Category: Equities

By Taofik Salako

 

Central Securities Clearing System (CSCS) Plc, the financial market infrastructure for the Nigerian capital market, appeared to be attracting investors to the NASD OTC Securities Exchange, the over-the-counter (OTC) market for trading in the unlisted securities.

Transaction details at NASD and financial reports of CSCS showed the company as one of the three most active stocks on the NASD while it has delivered capital gains of more than 70 per cent over the past two years.

CSCS, the Central Securities Depository (CSD) and settlement institution for the capital market, has proven to be an alternative way for a stable and diversified exposure to the capital market.

Amid the bearish equity market over the past two years, the shares of CSCS rallied strongly, gaining over 70 per cent over the past two years, delivering stellar return to its shareholders. The performance of the stock partly reflected the steady dividend payment culture of the company.

Its recent 70 kobo per share dividend translated to a dividend yield of 5.8 per cent on its closing share price of N12 at the weekend. Beyond the steady cashflow that the CSCS dividend provides to investors, the strong fundamentals of the company has been a compelling attraction to investors.

CSCS recorded a pre-tax profit of N6.1 billion in 2018 and most analysts expected the company to improve on its bottom-line in the immediate past business year ended December 31, 2019.

Market analysts attributed CSCS’s liquidity and pricing performance at the NASD to the company’s strong governance, stable profitability and increasing earnings diversification.

Chief Executive Officer, Central Securities Clearing System (CSCS) Plc, Mr Haruna Jalo-Waziri has said the company continues to record positive revenue growth despite the many challenges in the operating environment.

According to him, the company continues to see exciting growth potential in its businesses while optimizing the capability of its technologies.

“Overall, our capability to process trades has now significantly increased from hundreds of thousands of trades to millions of trades daily.

This development ensures that we stay well positioned to deliver clearing and settlement services across current and future product offerings of the stock exchanges we render services to,” Jalo-Waziri said.

He added that the company has also continued to automate its processes to eliminate manual interventions and improve turnaround time.

He pointed out that with the rapid digital transformation across industries, the company shall be exploring opportunities from emerging innovations with the potential of disrupting various aspects of the financial ecosystem.

CSCS recently introduced a new web-based application that will enhance the interface between the clearing house and companies’ registrars. The new solution, known as Regconnect, provides easier-to-use platform for exchange of information.

Prior to the solution, registrars could only connect with CSCS through a data exchange application that did not have the ability to process the data being submitted.

Now, Regconnect provides an efficiency lever for the capital market, as the application facilitates day to day processes regarding the maintenance of registers, with immediate validation of all data being submitted to ensure the accuracy of records, and in less time.

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Key extracts of the audited report and accounts of the company for the year ended December 31, 2018 showed that profit before tax rose by seven per cent to N6.09 billion while gross earnings increased by four per cent to N9.08 billion.

Total assets rose by 12 per cent to N35.9 billion. The company’s pre-tax profit margin improved from 65 per cent in 2017 to 67 per cent in 2018.

Market analysts said investors might be missing out on valuable stocks on the NASD noting that investors seeking for portfolio diversification should not only look across sectors but across the markets and trading platforms including stocks listed on the NASD.

Inaugurated in July 2013, NASD is registered by Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) as a Self-Regulatory Organisation (SRO).

It provides the platform for trading of a broad range of instruments over-the-counter (OTC), including equities, bonds and other securities not listed on a formal general securities exchange.

Already, many other leading private and unlisted public companies are listed on the NASD. These included Dufil Prima Foods Plc, the manufacturer of Indomie Noodles; Friesland Campina Wamco Nigeria Plc, manufacturer of Peak Milk brand; and Fan Milk Plc, popular manufacturer of Fan Yoghurts, NIPCO Plc, the majority core investor in 11 Plc, formerly known as Mobil Oil Nigeria Plc; Air Liquide Nigeria Plc Industrial & General Insurance Plc, Nigeria Mortgage Refinance Company, Acorn Petroleum Plc, ARM Life Plc, Afriland Properties Plc, BGL Plc, Consolidated Breweries Plc and Food Concepts Plc.

Others included Geo-Fluids Plc, Golden Capital Plc, Niger Delta Exploration & Production Plc, Partnership Investment Company Plc, Resourcery Plc, Riggs Ventures West Africa Plc, Swap Technologies & Telecomms Plc, Vital Products Plc, Fumman Agric Products Industries Plc, Free Range Farm Plc, FAMAD Plc, AG Mortgage Bank, Trustbond Mortgage Bank Plc, Mass Telecom Innovation (MTI ), Providus Bank and Great Nigeria, Insurance among others.

 

By Taofik Salako

Four insurance companies are finalizing arrangements to raise about N20 billion in new equity funds from existing and new investors as insurers step up efforts to meet new minimum capital requirements and strengthen their positions ahead of expected industry consolidation.

The four insurance companies-Prestige Assurance Plc, Consolidated Hallmark Insurance, AIICO Insurance and Sunu Assurances Nigeria Plc are raising about N20 billion in the next round of capital raising by insurers.

The companies are mostly sourcing for the new capital from existing shareholders, a traditional method for most companies in recent period.

Authorities at the Nigerian Stock Exchange (NSE) at the weekend indicated they have approved the new capital raising by Prestige Assurance and Consolidated Hallmark Insurance.

Prestige Assurance is seeking to float a rights issue of 13.47 billion ordinary shares of 50 kobo each at par value of 50 kobo with a view to raising N6.74 billion from existing shareholders.

The rights issue will be pre-allotted on the basis of five new ordinary shares of 50 kobo each for every two ordinary shares of 50 kobo each held as at the close of business Friday, January 31, 2020.

In preparation for the new capital raising, Prestige Assurance had created additional new 14 billion ordinary shares by increasing its authorised share capital from N3 billion of 6.0 billion ordinary shares of 50 kobo each to N10 billion of 20 billion ordinary shares of 50 kobo each.

The New India Assurance Company Limited, Mumbai, the precursor and founder of Prestige Assurance, is expected to provide more than two-thirds or about N4.7 billion of the new capital raising.

The New India Assurance Company Limited, Mumbai holds 69.50 per cent majority equity stake in the Nigerian subsidiary while Leadway Assurance Company, an unlisted Nigerian insurance company, holds 11.47 per cent equity stake.

Consolidated Hallmark Insurance has received approval to raise new capital through a rights issue of 2.03 billion ordinary shares of 50 kobo each at 52 kobo per share.

In the tradition of rights issue, the new shares to be offered for sale will be pre-allotted to shareholders on the basis of one new ordinary share of 50 kobo each for every four ordinary shares of 50 kobo each held as at the close of business on Monday, February 03, 3020.

Consolidated Hallmark Insurance is expected to raise N1.056 billion through the rights issue in what appeared to be the first round of multiple capital raising programme of the insurance company.

Shareholders of AIICO Insurance and Sunu Assurances Nigeria are scheduled to meet early next month to consider and approve new rights issues.

AIICO Insurance plans to raise up to N3.5 billion in new equity funds from existing shareholders while Sunu Assurances plans to raise N8 billion through any of the various capital raising methods.

AIICO Insurance’s share price closed weekend at 82 kobo per share while Sunu Assurances closed at 20 kobo per share.

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Under the capital raising plan, Sunu Assurances plans to create the headroom for new share issuance through a share reconstruction that will cancel four out of five ordinary shares held by shareholders.

With these, a total of 11.2 billion ordinary shares of 50 kobo each will be cancelled, reducing the company’s issued share capital to 2.80 billion ordinary shares.

Insurance companies are in a hot race to raise new equity capital to meet new minimum capital requirements for various insurance functions as directed by the National Insurance Commission (NAICOM).

NAICOM had in May 2019 released new capital requirements for insurance businesses with a 13-month compliance period for operators to shore up their minimum capital base to the required level.

The minimum paid-up share capital of a life insurance company was increased from N2 billion to N8 billion, non-life insurance from N3 billion to N10 billion, composite insurance from N5 billion to N18 billion while re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

Many insurance companies had recently raised new equity capital in what was regarded as the first round of the capital raising session for the industry.

Wapic Insurance recently closed application list for a N5.9 billion rights issue. It offered 15.61 billion ordinary shares of 50 kobo each to existing shareholders at 38 kobo per share.

The rights issue was pre-allotted to shareholders on the register of the insurance company as at the close of business on Thursday September 19, 2019 on the basis of seven new ordinary shares of 50 kobo each for every six ordinary shares of 50 kobo each already held.

Sovereign Trust Insurance (STI) also raised N2.09 billion through a rights issue. STI offered 4.17 billion ordinary shares of 50 kobo each at a price of 50 per share.

As rights, the new shares issued were pre-allotted on the basis of one new share for every two ordinary shares held as at the close of business on January 15, 2019.

Many other insurance companies including Universal Insurance and Niger Insurance have also launched preliminary processes in their quest to raise new capital, in what may form the third round of capital raising under the current recapitalisation programme.

 

THE board of directors of Infinity Trust Mortgage Bank (ITMB) Plc  has approved 16.7 per cent increase in dividend payout as the mortgage bank grew its net profit by 22 per cent to N400.1 million in 2019.

Directors of ITMB on Thursday indicated that shareholders will receive a dividend per share of 3.5 kobo for the 2019 business year as against 3.0 kobo paid for the 2018 business year.

Key extracts of the audited report and accounts of ITMB for the year ended December 31, 2019 released on Thursday at the Nigerian Stock Exchange (NSE) indicated well-rounded growth. Gross earnings rose from N1 billion in 2018 to N1.38 billion in 2019.

Profit before tax increased from N366.76 million to N444.38 million while net profit after tax rose from N327.22 million to N400.14 million.

With these, earnings per share improved from 6.84 kobo in 2018 to 8.59 kobo in 2019. Managing Director, Infinity Trust Mortgage Bank (ITMB) Plc, Dr. Olabanjo Obaleye had during an interactive session at the Nigerian Stock Exchange (NSE) assured that the mortgage bank would continue to maintain profitability despite the harsh business environment.

He said the key drivers of the bank’s growth has been its strong brand presence, increased customer confidence, marketing efforts, strong risk management and expenditure control.

According to him, the bank has experienced unequivocal growth through the public and private housing initiatives supported with efficient risk management framework.

“The bank will also seek to continuously enhance earnings, profits, and returns to shareholders as well as pursue expansion and growth,” Obaleye said.

He said the bank has articulated and instituted liquidity and information technology contingency plans, capital management plans and dividend policies to guide against business disruptions and depletion of capital. He enjoined the investing public to invest in the bank as it is set to redefine the face of mortgage banking in Nigeria.

He noted that the bank has performed excellently since its listing on the stock exchange in 2013 as the bank has increased its number of shareholders, attained national primary mortgage bank status and opened its Lagos regional office.

“We have received strong industry and regulatory ratings, and many industry and international awards. The bank also added two independent directors and became shareholders with Nigeria Mortgage Refinance Company and Mortgage Warehouse Funding Limited. The bank has held its annual general meeting consistently,” Obaleye said.

According to him, during the period, ITMB has recorded reasonable growth in its key business fundamentals with total assets, loans and investments rising by 51 per cent, 285 per cent and 10,000 per cent respectively. He pointed out that deposits and shareholders’ funds had grown by 122 per cent and 9.0 per cent respectively while gross earnings crossed the N1 billion mark in 2018.

NOTORE Chemical Industries Plc grew its top-line by 89.4 per cent to N8.18 billion in the first three months of the current business year as the agro-allied company begun to reap benefits of its production capacity development.

Key extract of the threemonth report for the period ended December 31, 2019 showed that turnover rose to N8.18 billion in 2019 as against N4.32 billion recorded in comparable period of 2018. Notore’s 12- month business year runs from October to September.

The top-line performance was due to improvement in plant’s reliability, which led to an increase in urea production volumes by 83 per cent from 44,076 metric tonnes in December 2018 to 80,777 metric tonnes in December 2019.

The report showed that Notore’s operating profit declined by 39 per cent from N3.34 billion to N2.04 billion.

This was due to a drop in other income by 78 per cent.

The company however recorded a loss of N1.39 billion in December 2019 with a net finance cost of N3.43 billion. The company expressed optimism that opportunities for better performance are high as the domestic fertilizer market is yet to reach its full potential.

According to the company, the fertilizer market in Nigeria during the period under review was robust as Notore sold all the urea that it produced during the period in both domestic and international fertilizer market.

On the outlook for the 2020 financial year, the company said it expects to exceed its 2019 financial year urea production figures and is also working on various financial initiatives to reduce its finance cost.

“The projected cost savings from Notore’s de-leverage is expected to further boost its profitability, in addition to a forecasted increase in production as TAM progresses.

Furthermore, Notore believes that the current Federal Government policies in the fertilizer space and demand for NPK and NPK specialty blends are quite favourable for its business, consequently, Notore will be producing a significant quantity of NPK and NPK specialty blends this FY to diversify its revenues,” Notore stated.

It added that the demand for urea and compound fertilizers, such as NPK, from the West African markets and neighbouring countries bordering the northern part of the country is also quite significant.

According to the company, constant natural gas, main feedstock for producing urea fertilizer supply has been one of its key strengths, as it is in line to achieve its 1,500 MTD name-plate production capacity following successful draw down of the TurnAround Maintenance (TAM) facility, which will be utilised to increase the plant’s reliability.

The company stated that it has commenced the ordering of critical components of the items under the TAM scope in order to keep with the TAM schedule.

 

By Taofik Salako, Capital Market Editor

THE Federal Government is finalising arrangements to raise about N25 billion through its third green bond issuance. Minister of Environment, Dr. Mohammad Abubakar said this yesterday during a courtesy visit to the Nigerian Stock Exchange (NSE) in Lagos. Nigeria had issued its maiden green bond of N10.69 billion in 2017 and followed this with second issuance of N15 billion in 2019.

Abubakar said the government was planning a bigger issuance under the third series to accommodate more projects as it continues to seek ways of improving sustainable growth.

“We want to embark on more projects that are climate sensitive that will help in eliminating climate problems,” Abubakar said.

He outlined that the net proceeds of the green bond will be used to finance power, aforestation, deforestation, water, energy and agriculture among other projects. He explained that government was moving towards smart agricultural production to produce more foods with minimal impact on the environment.

According to him, the third green bond will further demonstrate government’s commitment to the reduction of greenhouse gas emissions by 20 per cent unconditional and 45 per cent conditional by 2030, as outlined under the Paris Agreement signed on September 21, 2016.

He pointed out that green bond and climate change are the defining issues of today and the future.

“Green project are what we need today because of the climate issue we as a country is facing, we need to change our environment through solid waste management, turning waste to wealth, wasting to resources, these are all the things we need green bond to finance,” Abubakar said.

Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema reiterated the commitment of the Exchange to the development of the green bond market and in partnering with the government for sustainable growth and development.

The Federal Government had in December 2017 launched Nigeria’s maiden sovereign green bond as part of efforts to diversify government revenue and deepen the domestic capital market. Nigeria’s first sovereign green bond was oversubscribed by about N100 million as investors staked N10.791 billion on the N10.69 billion maiden bond.

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The DMO in July 2018, listed the maiden N10.69 billion green bond on the stock market. The five-year bond carries a coupon rate of 13.48 per cent.

The Debt Management Office (DMO), which oversees government’s debt issuances, listed the series 11 green bond, a N15 billion, seven-year green bond issued at a coupon rate of 14.50 per cent on June 13, 2019 on the NSE. The issuance of the green bond and listing were sequel to Nigeria’s endorsement of the Paris Agreement on Climate Change on September 21, 2016.

The Paris Agreement aims to strengthen the global response to the threat of climate change. The NSE and Luxembourg Stock Exchange (LuxSE ) had in 2019 signed a Memorandum of Understanding (MoU) that would see the two exchanges cooperating in promoting cross listing and trading of green bonds in Nigeria and Luxembourg.

The MoU also established an agreement for the two exchanges to collaborate with a view to sharing best practices and organising joint initiatives in their respective market

 

The Lagos State Government and Berger Paints Nigeria Plc have expressed commitment to partner on the infrastructural development agenda of the state government.

At a meeting between directors of Berger Paints and top government functionaries in Lagos, directors of Berger Paints outlined the value propositions of the paints-manufacturing company in line with the agenda of the state government.

Deputy Governor, Lagos State, Dr Obafemi Hamzat, who represented Governor Babajide Sanwo-Olu, said the visit of the management of the paints-manufacturing company was timely at a time when the state government is giving priorities to infrastructure development.

He assured the company of government’s willingness and preparedness to partner for development projects, including capacity building.

He commended Berger Paints for its trailblazing successes in many areas of its operations.

Chairman, Berger Paints Nigeria Plc, Mr Abi Ayida outlined that the company has been operating optimally and profitably because of its innovative policy, dynamic board and management and tested human capital.

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He commended the state government for placing premium on development of infrastructure noting that Berger Paints has a lot to support the government in execution of its infrastructural projects.

He pointed out the leading position of the paints-manufacturing company citing its new automated water-based paint factory, the first of its type in Sub-Sahara Africa.

“Berger Paints Nigeria Plc is the only paint manufacturing company in Nigeria actively operating in the four key segments: decorative and architectural coatings, marine and protection coating, automotive vehicle refinishes and wood finishes. The company has a reputation for being the first in setting standards in the paint industry,” Ayida said.

GTI Securities Limited, one of Nigeria’s leading stockbroking firms, has appointed Mr Thompson Okafor as its managing director.

Okafor, a chartered stockbroker and qualified dealer at the Nigerian Stock Exchange (NSE), is expected to lead the stockbroking firms to higher level of growth. GTI Securities owns Sub Saharan Africa’s largest private trading floor.

Okafor holds a Master’s  in Finance Options from University of Lagos,  Akoka, Lagos State.  He is an Associate member of the Chartered Instituted of Stockbrokers (CIS), the self regulatory body regulating the practice of stockbroking.

Prior to his appointment, he has worked with Premium Capital & Stockbrokers Limited, Summit Finance Company Limited and Aphantee Pharmaceutical Nigeria Limited.

By Taofik Salako, Capital Market Editor

Investors appeared to be making strategic shift to dividend-hunting among low-priced stocks as the bearishness at the Nigerian equities market continued to mitigate share prices of most large and mid-cap stocks.

With more than three decliners to every advancer, the overall market situation at the Nigerian Stock Exchange (NSE) was overtly negative. Benchmark indices for the stock market closed with average decline of 0.35 per cent, equivalent to net capital depreciation of N52 billion. The continuing price depreciation depressed the average year-to-date return to 5.92 per cent.

The All Share Index (ASI)- the common value-based index that tracks share prices at the NSE declined from its opening index of 28,533.40 points to close at 28,432.27 points. Aggregate market value off all quoted equities dropped from its opening value of N14.697 trillion to close at N14.645 trillion.

With 23 decliners to seven advancers, all sectoral indices closed negative, underlining the widespread selling sentiments at the market. The NSE Banking Index dropped by 1.09 per cent. The NSE Consumer Goods Index declined by 0.82 per cent. The NSE Insurance Index depreciated by 0.65 per cent. The NSE Oil and Gas Index dipped by 0.18 per cent while the NSE Industrial Goods Index slipped by 0.08 per cent.

Low-priced stocks dominated the gainers’ list. Union Bank of Nigeria led with a gain of 60 kobo to close at N6.60. Julius Berger Nigeria followed with a gain of 30 kobo to close at N21.50. Law Union and Rock Insurance rose by 7.0 kobo to close at 84 kobo. WAPIC Insurance added 3.0 kobo to close at 33 kobo. Transnational Corporation of Nigeria chalked up 2.0 kobo to close at 99 kobo while Cornerstone Insurance and Lasaco Assurance inched up by one kobo each to close at 60 kobo and 27 kobo respectively.

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On the negative side,  CAP led the losers with a drop of N2.40 to close at N22.60. Dangote Sugar Refinery followed with a loss of N1.35 to close at N12.45. Zenith Bank dropped by 70 kobo to close at N19.20. UAC of Nigeria lost 45 kobo to close at N8.50. Guaranty Trust Bank declined by 40 kobo to close at N29 while Ecobank Transnational Incorporated lost 25 kobo to close at N7.20 per share.

Total turnover stood at 254.86 million shares valued at N3.04 billion in 5,199 deals. Zenith Bank was the most active stock with a turnover of 68.48 million shares worth N1.31 billion. FBN Holdings followed with a turnover of 32.66 million shares worth N193.69 million. Access Bank placed third with 28.83 million shares valued at 28.83 million shares valued at N259.55 million. United Bank for Africa recorded a turnover of 23.63 million shares worth N174.62 million while Guaranty Trust Bank placed fifth with 13.27 million shares valued at N384.7 million.

“For the rest of the week, we expect corporate earnings release to dictate the direction of the equities market,” Afrinvest Securities stated.