The Nation Newspaper

Category: Investors

  • RenCap picks UBA, Access Bank as top stocks for banking sector

    RenCap picks UBA, Access Bank as top stocks for banking sector

    United Bank for Africa (UBA) Plc and Access Bank Plc have the upside potential and valuation for the highest returns in the banking sector, Renaissance Capital (RenCap) has said.

    In an investment research report titled: “Nigerian Banks: Path to Recovery”, RenCap noted that improving macro indicators points to a recovery in the Nigerian banking sector, which made the investment firm to increase its target prices for most of the stocks in the sector on the back of lower risk-free rate assumption of 13.0 per cent as against previous estimate of 14.0 per cent.

    “We believe earnings resilience will also be demonstrated by net interest margin protection. We are less concerned about the declining yield environment at Access Bank, Stanbic IBTC Holdings and FCMB Group, as we expect that improvements in the cost of funds will be more than offset asset-yield pressure. Our top picks in the sector remain UBA and Access Bank on upside potential and valuations, but we also like FBN Holdings and Stanbic IBTC Holdings, as we believe both banks have scope to report lower cost of risk in 2018. We like GTBank given the quality of its earnings, but believe that current valuations are full,” the report, anchored by Olamipo Ogunsanya stated.

    The investment firm noted that things appear to be looking up for the Nigerian economy after a challenging few years pointing out that improving macro-economic condition and high crude oil prices may lead to improvement in assets quality of banks.

    “We believe capital buffers will rise as profits improve and note that the banks are increasingly more comfortable, using an exchange rate of N330/$ – an average of the official rate and Investors and Exporters (I&E) window rate as against previous N306/$– to value their foreign currency portfolios. We take this to mean potential revaluation gains in fourth quarter 2017, which we think could offset any negative asset quality surprises,” RenCap stated.

    The investment firm, however, cautioned that the political risks might moderate performance in 2018 as Nigeria enters into election season.

    “Despite a positive macro backdrop, we believe 2018 will be a recovery story at best; earnings growth will be challenged by the declining yield environment, volatility in foreign exchange-related gains, and limited scope for cost efficiencies. Tough economic decisions are likely to be delayed till after the 2019 general elections, but the political risks that come with a pre-election year render us cautious on the recovery ahead,” RenCap noted.

    The UBA‘s board had last week approved the audited report and accounts of the bank for the year ended December 31, 2017. The directors also approved payment of final dividend for the 2017 business year.

    The bank’s Group Company Secretary, Bili Odum, confirmed the approval of the audited report and proposal for dividend payment, noting that the approved audited report has been forwarded to the Central Bank of Nigeria (CBN) for approval.

    He said the actual final dividend recommendation and the audited report would be released to the investing public after the approval by the apex bank.

    Market sources said they expected the bank to increase its dividend payout, citing the improvement in the overall performance of the bank in 2017.

    UBA had earlier paid an interim dividend of 20 kobo per share, after the audit of its 2017 half-year results. It had declared a final dividend of 55 kobo per share, in addition to an interim dividend of 20 kobo for the 2016 business year.

    Key extracts of the interim report and accounts of UBA for the nine-month period ended September 30, 2017 showed that gross earnings rose by 26 per cent while pre and post tax profits grew by 33.2 per cent and 23 per cent respectively.

    UBA’s gross earnings rose to N333.9 billion in third quarter 2017 as against N265.5 billion reported in corresponding period of 2016. Group’s operating income stood at N236.9 billion in 2017 compared with N183.3 billion recorded in the corresponding period of 2016, representing a 29.3 percent growth.  Profit before tax jumped to N78.3 billion in 2017 as against N58.8 billion recorded in the similar period of 2016. Profit after tax grew from N49.5 billion in 2016 to N60.9 billion in 2017.

    The balance sheet showed that while the group closed the third quarter with total assets of N3.77 trillion, a year-to-date growth of 7.6 per cent, the bank prudently grew net loans to N1.6 trillion, a 6.0 per cent year-to-date growth in the loan book. Group’s shareholders’ fund grew by 13.3 per cent to N507.6 billion in 2017 while the annualised return on average equity stood at 18 per cent.

    Access Bank in December 2017 launched a new five-year plan that aimed at making the bank Nigeria’s foremost in the next five years.

    The new plan is the latest in a series of transformative strategies that have resulted in sustained growth. From 2013 to November 2017, Access Bank has increased its total assets at a CAGR of 18 per cent and delivered shareholder returns of 90 per cent. The bank has also grown its customer base from 90,000 in 2002 to over 8.0 million in 2017 and in the same period opened 351 new branches.

    The new five-year strategy is expected to accelerate this growth story to position Access Bank as the leading Nigerian bank by 2022.

  • Stockbrokers’ council streamlines certification

    The Governing Council of the Chartered Institute of Stockbrokers (CIS) has approved the newly introduced Specialised Professional Certifications (SPC), otherwise known as the Stand-Alone-Programme.

    Under the new professional qualification, the holder shall be granted a license to practise in specific areas of the capital market as a core duty.

    The SPC, which is in line with global trends, will cover many core areas, including commodity trading and derivatives, equities dealing, share registration and custodianship services, investment management and financial advisory.

    By the new certifications, which commence in March this year, the examination shall run concurrently with the institute’s current professional examinations, which hold annually in March and September.

    Registrar and Chief Executive, Chartered Institute of Stockbrokers (CIS), Mr Adedeji Ajadi, said the requirements for the SPC are the same as the Professional Examinations noting that the holder of the specialized certificates shall be addressed as stockbroker who is a specialist in one particular area of the securities and investment industry.

    “They are licenced to practise only in that specific area. Although an individual can acquire as many different SPC licences as possible. Four specialised certificates will qualify the holder to become an Associate Member of the Institute,” Ajadi said.

    CIS indicated that after induction, the institute’s SPC graduates shall be called specialists in their chosen area, although they will be inducted and licenced under the same conditions as the omnibus professional examination graduate.

  • PCMN reverts to private status, delists from NSE

    Shareholders of Paints and Coatings Manufacturers Nigeria (PCMN) Plc are scheduled to meet and vote on sub-joined resolutions that will see the reversion of the company to a private limited liability company and the delisting of its shares from the Nigerian Stock Exchange (NSE).

    A Federal High Court has directed the company to convene a court-ordered meeting on February 15, 2018 in Lagos where shareholders will deliberate and vote on the scheme of arrangement for the change in the status of the company and the delisting from the NSE. A new company-Paintcom Investment Nigeria Limited is proposed to emerge after the delisting.

    The NSE has confirmed that the company had submitted application for scheme of arrangement between the company and holders of its fully paid up ordinary shares in furtherance of the delisting.

    The Asset Management Corporation of Nigeria (AMCON) recently sold the fourth largest equity in PCMN to Bizfeat Ventures Limited, a relatively unknown firm. AMCON, the bad-debt resolution corporation floated by the government, transferred its 7.4 per cent equity in PCMN to Bizfeat Ventures through a negotiated cross deal at the NSE.

    The block divestment involved transfer of a total of 58.66 million ordinary shares of 50 kobo each held by AMCON to Bizfeat Ventures at a negotiated price of N1.05 per share.

     

  • VEEDA, EPOS Solutions partner to boost operations

    Two leading players in the Nigerian retail and hospitality industry, VEEDA Nigeria and EPOS Solutions, last weekend signed a partnership that would see both organisations working together to deliver superior inventory management solutions to large and small-sized companies in Nigeria.

    The VEEDA brand is famous for its range of smart POS, smart POS scale, Thermal Printers, Barcode Printers, Mobile Printers, Barcode Scanners, Cash drawers and consumables. Its sales network has matured to include growing outlets in Nigeria, Africa, Asia and Europe.

    EPOS Solutions is the exclusive partners to EPOS NOW, United Kingdom’s (UK) number one inventory management platform currently deployed in over 103 countries by over 30000 retail businesses. The company delivers market leading Point of Sale (POS) systems, designed specifically to reduce costs, improve efficiency and grow sale.

    At the agreement signing in Lagos, VEEDA Nigeria Managing Director, Mr. Bill expressed delight at the prospect of the partnership helping to revolutionise the conduct of businesses through cost reduction and improved efficiency.

    “The partnership would provide platform for customised complete solutions delivery to retail & hospitality businesses with exceptional customer service across the country,” Bill said.

    Chief Executive Officer, EPOS Solutions, Kayode Ayansola, said the partnership would guarantee smooth business operations and ensure healthy returns on investment by helping to improve corporate efficiency.

    “We are happy at this partnership as it ensures that core product software is running on an industry-leading hardware system in Nigeria. We are also confident that it would guarantee smooth business operations for our clients,” Ayansola said.

    Industry watchers, who witnessed the ceremonies, said they were hopeful that the new partnership is capable of assisting many troubled small businesses to overcome the challenge of internal breaches, which lead to revenue losses and collapse.

  • UBA board approves 2017 audited report, dividend payment

    The United Bank for Africa (UBA) Plc Board of Directors has approved the audited report and accounts of the bank for the year ended December 31, 2017. At the board meeting on Monday, the directors also approved the payment of final dividend for the 2017 business year.

    The bank’s Group Company Secretary, Bili Odum, confirmed the approval of the audited report and proposal for dividend payment, noting that the approved audited report has been forwarded to the Central Bank of Nigeria (CBN) for endorsement.

    He said the actual final dividend recommendation and the audited report would be released to the investing public after the approval of the apex bank.

    UBA’s share price continued its rally on Monday with a gain of 1.56 per cent to close at N13 per share. Ahead of the board meeting, it had risen by 2.48 per cent at the weekend, 343 per cent above equities market’s average gain of 0.56 per cent. As the equities market staged its first rally in five days last Friday, UBA chalked up 31 kobo to close at N12.80 per share.

    The All  Share Index (ASI)-the benchmark index at the Nigerian Stock Exchange (NSE) recorded average gain of 1.22 per cent and 0.56 per cent on Monday and Friday respectively.

    UBA’s share price rose by 129 per cent in 2017 while it has performed above average so far in 2018 with average year-to-date return of 24.3 per cent at the opening of the stock market on Monday.

    Market sources said they expected the bank to increase its dividend payout, citing the improvement in the overall performance of the bank in 2017.

    UBA had earlier paid an interim dividend of 20 kobo per share, after the audit of its 2017 half-year results. It declared a final dividend of 55 kobo per share, in addition to an interim dividend of 20 kobo for the 2016 business year.

    As a mark of its sound corporate governance and in line with NSE Rule Book and the Amendments to the Listing Rules, UBA had announced commencement of its closed period on Friday, January 12, 2018, implying that directors, persons discharging managerial responsibility, employees with sensitive information, advisers and consultants of the bank and their connected persons may not directly or indirectly deal in the securities of the bank until 24 hours after the publication of its audited full year reports and accounts for 2017.

    Key extracts of the interim report and accounts of the bank for the nine-month period ended September 30, 2017, showed that gross earnings rose by 26 per cent while pre and post tax profits grew by 33.2 per cent and 23 per cent respectively.

    UBA’s gross earnings rose to N333.9 billion in third quarter 2017 as against N265.5 billion reported in corresponding period of 2016. Group’s operating income stood at N236.9 billion in 2017 compared with N183.3 billion recorded in the corresponding period of 2016, representing a 29.3 per cent growth.  Profit before tax jumped to N78.3 billion in 2017 as against N58.8 billion recorded in the similar period of 2016. Profit after tax grew from N49.5 billion in 2016 to N60.9 billion in 2017.

    The balance sheet showed that while the group closed the third quarter with total assets of N3.77 trillion a year-to-date growth of 7.6 per cent, the bank prudently grew net loans to N1.6 trillion, a 6.0 per cent year-to-date growth in the loan book. Group’s shareholders’ fund grew by 13.3 per cent to N507.6 billion in 2017 while the annualised return on average equity stood at 18 per cent.

    Under the enhanced listing rules at the NSE, which took effect on January 1, 2017, quoted companies are expected to submit their annual 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.

  • Stanbic IBTC Imaan Fund donates to charity

    Stanbic IBTC Imaan Fund, a Shariah-compliant mutual fund being managed by Stanbic IBTC Asset Management Limited, has donated the non-permissible income of its assets to a registered charity in line with the principles of Shariah.

    The Stanbic IBTC Imaan Fund, which was originally introduced to private investors in 2011 as a Shariah compliant portfolio, has the primary objective of achieving long-term capital appreciation of its assets by investing in Shariah-compliant equity securities approved by the Shariah Advisory Committee of Experts (ACE).

    The fund invests a minimum of 60 per cent of its assets in equities of Shariah-compliant companies listed on the Nigerian Stock Exchange (NSE) while retaining a maximum of 40 per cent in non-interest bearing fixed income securities (Sukuk). The fund prohibits investments in businesses that sell or produce alcohol, tobacco, pork products, conventional financial services such as banking and insurance, weapons, defense products and entertainment.

    The non-permissible income, which constitutes a certain percentage of the fund’s dividend income, is usually donated to charities that have gone through screening and approval by ACE. The screening is undertaken to ensure that the benefiting charities are not involved in any activity that is contrary to Shariah principles.

    The formal presentation of cheques totalling N787,037 to the ACE in the sum of N787,037.02 was made in Lagos last week, with the parties expressing optimism that it would help in attaining the objective of supporting the vulnerable and under-privileged in society.

    Chief Executive, Stanbic IBTC Asset Management Limited, Mrs. Bunmi Dayo-Olagunju, said as a company with strong corporate governance, adherence to ethical conduct, underlined by probity and transparency, will remain  cardinal operational principles.

    She pointed out that the Stanbic IBTC Imaan Fund is tailored to meet the needs of those seeking investments compliant with their religious principles and beliefs, and specifically targeted at people seeking conformity with their religious beliefs and ethics.

    According to her, the pooled funds are invested in Shariah-compliant equity and non-interest bearing fixed income securities. The minimum subscription amount into the fund is N5,000 and subsequent investments of N5,000.00.

    Dayo-Olagunju added that Stanbic IBTC Asset Management Limited has amassed impeccable wealth of experience and expertise in managing funds on behalf of savings schemes, institutional and corporates bodies and high net-worth individuals for over two decades.

    “Mutual funds offer investors the advantages of portfolio diversification and professional management at low cost. These advantages are particularly important because diversification and professional management ensure steady returns when compared to other investment strategies. Mutual funds offer an opportunity for steady growth in assets while reducing the attendant risk associated with investing in individual securities,” said Dayo-Olagunju.

  • 67.8m scrip shares lift Nigerian Breweries to N1.21tr

    Nigerian Breweries opened this week with a market capitalisation of N1.214 trillion, trailing behind Dangote Cement’s N4.43 trillion and Guaranty Trust Bank’s N1.442 trillion.

    Nigerian Breweries last weekend listed 67.8 million ordinary shares of 50 kobo each, increasing its outstanding issued shares from 7.929 billion ordinary shares to 7.997 billion ordinary shares. The additional shares further strengthened Nigerian Breweries’ position as the third most capitalised company at the Nigerian stock market.

    The supplementary shares were due to the scrip dividend scheme offered by the company to eligible shareholders, who elected to receive new ordinary shares in lieu of cash dividends.

    The additional shares arose as a result of the scrip dividend scheme offered to eligible shareholders of the company, who elected to receive new ordinary shares in lieu of cash dividends with respect to the N2.58 final dividend declared for the year ended December 31, 2017.

    Nigerian Breweries had distributed N28.4 billion to shareholders as cash dividend for the 2016 business. Breakdown of the dividend recommendation showed a total dividend per share of N3.58. A final dividend of N20.46 billion was distributed to shareholders on the basis of N2.58 per share. The company had earlier paid interim dividend of N7.9 billion to shareholders, equivalent to N1 per share.

    The board of Nigerian Breweries then recommended an option for qualifying shareholders to receive new ordinary shares in the company instead of the cash final dividend, on terms and conditions as the board may determine based on prevailing market conditions.  Shareholders subsequently voted for the cash-for-share dividend option at the company’s annual general meeting in May 2017.

  • Ascentech holds career expo to boost economy

    As Nigeria looks to alternative options to diversify its economy, Ascentech Services Limited has concluded arrangements to hold a career expo to explore various strategies and options to reduce unemployment and boost national economic productivity.

    At a media interactive session to announce the career expo, Human Resource Manager, Ascentech Services Limited, Henrietta Owie said the career expo, scheduled for March 16 in Lagos, is in line with the Federal Government’s agenda to create employment and improve economic productivity.

    She noted that the Federal Government sees 2018 as a year of consolidation of the economic recovery, and the gains from improved macroeconomic management, especially with the extensive investments made in agriculture, infrastructure and the business environment.

    Vice President Yemi Osinbajo at the last December graduation of the Senior Executive Course 39 of the National Institute of Policy and Strategic Studies ( NIPSS), said the country must diversify all its options and ensure that employment and career development is placed at the fore burner of all activities in 2018.

    Owie said Ascentech Services’s career expo is expected with a footfall of over 2000 participants comprising of job seekers and key industry players and more than 50 blue chip and Medium, Small and Micro Enterprises (MSME).

    According to her, the career expo will serve as a platform for more than 20 speakers to chart strategies to diversify the nations’ options in other to ensure career development and to reduce unemployment in the nation.

    “Our career expo is a capacity building event with a difference, designed to reduce the growing unemployment rate in Nigeria by connecting employable talents to prospective employers. The expo is set to be a yearly symposium on human capacity development for employees seeking new opportunities across the junior, middle and senior management levels. It will also feature a wide range of exhibitors of any career-focused expo in Nigeria, consisting of private, International, governmental, non-governmental, and bilateral organisations,” Owie said.

    She added that the expo will connect thousands of candidates with various employers to experience the perfect job interview set to happen throughout the event.

    Participating companies include Azinova Solutions Limited, CORMART, CWAY, SIMBA Group, Sweetco, and Simpli.

    Ascentech Services is an human resource solution provider committed to forging long term partnerships through robust and flexible services that address the changing needs of businesses through recruitment and selection; outsourcing; and training and development.

  • FBNQuest Capital predicts 25% return for equities in 2018

    FBNQuest Capital Limited Capital, the investment banking subsidiary of FBN Holdings Plc, has predicted that the Nigerian equities market would sustain a bullish run for the second consecutive year with a double digit return of 25 per cent in 2018.

    In its preview of 2018, FBNQuest stated that Nigerian equities may add to the 42.3 per cent full-year gain recorded last year, with a further 25 per cent gain in the year to push the benchmark index to 47,800.

    The investment and economic outlook report noted that with a year-to-date gain of about 18 per cent already in 2018, there is slightly more than six per cent upside potential.

    The report noted that the narrowing of yields on Federal Government of Nigeria paper has a little further to run due to official debt strategy and a firmer total bid. This could amount to 100 basis points across the bond curve, according to the research report.

    According to the report, while the race for the presidency in February 2019 has started, political distractions may not have significant slowdown effect on the economy.

    “It is said that such years are lost because of the political distraction. In our view 2018 is not lost because the FGN will step up the pace of its fiscal expansion, notably with capital releases. This fiscal stimulus is a core element in our Gross Domestic Products (GDP) growth forecast of 2.4 per cent this year. Additionally, we see an increase in crude oil production, selective private investment and the positive impact of the foreign exchange reforms. Beyond 2018 household consumption will recover, leading to acceleration in growth,” FBNQuest stated.

    The report noted that the monetary authorities have arrived at exchange-rate policies that are a success in many ways, and have grown greatly in confidence.

    “They are under no real pressure to change tack and they benefit from the “official” rate for priority transactions. Foreign exchange has become widely available. Manufacturers have it, as do middle class Nigerians with bills to pay outside the country and offshore portfolio investors. Further, its price is stable, and the CBN even thinks it should fall,” FBNQuest noted.

    According to FBNQuest, there could be the first rate cuts since July 2016 in response to slowing inflation in the first half of 2018.

    “Positive base effects are coming into play, and we see easing of 150 basis points over the full year,” FBNQuest stated.

    Nigerian equities had recorded average full-year return of 42.3 per cent in 2017. With a net capital gain of N4.36 trillion, investors in Nigerian equities technically recovered what they had lost in the past three years.

    The stock market had been on a losing streak since 2014. Investors lost N1.75 trillion in 2014 and followed this with another loss of N1.63 trillion in 2015. Against the general expectation that political transition and new government will quicken a rebound, equities closed 2016 with a net capital loss of N604 billion. Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) closed 2016 at N9.247 trillion as against N13.226 trillion recorded at the start of trading in 2014, representing a net capital loss of N3.98 trillion. The turnaround in 2017 represented a fillip for the hard-pressed Nigerian investors.

    Aggregate market value of all quoted equities on the NSE closed 2017 at N13.609 trillion as against its opening value of N9.247 trillion for the year, representing net capital gain of N4.36 trillion. The All Share Index (ASI)-the main common price index that tracks share prices at the NSE, indicated average year-to-date return of 42.30 per cent, rising from the year’s opening index of 26,874.62 points to close the year at 38,243.19 points. Generally, it appeared to be more of a bounteous harvest that leaves no one with an empty hand.

    All major sectoral indices at the stock market showed a market-wide rally. Investors in the banking sector were far ahead of other sectors with the NSE Banking Index indicating average year-to-date return of 73.32 per cent. The NSE 30 Index, which tracks the 30 most capitalised companies, posted above average return of 46.14 per cent, underlining the fact that the recovery was partly driven by large-cap stocks. The NSE Consumer Goods Index closed the year with a gain of 36.97 per cent. The NSE Industrial Goods Index rose by 23.84 per cent. The NSE Insurance Index posted a modest return of 10.36 per cent, despite the lacklustre performance of most insurance stocks that had stagnated over the years at nominal value of 50 kobo.

    With the major oil marketers such as 11 Plc, formerly Mobil Oil Nigeria and Forte Oil among the worst-performing stocks, the NSE Oil and Gas Index recorded the least return of 5.76 per cent. The NSE Lotus Islamic Index-which tracks ethical stocks in compliance with Islamic rulings, posted a gain of 39.03 per cent, underlining the attractiveness of ethical investment in the midst of the rally.

    The NSE Lotus Islamic Index excludes interest-based banks, breweries, gambling and overleveraged companies among others.  The NSE Pension Index, which tracks a portfolio of stocks specially screened in line with the pension investment guidelines, showed above-average return of 70.33 per cent.

  • Academy Press skips dividend as loss rises to N512.73m

    The Board of Directors of Academy Press Plc has decided not to recommend any payment of dividend for the third consecutive business year after the company’s performance worsened in 2017.

    Academy Press recorded a net loss of N512.7 million in 2017, an increase of 662 per cent.

    The board stated that it decided not to declare dividend in view of the loss sustained by the company and the need to strengthen its working capital position.

    Key extract of the audited report and accounts of Academy Press for the year ended March 31, 2017 showed that turnover rose marginally from N2.05 billion in 2016 to N2.12 billion in 2017.

    Gross profit however dropped from N525.22 million in 2016 to N379.91 million. Loss before tax worsened from N93.51 million to N387.46 million. After taxes, net loss also worsened from N67.32 million to N512.73 million.

    The balance sheet of the printing and publishing company also weakened as total assets dropped from N3.67 billion in 2016 to N2.98 billion. Total equity fund also declined from N726.52 million to N225.14 million.

    Academy Press was incorporated  as a private limited liability company on July 28, 1964 and by a special resolution became a public limited liability company in October 1991. It offered its shares to the public in November 1994 and these were listed on the Nigerian Stock Exchange(NSE) in June, 1995.

    Academy Press engages in printing and publishing of educational and general books, and commercial printing of diaries, labels, calendars, periodicals, annual reports, confidential and other printing.

    The NSE last October  suspended trading on the shares of Academy Press and three other companies, following the failure of the companies to adhere to best corporate governance and post-listing requirements. The other three suspended companies included Nigerian German Chemical Plc, Roads Nigeria Plc and Thomas Wyatt Nigeria Plc.

    The companies were suspended after they failed to file their accounts and operational reports as required by the listing rules at the Exchange.

    Post-listing rules at the NSE require quoted companies to submit their audited earnings reports, not later than 90 calendar days, or three months, after the expiration of the period. The rules also require quoted companies to submit interim report not later than 30 calendar days after the end of the relevant period.

    NSE tags and applies fines on companies that fail to meet earnings reports’ deadline. The Exchange last January 1, 2017 launched its new sanction regime for delay in submission of companies’results.

    Under the new regime, quoted companies are required to file their unaudited quarterly accounts with the NSE not later than 30 calendar days after the relevant quarter, and publish it within five business days after the date of filing, in at least two national dailies.