The Nation Newspaper

Category: Equities

  • Union Bank lifts women with special banking support

    By Taofik Salako

    Union Bank of Nigeria (UBN) Plc has launched its special women’s banking proposition aimed at enabling women for enduring success.

    The women special banking proposition, known as Alpher, provides tailored support for the individual woman, women-owned and women-led businesses. Women can benefit from a wide range of financial services, business and career development opportunities and lifestyle discounts.

    The launch themed ‘Take Your Best Shot’ featured special guests including UBN’s chairman, Beatrice Hamza Bassey and UBN’s Chief Executive Officer, Emeka Emuwa, as well as the head of the bank’s retail bank and digital, Lola Cardoso among other executives of the bank.

    Read Also: Union Bank raises N20b debt capital

    Alpher was initially unveiled at the bank’s 2019 International Women’s Day celebration, and has since then been developed into a fully-fledged proposition, set to change the face of banking for Nigerian women.

    Speaking at the launch, Emuwa, said gender equality and women empowerment were important to the bank citing the bank’s track record of supporting women.

    According to him, Alpher is a natural next step for the bank and with it, the bank will focus on empowering women across all segments of the Nigerian society with tailored financial services and other benefits that improve the quality of their lives.

    Cardoso reminded women of the need to take their best shot at attaining their dreams in order to live a fulfilled and impactful life.

    She noted that the launch of Alpher was in line with the bank’s long-standing commitment to enable enterprise and empower women, their businesses and careers.

    “We are pleased to introduce Alpher, our unique banking proposition developed to create an enabling environment for women as they pursue their dreams and aspirations,” Cardoso said.

    Union Bank recently secured $200 million in funding via a partnership with Atlas Mara Limited from Overseas Private Investment Corporation (OPIC), United States government’s development finance institution. The funding is to drive investments in digitilisation, on-lending to small and medium-scale enterprises (SMEs), and funding for women-led businesses.

    Union Bank has a history of showing support to women businesses and enterprises. In 2019 to reiterate its commitment to women, the bank awarded 40 scholarships to women entrepreneurs to build their capacity through the Enterprise & Leadership Program (ELP) organised by China Europe International Business School (CEIBS) in partnership with Leading Ladies Africa.

  • Nigerian investors net N966.7b gains in Jan 2020

    By Taofik Salako

    Investors in Nigerian equities netted N966.7 billion as capital gains in the first month of this year, as a strong rally in the early weeks of the year mitigated last week’s price depreciation. This technically implied that investors had in the first month recouped more than half of the N1.71 trillion lost in 2019.

    Benchmark index for the Nigerian stock market at the weekend indicated average return of 7.46 per cent, equivalent to net capital gains of N966.7 billion. The All Share Index (ASI) – the value-based common index that tracks share prices at the Nigerian Stock Exchange (NSE) closed weekend at 28,843.53 points as against the opening index of 26,842.07 points for the year, representing an increase of 7.46 per cent. This implied a net capital gain of N966.7 billion on 2020’s opening market capitalisation of N12.958 trillion.

    The stock market had recorded negative average full-year return of -14.60 per cent for the 2019 trading year, equivalent to net capital depreciation of N1.71 trillion for the year. It had recorded negative average full-year return of -17.81 per cent in 2018.

    The January 2020 performance represents a fillip for hard-pressed investors amid expectations that attractive valuations and supportive fiscal and monetary environments could halt consecutive price depreciation at the equities market.

    The ASI, which doubles as Nigeria’s sovereign equities index, had closed 2018 at 31,430.50 points, down from 38,243.19 points recorded as closing index in 2017. The 2019 pricing performance marked the fifth negative closing in six consecutive years. After a world-leading positive return of 42.3 per cent in 2017, the market had reversed to negative in 2018 with average full-year return of -17.81 per cent.

    Sectoral analysis showed that the overall market performance in January 2020 was driven largely by gains recorded in the industrial goods and financial services sectors. The NSE Industrial Goods Index posted above average return of 14.39 per cent. The NSE Insurance Index appreciated by 4.91 per cent. The NSE Banking Index rose by 4.75 per cent while the NSE 30 Index, which tracks the 30 largest stocks at the NSE, appreciated by 8.25 per cent. The NSE Consumer Goods Index and NSE Oil and Gas Index however depreciated by 5.79 per cent and 4.19 per cent respectively.

    Aggregate market value of quoted equities closed weekend at N14.857 trillion as against the year’s opening value of N12.958 trillion, an increase of N1.9 trillion. The difference between the benchmarked return of ASI and aggregate market value growth was due to the listing of BUA Cement during the month.

    Based on market values, both the ASI and market capitalisation are correlated indices and without new listing or delisting, usually move simultaneously in the same direction. But the ASI is weighted, and as such adjusted for effect of new listing while the market capitalisation is a straight-line summation of share prices and issued shares. Thus, where the ASI and market capitalisation differ, the ASI is widely regarded as the true representation of the market condition.

    Most analysts remained cautious about the short-term outlook for Nigerian equities, after the two-year consecutive decline.

    Analysts at United Capital Plc projected that Nigerian equities may deliver a modest average return of some 5.3 per cent in 2020, although the overall market outlook remains susceptible to external shocks and domestic policies.

    In its 2020 economic outlook report titled “A Different Playing Field”, United Capital stated that its base case scenario sees equities market returning +5.3 per cent in 2020, driven by local demand for high-quality dividend-paying stocks and increased system liquidity.

    The report carefully considered events in the international economic environment, including the effects of the United States-China trade wars on the global economy, as well as piecing together the stance of the world’s biggest central banks from their decisions over the course of 2019. The report takes these parameters into consideration, combined with local happenings on the political and economic policy scene, to project the nature and movement of the economy and the financial market in 2020.

    According to the report, the continued auction of high yield Open Market Operation (OMO) bills to foreign portfolio investors (FPIs) may keep foreign interest in local equity market tepid amid fears of a naira devaluation and confidence deficit in the economy.

    The report noted that FPIs are likely to continue their flight to safety by swapping or selling equities for low-risk OMO bills pointing out that the outlook for stocks in 2020 was anchored on developments in the domestic and global economy with monetary policy as the biggest factor to watch.

    “From all indications, the only justification for an uptick in the equities market is the lower yield environment, supported by increased local currency liquidity. However, this will not be enough to trigger a major rally in the absence of the demand from FPIs,” United Capital stated.

    Analysts at CardinalStone, an investment banking group, urged investors to focus on fundamentally strong stocks to hedge against fluctuations in 2020. In its outlook for 2020, analysts at CardinalStone selected a portfolio of 10 stocks including four leading banks, two largest cement manufacturing companies, two consumer goods companies, a telecommunication company and a conglomerate with diverse businesses.

    According to the report, there is substantial scope for capital gains in a portfolio consisting of Zenith Bank, United Bank for Africa, Guaranty Trust Bank, FBN Holdings, Lafarge Africa, UAC of Nigeria, Flour Mills of Nigeria, Nigerian Breweries, MTN Communications Nigeria and Dangote Cement.

    The report noted that the leading banks have headroom for growth while the investment case for the duo of Lafarge Africa and UAC of Nigeria have become compelling following recent restructuring efforts.

    The report stated that the performance of a few other consumer names is likely to be buoyed by debt refinancing initiatives while the two largest companies, MTN Nigeria and Dangote Cement, will benefit from reduced regulatory tension and strong market positioning set to buoy growth for respective duo.

    “We expect improvement in the domestic economy on the back of the structural changes that began in 2019. Notwithstanding, per capita income is likely to remain frail with scope for further changes in consumption patterns and, possibly, excess capacity for a few companies,” CardinalStone stated.

  • New CBN’s OMO policy will boost economic growth

    By Sonnie Ayere

    In Nigeria, one of the monsters that have needed to be faced head on is a regime of high interest rates and its impeding effects on the growth of the country. Most recently, the Central Bank of Nigeria (CBN), led by Governor Godwin Emefiele, decided to take on the challenge of addressing this deterrent to domestic economic growth in Nigeria.

    Historically in Nigeria, interest rates have always been high, and this can be directly attributed to the monetary system in vogue since 2009, which sought to use Federal Government of Nigeria (FGN) bonds, Treasury-bills and Open Market Operation (OMO) bills as a means of attracting United States Dollars into Nigeria to help stabilise the Naira.

    Following this long unnecessary spell of extremely high interest rates in Nigeria from 2009 to 2019, it is gratifying to see that once again, it is possible to experience the rebirth of a sustainable credit economy in Nigeria; one that can support ordinary citizens as well as infrastructure growth.

    Yes, many commercial bankers, pension fund managers, asset managers and traditional buyside investors do not like these lower rates. Some use old archaic economic theories that question how inflation at 11 per cent can be higher than the treasury risk free rate at 3.0 per cent. Even when you look at inflation against yields on fixed income securities, it would be inflationary expectations that an economist will analyse and not the spot inflation per se.

    Why so? If I were to purchase a 10year bond, with a coupon rate of 10 per cent and spot inflation is 11 per cent today, you could argue that you are getting a negative return today. However, this would only before the first year as inflation the next year could be 9.0 per cent or could even have dropped to 7.0 per cent in year five and so on. Therefore, over the duration of the bond, my coupon rate begins to exceed future spot inflation rates as described above and therefore I’m in the money, bond price in premium.

    If, however, I did not buy that bond and inflation falls as described above, the new bonds will have increasingly lower coupons and my profit as an investor becomes much less. Who also says that the short-term risk-free rate like T-Bills must be above inflation? Where an investor wants above inflation returns, then such investor takes the appropriate risk and reward opportunities. That is what all other institutional investors, worldwide do.

    Why the clamour for low interest rates? –The answer is simple. No economy can expect sustainable real growth when long term rates are above single digit. In order to attack inflation in Nigeria, we need to combat the high cost of the factors of production, including power, infrastructure, logistics, transportation, and a host of others. Long-term funding therefore becomes critical, most importantly the cost of financing at the risk-free rates that make our commercial banks and pension funds happy. Financing these critical components of economic development for the country becomes utterly impossible, leaving us in the rot we have become accustomed to. However, with Emefiele’s silver bullet, projects that will reduce the cost of production in Nigeria and enable us morph into a country that can produce competitively rather than continuously import, begins to actualize.

    Why do we call it a silver bullet?  –The lower interest rates you see today is a matter of basic economic supply and demand, induced by removing domestic investors from CBN’s OMO. Henceforth, domestic investors have been directed by the CBN to buy domestic securities issued by the FGN, namely Treasury Bills and FGN bonds. The result is that the demand for treasury bills and FGN bonds now far exceeds its supply and as such the yields have been adjusted to their normal economic equilibrium, dictated by investor appetite. OMO securities are now the preserve of a bilateral financing agreement between the CBN and foreign portfolio investors. In other words, Foreign Portfolio Investors(FPIs) will be willing to buy Nigerian OMO bills at a negotiated yield that does not distort the Nigerian domestic yield curve, fostering a credit market in the country and allowing Nigeria fund its infrastructure with long term economically viable Naira. I recently read an article from an international rating agency criticizing this move by the CBN, sighting illiquidity in the OMO securities due to a much smaller investor base. If a window was opened to foreign investors to sell to the CBN whenever necessary, then this totally makes the bills liquid and defeats that theory from the rating agency.

    With regards to the fear of a Naira devaluation, again this is an inaccurate conclusion. To the extent that the negotiable rates between the CBN and FPIs remain attractive, the probability of a run on the Naira remains mute. This coupled with the Import and Export FX window and CBN’s timely interventions, we can look forward to having a relatively stable currency and low economically viable interest rates that will help grow the economy into a stronger future. So, should we like Emefiele’s silver bullet? –This answer is a resounding yes.  Nigerians lets support this crucial initiative from the CBN for a brighter tomorrow and let’s help ourselves breakout from our history of round tripping banking.

    • Ayere, a financial economist and investment banker, runs the investment banking outfit of DLM Capital Group. Prior to that, he was chief executive at UBA Global Markets, now United Capital Plc. He had spent many years working for the International Finance Corporation (IFC) and various international commercial and investment banks in the United Kingdom and US.

     

     

  • Stock market begins new VAT implementation

    The stock market will begin implementation of the new Value Added Tax (VAT) rate of 7.5 per cent on February 1.

    In a circular to stockbroking firms on Wednesday, the Nigerian Stock Exchange (NSE) indicated that with effect from February 1, VAT charged on commissions applicable to capital market transactions will increase from five per cent to 7.5 per cent.

    The Nation meanwhile reported that the actual implementation will be on Monday February 3, 2020, the first trading session after the effective date of the new VAT rate.

    The VAT will apply to commissions earned by stockbroking firms on the traded value of shares as well as those payable to the Nigerian Stock Exchange (NSE) and the Central Securities Clearing System Plc. (CSCS).

    The Exchange urged stockbroking firms to engage their software vendors for the amendment of their systems to reflect the increase in the VAT rate, and communicate to their clients ahead of the effective date.

  • Stock Exchange opens new window for SMEs

    Taofik Salako, Capital Market, Editor

     

    The Nigerian Stock Exchange (NSE) on Wednesday launched a new platform for the listing of small and medium enterprises (SMEs).

    The new window, known as growth board, allows SMEs to list their shares and raise capital through the Nigerian capital market.

    NSE Chief Executive Officer, Nigerian Stock Exchange, Mr Oscar Onyema, said the new board was pivotal to efforts in catering to a segment of the economy that hitherto has been neglected and perceived as a high risk and low reward venture by most service providers especially in relation to access to capital from financial institutions.

    He noted that the traditional role of the Exchange as an enabler of capital flow from areas of surplus to deficit holds good promise for its capability to support SMEs, as access to capital is the prime challenge faced by companies that are active in the SME sector.

    According Nigeria Bureau of Statistics, SMEs in Nigeria have contributed about 48 per cent of the national GDP in the last five years and also accounts for 96 per cent of operational businesses and 84 per cent of employment. With a total number of about 41.5 million enterprises, the SME segment accounts for nearly 90 per cent of companies operating in the manufacturing sector and 50 per cent of industrial jobs.

    Onyema pointed out that despite these significant contributions by SMEs to the Nigerian economy, the reality and headwinds faced by operators in this segment have been quite daunting.

    According to him, the economic landscape in recent years has been quite challenging for corporates with small and medium scale enterprises experiencing some of the difficulties observed in the Nigerian macro landscape. These companies have seen declining productivity rates largely caused by deficiencies in power supply; substandard trade facilitation infrastructure; lack of rightsized and right-priced financing, multiplicity of taxes, levies, fees; lack of innovation; and limited availability of requisite talent. This is further compounded with an absence of needed corporate governance to ensure maximised capacity utilization and profitability for the companies.

    He noted that in spite of the challenges faced by operators in the SME space, this segment of the economy continues to show progress and innovation.

    “The growth board aims to encourage companies with high growth potential to seize the opportunity of raising long term capital and promote liquidity in the trading of their shares. The board also presents as an avenue for companies in their growth phase to leverage the NSEs platform and varied products and services to achieve their long term business objectives,” Onyema.

    Read Also: Stock Exchange recovers N1.44b shares for investors

    He explained that the board was designed to offer relaxed entry criteria as well as less stringent ongoing listing requirements and allows for greater accessibility to capital flows, global visibility and credibility through corporate disclosures.

    He added that the growth board also restructures current market segments to better meet needs along company’s entire lifecycle of entry segment – for companies with a market capitalization from N50 million and standard market for institutions with a market capitalization from N500 million.

    According to him, the segmentation of the boards also provides alternative options for interested investors to participate in each company’s growth journey.

    “To successfully achieve our listed company’s growth strategy and listing objective, the NSE will be collaborating with various strategic business partners and value added service providers to offer cost effective services designed to create a competitive edge for listed companies within their respective industries while stimulating investors’ interest through enhanced information delivery,” Onyema said.

    He outlined that services such as pre-listing diagnostics; institutional services such as audit services, financial advisory, legal advisory, corporate strategic advisory; investor relations; analyst coverage, corporate access and corporate governance will be provided to support the SMEs while the Exchange will also provide tailored trainings on its learning and development platform –”X-Academy” for capacity development and to promote increased corporate governance for board and employees of companies on the growth board.

    For any company to be listed on the growth board, it must be a duly incorporated public limited liability company with at least two years of operations, audited financial statements in line with the International Financial Reporting Standards (IFRS) and must have grown its revenue by a minimum of 20 per cent cumulatively in its last two years of operations.

    Also, all companies to be listed on the growth board must undertake that their promoters or directors shall retain a minimum of 50 per cent of their shares for a minimum period of 12 months from date of their listing, and that the directors or promoters shall not directly or indirectly sell or offer to sell such securities during that 12-month period.

    The framework meanwhile provides alternative requirements for listing for each segment. Under the entry segment, a new business may be considered for listing if it can provide evidence of investment in it by a core investor or a strong technical partner that has a minimum of two years’ operating track record, or a majority shareholder who is either a High Net Worth Individual (HNI) or is a director of a listed company. Under rules, HNI is an individual with net worth of more than N100 million.

    Besides, companies heading for the entry segment must have market capitalisation of not less than N50 million, a minimum of 10 per cent of its shares available or to be available to minority retail investors and at least 25 shareholders.

    Under the standard segment, a new business may be considered for listing if it that can provide evidence of a core investor or a strong technical partner who has a minimum of four years’ operating track record, or a majority shareholder who is a HNI. The company must also have a minimum market capitalisation of N500 million, at least 15 per cent of its shares must be held or will be held by minority retail shareholders and it must have a minimum of 51 shareholders.

     

  • TAJBank opens National Assembly branch

    Taofik Salako, Capital Market Editor

     

    TAJBANK, Nigeria’s second non-interest financial institution has opened its third office in less than two months of operations at the National Assembly in Abuja.

    The launch was attended by the Clerk of the House of Representatives, Mohammed Ataba Sani-Omololu, the bank’s Chairman, Alhaji Tanko Isiaku Gwamna, directors, and staff members.

    Gwamna said:  “We are delighted to be here, beyond  that this is a laudable achievement, we are driven by the need to discover and maximise opportunities to deliver the superior benefits of Non-Interest Banking as well as avail our esteemed customers the opportunity to enjoy our outstanding customer service which  has become one of our strongest pillars of our institution.  As such, it was only expected that we would identify such veritable platforms as this in order to continue driving the full benefits of financial integration.

    The bank’s founder and Chief Operations Officer, Hamid Joda, noted: “It is indicative that in this short period of business operations we have received such a massive amount of support and encouragement from various bodies and individuals within and outside the country. It is this support and encouragement that drives us as a young financial institution operating in a unique niche as we rapidly expand our frontiers and deliver on our mission to continually provide the very best of products and services to our customers.’’

    Read Also: National Assembly’s indifference to public criticism

    Its co-founder and Chief Marketing Officer, Mr Sherif Idi, acknowledged that the financial industry while still challenging, also presents a myriad of exciting opportunities.

    He said: “We’re bullishly taking charge of such identified opportunities to ‘thrive and drive’ which is one of our internal maxims. In our dynamic business environment, creating products and services that fully resonate with our customers while addressing their needs is a priority.

     

  • UBA, Zenith Bank’s boards approve final dividend

    Taofik Salako, Capital Market Editor

    THE boards of directors of two of Nigeria’s five largest banks- Zenith Bank International Plc and United Bank for Africa (UBA) Plc – have approved payment of final dividends to shareholders of the banks, sustaining a tradition of paying dividends twice a year.

    The boards of the banks also approved the financial statements for the year ended December 31, 2019, raising prospects that the results may be released within the next five weeks ahead of the regulatory deadline of March 30, this year.

    The board of Zenith Bank, which met yesterday and the board of UBA, which had met a day earlier, reviewed the three-month fourth quarter results for 2019 and the 12-month full-year results for the year ended December 31, 2019.

    Directors of the banks subsequently approved the results and authorised designated directors to sign the results on behalf of the board, a major requirement by financial regulatory authorities.

    In separate regulatory filing at the Nigerian Stock Exchange (NSE), the boards of the banks stated that the approved results would be sent to the Central Bank of Nigeria (CBN) for final regulatory review and approval, following which the results and dividend recommendations will be made available to the public through the NSE.

    Read Also: UBA supports creative industry with REDTV’s series

    Under the listing rules at the NSE, quoted companies are required to submit their yearly audited account to the Exchange not later than 90 calendar days after the relevant year end, and published same in at least two national daily newspapers not later than 21 calendar days before the date of the annual general meeting. They are also required to post same on their websites with the web address disclosed in the newspaper publications. Also, an electronic copy of the publication shall be filed with the Exchange on the same day as the publication.

    Most quoted companies including all banks, major manufacturers, insurers, oil and gas companies, breweries and cement companies use the 12-month Gregorian calendar year as their business year.  The deadline for the submission of yearly report for the year ended December 31, 2019 is thus Monday March 30, this year.

    Zenith Bank had paid interim dividend of 30 kobo from earnings per share of N2.83 for first half 2019.

     

  • Union Bank sells UK subsidiary

    Taofik Salako, Capital Market Editor

     

    UNION Bank of Nigeria (UBN) Plc has entered a share sale and purchase agreement to divest its 100 per cent equity stake in its United Kingdom (UK) subsidiary, Union Bank UK (UBUK) Plc.

    In a regulatory filing yesterday at the Nigerian Stock Exchange (NSE), the board of Union Bank stated that the sale was in line with the bank’s strategy to  streamline its business operations to focus on growth opportunities in Nigeria.

    According to the bank, following a competitive bid process, MBU BidCo Limited (MBU), an acquisition vehicle owned by MBU Capital Limited (MBU Capital), was selected as the preferred bidder. The completion of the sale is however still subject to regulatory approvals from the relevant regulatory authorities in Nigeria and the UK.

    MBU Capital is an investment management firm founded in 2013 and based in Mayfair, London. MBU Capital has active interests in financial services, healthcare, education, real estate and technology. MBU Capital (UK) LLP is authorised and regulated by the Financial Conduct Authority.

    UBN Chief Executive Officer, Emeka Emuwa, said the bank decided that as the banking landscape shifts towards digital and agency banking to drive financial inclusion, the Nigerian market presents robust long-term opportunities for it.

    He pointed out that the divestment allows the bank to channel its focus and capital towards mining the Nigerian opportunities fully.

    “Through the sale, we are better positioned to deliver greater value to the organisation and its stakeholders as well as continue to build the future of banking in Nigeria. The terms of the sale of UBUK delivers substantial value to our shareholders, while also entrusting its customers and trading partners to a high-quality financial services institution which will work with existing management to deliver a stronger and more profitable entity,” Emuwa said.

    Founder and Chief Executive Officer, MBU Capital, Mohammed Iqbal, said the investment group was delighted with the acquisition, describing it as a huge opportunity to build on UBUK’s strengths in international markets to create a new-style bank which is focused on the needs of UK and international SMEs and entrepreneurs.

    According to him, many customers are seeking a bank, which truly understands the needs of entrepreneurial, fast-growing businesses.

    “We believe that our acquisition and vision for UBUK offers the potential for significant growth for the bank. We look forward to working with our new colleagues at UBUK to continue to service the needs of its clients. We also look forward to sustaining and deepening relationships with UBUK’s existing trading partners,” Iqbal said.

     

  • Vitafoam Nigeria doubles pre-tax profit to N1.18b

    By Taofik Salako, Capital Market Editor

    Vitafoam Nigeria Plc started the new business year on a double as the foam-manufacturing company doubled profit to N1.13 billion within the first three months of the year.

    Vitafoam Nigeria’s share price rose by 6.0 per cent to N5.30 per share on Monday at the Nigerian Stock Exchange (NSE) as investors reacted positively to the first quarter results.

    Key extracts of the interim report and accounts of Vitafoam Nigeria for the three-month period ended December 31, 2019 showed that pre-tax profit grew from N513.12 million to N1.18 billion. Profit after tax also leapt from N361.87 million to N819.67 million.

    Earnings per share thus doubled to 62 kobo in first quarter ended December 2019 compared with 33 kobo recorded in comparable period of 2018. Turnover however declined from N6.38 billion to N5.98 billion.

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    The first quarter performance strengthened the return outlook of the group and it came on the heels on a 68 per cent increase in dividend payouts recommended by the board after the leading foam manufacturing company grew its bottom-line by 296.3 per cent in the immediate past business year.

    The board of Vitafoam Nigeria has recommended payment of a dividend per share of 42 kobo or N525.35 million for the 2019 business year as against 25 kobo per share paid for the 2018 business year. The dividend will be paid in March 2020 after approval by shareholders at the annual general meeting scheduled for March 4, 2020.

    The latest dividend represented a significant growth for shareholders given that the company had also distributed bonus shares of one share for five shares for the 2018 business year, which automatically increased shareholders’ holdings by 20 per cent. The 42 kobo per share will be paid on both the previous and bonus shares.

    Key extracts of the audited report and accounts of Vitafoam Nigeria for the year ended September 30, 2019 had shown that profit before tax rose by 339.5 per cent while net profit grew by 296.3 per cent. With the dilution, basic earnings per share rose by 219.3 per cent. The company’s top-line had grown by 14.1 per cent, implying that bottom-line performance was driven by growing sales, improved financial management and enhanced operating efficiency.

    Group turnover rose from N19.53 billion in 2018 to N22.28 billion in 2019. Profit before tax surged to N3.49 billion in 2019 from N793.85 million in 2018. While tax expenses leapt from N191.92 million in 2018 to N1.03 billion in 2019, net profit jumped from N601.9 million in 2018 to N2.39 billion in 2019. Earnings per share increased from 57 kobo to N1.82 per share. The dividend payout represents 23.1 per cent of the earnings per share, a considerable improvement on a payout ratio of 53.2 per cent in 2018.

    Group Managing Director, Vitafoam Nigeria Plc, Mr Taiwo Adeniyi, has said consistent growths in key performance indicators in successive results provide basis for assurance that the company will be able to surpass its previous performance in the current business year.

    Adeniyi said the group’s Nigerian businesses are on a stronger footing while three of its seven subsidiaries have started to generate profit.

    He said the company will continue to innovate and develop products that will keep it ahead of competition and enable it to grow its turnover while extracting better values for shareholders.

    Chairman, Vitafoam Nigeria Plc, Dr Bamidele Makanjuola, said the growth in turnover and profitability reflected the robustness and fundamental strength of the group’s business.

    According to him, the company had taken strategic decision and reengineered its business with special focus on products quality, innovation, market differentiation, customer service and consumer education.

    “These efforts underscored our long-term priorities of growing revenue, controlling operating costs, and driving higher gross margins. I am pleased to report that we made great strides in cost containment and sustained positive trends in gross margins,” Makanjuola said.

  • CardinalStone picks 10 stocks to watch in 2020

    By Taofik Salako, Capital Market Editor

     

    Investors looking to earn above average return in the Nigerian capital market this year should consider a portfolio of banking, consumer goods, telecommunication and industrial goods stocks.

    In its outlook for 2020, CardinalStone, an investment banking group, stated that investors are expected to take advantage of bargain hunting opportunities in fundamentally strong names.

    Analysts selected a portfolio of 10 stocks including four leading banks, two largest cement manufacturing companies, two consumer goods companies, a telecommunication company and a conglomerate with diverse businesses.

    According to the report, there is substantial scope for capital gains in a portfolio consisting of Zenith Bank, United Bank for Africa, Guaranty Trust Bank, FBN Holdings, Lafarge Africa, UAC of Nigeria, Flour Mills of Nigeria, Nigerian Breweries, MTN Communications Nigeria and Dangote Cement.

    The report noted that the leading banks have headroom for growth while the investment case for the duo of Lafarge Africa and UAC of Nigeria have become compelling following recent restructuring efforts.

    The report stated that the performance of a few other consumer names is likely to be buoyed by debt refinancing initiatives while the two largest companies, MTN Nigeria and Dangote Cement, will benefit from reduced regulatory tension and strong market positioning set to buoy growth for respective duo.

    “We expect improvement in the domestic economy on the back of the structural changes that began in 2019. Notwithstanding, per capita income is likely to remain frail with scope for further changes in consumption patterns and, possibly, excess capacity for a few companies,” CardinalStone stated.

    Analysts pointed out that monetary bias could remain largely dovish, with administrative measures set to leave system liquidity at elevated levels and yields mostly lower in first half 2020.

    Analysts called for bold reforms to lubricate proposed implementation of Nigeria’s N10.6 trillion budget to properly stimulate growth.

    The report stated that investors in fixed incomes are more likely to stay short in view of expected recovery in interest rate in coming quarters.

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    Investors in Nigerian equities had lost about N1.71 trillion in 2019 as a combination of political risk, weak macroeconomic performance and tense global outlook drove the stock market to second consecutive negative performance.

    The stock market closed 2019 with negative average full-year return of -14.60 per cent for the 2019 trading year, equivalent to net capital depreciation of N1.71 trillion for the year. It had recorded negative average full-year return of -17.81 per cent in 2018.

    The All Share Index (ASI)- the common value-based index that tracks all share prices at the Nigerian Stock Exchange (NSE) closed 2019 at 26,842.07 points as against its opening index of  31,430.50 points for 2019, which was also the closing index for 2018. It had opened 2018 at 38,243.19 points.

    With average return of -14.09 per cent by November 2019, the average decline of 0.59 per cent recorded in December 2019 nudged the full-year return to -14.60 per cent. The December 2019 negative performance marks the first time in 10 years that the market suffered a relapse in the last trading month of the year.

    The negative average full-year return of -14.60 per cent implies that investors in the Nigerian stock market lost nothing less than 14.6 per cent of their portfolios during the year. However, with higher losses in several sectors, actual losses by most investors may be higher than average benchmark.

    Aggregate market value of quoted equities closed 2019 at N12.958 trillion as against its opening value of N11.721 trillion for the year.

    The seeming appreciation in the year-to-date performance of aggregate market value of all quoted equities was due to the unabsorbed boost from the listing of two leading telecommunication companies- MTN Nigeria Communications Plc and Airtel Africa Plc.

    Based on market values, both the ASI and market capitalisation are correlated indices and without new listing or delisting, usually move simultaneously in the same direction.

    But the ASI is weighted, and as such adjusted for effect of new listing while the market capitalisation is a straight-line summation of share prices and issued shares. Thus, where the ASI and market capitalisation differ, the ASI is widely regarded as the true representation of the market condition.