By Taofik Salako, Deputy Group Business Editor
Several active Nigerian stocks are trading at their highest prices in a year as steady to impressive results by quoted companies continued to tickle the bulls at the stock market.
The rally lifted Nigerian equities benchmark index to its recent highest index point at 31,016.17 points with aggregate market value of quoted equities at a high of N16.21 trillion.
Investors earned N249 billion in the five-day first week of November, continuing the uptrend that saw equities closing October 2020 with net capital gains of N1.93 trillion. With average gain of 1.59 per cent by the weekend, average year-to-date return for Nigerian equities now stands at 15.55 per cent.
The Nation’s check indicated that several active stocks including MTN Nigeria Communications, Total Nigeria, Lafarge Africa, Vitafoam Nigeria, Stanbic IBTC Holdings, Presco and Okomu Oil Palm among others are now trading at their highest prices over the past 12 months.
Several other active stocks including Dangote Cement, Nestle Nigeria, Guaranty Trust Bank, Zenith Bank, Dangote Sugar Refinery, FCMB Group, AXA Mansard Insurance and Fidelity Bank among others are trading around their highs, with the bid positions suggesting headroom for price gain.
MTN Nigeria, which had traded at a low of N90 per share, will open trading today at N144 per share, its closing price at the weekend. Lafarge Africa is trading at a high of N19.50 per share after trading at a low of N8.95 per share during the period. Total Nigeria rallied to a high of N129.90, 64.2 per cent above its low of N79.1 within the period.
After it released a third quarter report showing growths across key performance indices, Nigeria’s largest quoted company, Dangote Cement rallied to N174.50, few points below its one-year high of N180 and 50 per cent above its lowest price of N116 within the period.
Market analysts were unanimous that the sustained upswing was driven by new earnings reports by quoted companies, which in most instances dampened apprehensions over the adverse impact of the COVID-19 pandemic and other disruptions on corporate performance.
Investors were staking on the traditional “rule of progression” that mostly relates improvement in earnings to corresponding increase in dividend payment and capital gains during the earnings season. With steady bottom-line, most analysts expected companies in the base scenario to at least sustain previous payouts, which in many instances offer better yields than most fixed-income securities.
Analysts at Afrinvest Securities said the market was “buoyed by strong earnings results”, noting that corporate earnings will continue to shape pricing in the days ahead.
“In the short term, we still see scope for expansion in valuation multiples as hunt for alpha-yielding opportunities in the face of increasingly negative real returns in the fixed income market remain positive for stocks,” Cordros Securities stated.
Analysts however advised investors to take positions in fundamentally justified stocks as the weak macro environment remains a significant headwind for corporate earnings.
Stanbic IBTC Holdings had recorded 19 per cent growth in net earnings in the third quarter as profit after tax closed the nine-month period at N66.2 billion. Key extracts of the interim report and accounts of Stanbic IBTC showed that gross earnings rose by 4.0 per cent to N183.3 billion in third quarter 2020 as against N176.2 billion recorded in third quarter 2019.
Profit before tax also rose from N69.11 billion to N76.87 billion. After taxes, net profit grew by 19.1 per cent from N55.6 billion in third quarter 2019 to N66.2 billion in third quarter 2020. Earnings per share thus rose from N5.13 in third quarter 2019 to N5.80 in third quarter 2020. The third quarter performance indicated that the group might be on the way to modest improvement in the current business year. Stanbic IBTC had recorded a net profit of N75.04 billion in 2019. The company subsequently paid N21 billion as dividend for the 2019 business year, implying a dividend per share of N2, 33.3 per cent increase on N1.50 per share paid for the 2018 business year.
Also, Lafarge Africa also had recorded double-digit growths in sales and profitability in the third quarter, with gross turnover rising by 10.3 per cent to N179.9 billion. Lafarge Africa’s sales rose from N163.1 billion to N179.9 billion. Profit after tax also grew by 37.1 per cent from N20.6 billion in third quarter 2019 to N28.2 billion in third quarter 2020.
Lafarge Africa had distributed N16.11 billion to shareholders as cash dividend for the 2019 business year after the cement group completed a major balance sheet restructuring. Shareholders received a dividend per share of N1.
Dangote Sugar Refinery (DSR) also reported well-rounded performance in the third quarter as net profit rose by 81 per cent to N26.6 billion within the nine-month report.
Key extracts of the interim report and accounts of DSR for the nine-month period ended September 30, 2020 showed that turnover rose by 36.7 per cent to N160.51 billion as against N117.42 billion recorded in comparable period of 2019. Profit before grew to N29.08 billion in third quarter 2020 as against N22.97 billion in third quarter 2019. After taxes, net profit leapt by 81.1 per cent from N14.7 billion to N26.63 billion.
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