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Stock Market Hits 9-month High



Nigerian stock market - Investors King
  • Stock Market Hits 9-month High

It was a record breaking week with the NSE ASI posting the largest singular gain of 3.18per cent , since 15th of June 2016.

Analysts at Cordros Capital Limited, an investment banking firm, said judging by market activity in the past three weeks, and more specifically, the spike in the number of deals and volume traded last week, “we sense improved investors, both local and foreign, appetite for risk assets on domestic bourse, following the: reduced apprehension in the macroeconomic environment; impressive 2016 full year and first quarter (Q1) performance of highly capitalised names, and increased confidence about the stability and liquidity of the foreign exchange (FX).

Apart from the ASI, that appreciated, all other indices finished higher during the week with the exception of the NSE ASeM Index that closed flat.

Daily Market Performance

The stock market opened for trading in the week on a positive note, sustaining its bullish trend, following high demand for fast moving consumer goods, insurance and banking stocks. Having gained 1.85 per cent last week, some level of profit taking was expected as trading resumed for the week yesterday. However, it appears investors are delaying their profit taking as bargain hunting remained high. Consequently, the NSE All-Share Index appreciated by 0.70 per cent to close at 26,418.33, while market capitalisation added N63.2 billion to close at N9.1 trillion.

Monday’s performance reduced the year-to-date decline to 1.70 per cent. The market recorded 26 price gainers, while 12 stocks depreciated. Although bellwether stocks such as Nestle Nigeria Plc, Nigerian Breweries Plc, Zenith Bank Plc, GTBank Plc were among the price gainers, Oando Plc led the chart with 10.0 per cent, trailed by Seven-Up Bottling Company Plc with 9.7 per cent. Continental Reinsurance Plc and AIICO Insurance Plc chalked up 9.4 per cent and 7.5 per cent respectively among others.

Conversely, Champion Breweries Plc led the price losers with 4.6 per cent, followed by Jaiz Bank Plc with a decline of 4.5 per cent. African Prudential Plc and Dangote Flour Mills Plc shed 3.3 per cent and 2.3 per cent in that order.

In terms of sectoral performance, all indices advanced except the NSE Industrial Goods Index that shed 0.02 per cent following price loss by Cement Company of Northern Nigeria(-1.9 per cent). The NSE Consumer Goods Index recorded the highest gain (+2.0) on account of buy sentiment in Nestle (+3.4 per cent), Seven-Up Bottling Company Plc (+9.7 per cent) and Nigerian Breweries Plc (+2.7 per cent). Similarly, the NSE Insurance Index went up by 1.8 per cent on the back of price appreciations in Continental (+9.4 per cent) and AIICO (+7.6 per cent) while the NSE Oil & Gas and NSE Banking indices appreciated 1.4 per cent and 0.4 per cent respectively.

Following continuous bull run, the market rallied to a year high on Tuesday after gaining for the eight consecutive days. Sustained demand lifted the NSE ASI by 1.28 per cent to close at year’s high of 26,756.21, while market capitalisation added N116.8 billion to be at N9.25 trillion. The gain was spurred mainly by demand for stocks such as Oando Plc, Access Bank Plc, FBN Holdings Plc, Guaranty Trust Bank Plc, Dangote Cement Plc, Nigerian Breweries Plc and Zenith Bank Plc.

According to analysts at Meristem Securities Limited, the increased investors’ appetite witnessed may be traced to the streams of positive news inflow as regards companies’ performance and economic recovery.

“Whilst we do not rule of some profit-taking activities at the end of the week, we reiterate that the current positive trend may persist,” they stated.

The bulls visited 34 stocks, while only six stocks played host to the bears. Just like Monday, Oando Plc led the price gainers with 10.1 per cent, trailed by Fidson Healthcare Plc with 9.5 per cent. Transcorp Plc chalked up 7.1 per cent just as May & Baker Nigeria Plc, Portland Paints and Products, Cement Company of Northern Nigeria Plc and Access Bank Plc appreciated by 5.9 per cent, 4.9 per cent, 4.8 per cent and 4.8 per cent in that order among others.

Conversely, Linkage Assurance Plc led the price losers with 3.7 per cent, followed by Dangote Sugar Refinery Plc with 3.5 per cent. Total Nigeria Plc shed 2.3 per cent, just as Lafarge Africa Plc and Seven-Up Bottling Company Plc depreciated by 2.2 per cent and 1.8 per cent respectively.

However, the value of stocks traded fell by 13.5 per cent to N2.815 billion, while volume rose by 101.4 per cent to 539.23 million shares. The three most actively traded sectors were Financial Services (488.45 million), Conglomerates (23.43 million) and Consumer Goods (9.78 million), while the three most actively traded stocks were: FCMB (243.86 million), Zenith Bank (52.29 million) and UBA (42.52 million).

Performance across sectors remained positive with three of the sectors appreciating, while only the NSE Industrial Goods Index, which dipped 0.3 per cent on account of profit-taking in Lafarge Africa.

The NSE Banking Index led sector gainers, rising by 2.2 per cent, followed by the NSE Oil & Gas Index with 0.7 per cent growth.

The bulls tightened their hold on the Nigerian Bourse on Wednesday as investors continue to react to improving macroeconomic fundamentals, particularly the recent introduction of an autonomous FX market for investors and exporters. At the close of trade, the NSE ASI rose 2.9 per cent to reach a 6-month high of 27,546.68 while the year to date return swung positive for the first time in the year to close at 2.5 per cent. Although the positive close was driven by broad-based buying interest across large, mid and small cap stocks, market bellwethers such as Dangote Cement, Nigerian Breweries, and Nestle supported performance. Investors gained N273.3 billion as market capitalisation advanced to N9.5 trillion.

In terms sectoral movement, on the NSE Industrial Goods Index fell by 0.9 per cent. The NSE Banking Index led with a gain of 4.1 per cent on the back of a broad-based rally in banking stocks across Tiers – Zenith (+5.6 per cent), GTBank (+2.4 per cent), UBA (+7.2 per cent), Fidelity Bank (+8.8 per cent) and Union Bank (+3.0 per cent). The NSE Consumer Goods Index trailed with 3.6 per cent, while the NSE Oil & Gas Index added 2.4 per cent. The NSE Insurance Index closed higher by 0.7 per cent.

In line with expectation, the bullish run in the equities market continued on Thursday, rising by 3.2 per cent to close at 28,423.70. As with previous sessions, the positive performance was driven by rally across sectors, but was largely buoyed by gains in bellwethers such as Dangote Cement, Nigerian Breweries Plc and GTBank.

Market Turnover

Meanwhile, investors traded 3.255 billion shares worth N28.738 billion in 25,370 deals, up from 1.154 billion shares valued at N10.439 billion that exchanged hands in 16,676 deals the previous week.

The financial services industry led the activity chart with 2.716 billion shares valued at N17.230 billion traded in 15,103 deals, thus contributing 83.4 per cent and 59.9 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 185.750 million shares worth N6.596 billion in 3,817 deals. The third place was occupied by Conglomerates Industry with a turnover of 156.010 million shares worth N385.427 million in 1,340 deals.

Trading in the top three Equities namely, FBN Holdings Plc, FCMB Group Plc and Zenith Bank Plc accounted for 1.419 billion shares worth N8.185 billion in 5,117 deals.

Also traded during the week were a total of 948 units of Exchange Traded Products (ETPs) valued at N16,591.16 executed in 14 deals compared with a total of 20 units valued at N110,000.00 transacted the preceding week in one deal.

A total of 5,201 units of Federal Government Bonds valued at N5.400 million were traded last week in three deals, compared with a total of 1,582 units valued at N1.608 million transacted two weeks ago in 10 deals.

Price Gainers and Losers

The price movement chart showed 57 equities that appreciated , up from 43 equities of the previous week, while 13 equities depreciated compared with 16 equities of the previous week. May & Baker Nigeria Plc led the price gainers with 31.9 per cent. Ecobank Transnational Incorporated trailed with 22.5 per cent, just as Fidson Healthcare Plc and PZ Cussons Nigeria Plc appreciated by 20.4 per cent.

Oando Plc and Unity Bank Plc appreciated by 20.2 per cent and 20 per cent in that order, just as Eterna Plc, Diamond Bank Plc, Nigerian Breweries Plc and Transcorp Plc chalked up 17.8 per cent, 17.6 per cent, 17.1 per cent and 16.3 per cent respectively.

Conversely, Jaiz Bank Plc led the price losers, shedding 9.1 per cent, trailed by Seplat with a decline of 5.8 per cent. Newrest ASL Nigeria Plc and Neimeth International Pharmaceuticals Plc went down by 5.6 per cent, 5.3 per cent and 4.8 per cent.

Other top price losers were: B.O.C Gases Plc, Trans-Nationwide Express Plc (4.8 per cent apiece); A-G Leventis Nigeria Plc (4.1 per cent); Lafarge Africa Plc (3.0 per cent); AIICO Insurance Plc (1.8 per cent0 and Learn Africa Plc (1.1 per cent).

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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Seplat Energy Plc Records $535 Million in Revenue in the First Nine Months of 2021



Seplat Energy Plc - Investors King

Seplat Energy, a leading Nigerian independent energy company listed on both the Nigerian Exchange Limited and the London Stock Exchange, recorded $535 million in revenue in the nine months that ended 30 September 2021.

Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at $266.4 million while cash realised from operations was $163.8 million, the company stated in its unaudited financial statements for the period.

Total expenditure for the period was $83.9 million. Cash at the bank was estimated at $273.9 million and the energy company posted $479.8 million as net debt. See other details below.

Operational highlights

  • YTD working-interest production of 47,280 boepd down 6.7% year on year largely as a result of the shut-in of the Forcados Oil Terminal (FOT) in August (Q3: 40,381 boepd)
  • Liquids production down 16.6% year on year at 27,804 bopd, recovering to 33kbopd liquids in October
  • Gas production up 13% to 113 MMscfd, despite FOT impact on associated gas
  • Completed two gas wells and three oil wells in the period, new Gbetiokun wells performing strongly

Financial highlights (9M 2021)

  • Revenue after adjusting for an underlift was $535 million
  • EBITDA of $266.4 million
  • Cash generated from operations $163.8 million
  • Cash at bank $273.9 million, net debt of $479.8 million
  • Total capital expenditure of $83.9 million
  • Interim dividend of 2.5 cents ($0.025)

Corporate updates

  • Name changed to Seplat Energy Plc to reflect new strategic vision outlined in July; new branding launched in October
  • Acquisition of Cardinal Drilling rigs for $36 million and cessation of legal proceedings by Access Bank Outlook for 2021
  • Expected production narrowed to 48-50 kboepd for full year, subject to market conditions
  • Amukpe-Escravos Pipeline (AEP) commissioning has commenced, oil flow expected in December 2021
  • Capex now expected to be $167 million for the full year
  • ANOH project remains on track for first gas in H1 2022

Commenting on the financial statements, Roger Brown, Chief Executive Officer, said: “Production has recovered strongly since the outage at Forcados Oil Terminal (FOT) and we have been averaging nearly 33kbopd liquids throughout October. Now that production has normalised, we expect production to be in the range 48-50 kboepd for the year, provided uptime on the Forcados Pipeline and FOT remains above the budgeted 80%. I’m pleased to report that our new wells at Gbetiokun are performing strongly, and we will soon commence drilling the exciting Sibiri prospect on OML40.

“We have taken the difficult, but practical decision to bring an end to the uncertainty of the Access Bank legal dispute regarding Cardinal Drilling Services, which completes the Board-mandated removal of Related Party Transactions.

“Although we maintain our previously stated position that legal action against the Company was wholly without merit, the risk of significant disruption to our operations and other opportunities from a long, drawn-out legal case brought us to a negotiated settlement with Access Bank. We have therefore acquired the four Cardinal rigs and we are now focusing on fast tracking their deployment in future drilling campaigns. `

“Our business model is robust, despite setbacks in the third quarter, thanks to the prudent and flexible approach we have taken to managing the business. With an increased focus on efficiency in our operations, improving uptime by opening up the Amukpe to Escravos Pipeline and driving further cost reduction across our portfolio, this will provide the bedrock allowing us to operate effectively in fluctuating commodity prices and generate returns for shareholders. I am optimistic that the coming year will be much stronger, with many of the problems of the past put behind us.

“After we set out our future strategy in July’s Capital Markets Day and launched our new corporate name of Seplat Energy plc, complete with its new branding, we are now focusing on building out and executing the energy transition that is right for Nigeria. A strong step forward will be when we bring on stream the ANOH project next year delivering more transition gas to an energy poor market, over reliant on expensive, high carbon-emitting electricity generated from small-scale diesel and PMS generators. Our three-pillar strategy is designed to ensure we balance carbon emission reduction with the essential social agenda for undeniably the most under-electrified, youngest and fastest growing population on earth.”

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Crude Oil

Crude Oil Drops on Wednesday as U.S. Oil Inventories Jump Unexpectedly



Crude oil - Investors King

Global oil prices fell by 1 percent on Wednesday after data from the U.S. Energy Department showed that the United States oil inventories unexpectedly rose by 4.3 million barrels last week. More than the 1.9 million barrels predicted by experts.

The unexpected increase in United States inventories weighed on crude oil prices on Wednesday, erasing $1.31 or 1.5 percent from Brent crude oil after it rose to a seven-year high on Tuesday. While the U.S West Texas Intermediate (WTI) dipped by $1.09 or 1.3 percent to $83.56 a barrel.

Still, gasoline stocks declined by 2 million barrels across the United States, a situation likely to push pump prices even higher.

“The market continues to deplete Cushing crude oil inventories and that is impacting the Brent-WTI spread and ultimately we’re going to see crude oil diverted from the Permian up to Cushing rather than going to the Gulf Coast,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

However, the shaky COVID-19 recovery in most economies has led to doubts over the sustainability of rising oil prices.

“(Some) countries are falling into an autumn Covid-19 case spike,” said Louise Dickson, senior oil markets analyst at Rystad Energy, “which poses downside risk for oil demand growth in the very near-term and could provide a soft pressure on oil prices.”

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Crude Oil

Brent Crude Oil Extends Gain to $86.66 a Barrel Amid Tight Supply



Brent crude oil - Investors King

Tight global oil supply pushed Brent crude oil, against which Nigeria oil is priced, to a multi-year high of $86.66 per barrel on Monday at 3:30 pm Nigerian time.

Oil price was lifted by rising fuel demand in the United States and tight global supply as economies recover from pandemic-induced slumps.

The global energy supply crunch continues to show its teeth, as oil prices extend their upward march this week, a result of traders pricing in the ongoing rise in fuel demand – which amid limited supply response is depleting global stockpiles,” said Louise Dickson, senior oil markets analyst at Rystad Energy.

Goldman Sachs on the other hand is predicting a further increase in Brent crude oil to $90 a barrel, citing a strong rebound in global oil demand due to switching from gas to oil. This the bank estimated may contribute about 1 million barrels per day to global oil demand.

The investment bank said it expects oil demand to reach around 100 million barrels per day as consumption in Asia increases after the devastating effect of COVID-19.

While not our base-case, such persistence would pose upside risk to our $90/bbl year-end Brent price forecast,” Goldman said in a research note dated Oct. 24.

Earlier this month, the Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+ agreed to continue increasing oil supply by 400,000 bpd a month until April 2022 despite calls for an increase in global oil supplies.

The decision bolstered the price of Brent crude oil above $84 per barrel and expected to push the price even further to $90 a barrel. Low global oil supply amid rising demand for crude oil will continue to support oil prices in the near term.

Despite the recent power cuts and impacts to industrial activity in China, oil demand is likely instead supported by switching to diesel powered generators and diesel engines in LNG trucks, as well as by a ramp up in coal production,” Goldman Sachs stated.

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