one is able to easily track the performance of the selected stocks without going through the rigor of stock analysis and selection.

She added that at the close of the offer, the ETF will be available for trading on the Nigerian Stock Exchange (NSE) and investors can trade through the Meritrade app, a fully electronic trading platform that delivers speed, efficiency and transparency. The platform which launched in 2014 is available on Playstore and iOS, with Meritrade investors can easily access and trade all listed stocks on the NSE, including the ETFs in real time.

Hassan said Meristem has for the past 16 years been consistent in value creation and innovation within the capital market space.

“In 2018, the Nigerian Stock Exchange awarded Meristem as the best digital broker of the year. In 2018 also, Meristem became the first Nigerian asset management firm to attain compliance with the Global Investment Performance Standards (GIPS) by the CFA Institute. In 2017, Meristem handled the single largest trade in the history of the Nigerian Stock Exchange. The firm has remained a leading player in Nigeria’s competitive investment market with a solid reputation as a highly professional and client-centric firm,” Hassan said.

ETFs are professionally managed vehicles designed to give investors broad exposure to the market by tracking an index or specialized themes that consider factors such as value and growth investing. The ever-growing investment vehicle gives institutional and individual investors access to a wide range of asset classes such as stocks, bonds, commodities, real estate and investment themes, including Shariah investing, sector bias, dividend yield and more.

ETFs can be purchased on the NSE just like stocks and bonds through dealing member firms as well as online trading platforms.

NSE offers a fully electronic trading platform that delivers the benefits of transparency, tremendous speed and efficiency. In December 2011, the first ETF, tracking the price of Gold, was listed on the NSE’s ETF Board, since then a number of equity and fixed income ETFs have been introduced to the Nigerian market.