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Weak Earnings Reports Push Stock Market Lower – Analysts



capital market
  • Weak Earnings Reports Push Stock Market Lower – Analysts

The weak earnings reports filed with the Nigerian Stock Exchange by some firms last week weighed on the equities market, pushing investors to sell off their shares and take profits, analysts have said.

The market halted its two weeks’ bullish run as the NSE All Share Index declined by 2.51 per cent to settle at 30,636.36 basis points, dragging the year-to-date return to -2.53 per cent.

According to analysts at Meristem Securities Limited, investors took profit off most of the counters following the unimpressive financial scorecards mainly across the consumer goods sector, which contributed to the market’s underwhelming performance.

Investors lost N326bn in January following persistent bearish sentiments.

The market, however, opened on a positive note this month as the ASI gained 0.26 per cent to settle at 30,636.36bps on Friday.

The market capitalisation of equities listed on the NSE increased by N20bn from N11.394tn on Thursday to N11.424tn on Friday.

A total turnover of 1.452 billion shares worth N14.788bn in 19,318 deals were traded last week by investors on the floor of the Exchange in contrast to a total of 1.807 billion shares valued at N17.232bn that exchanged hands in the previous week in 18,332 deals.

The financial services industry (measured by volume) led the activity chart with 1.204 billion shares valued at N10.500bn traded in 12,671 deals, thus contributing 82.95 per cent and 71 per cent to the total equity turnover volume and value, respectively.

The performance in the banking sector was largely negative as it shed previous gains, declining by 2.47 per cent.

This dragged the year-to-date return into the negative territory at -0.59 per cent. With two gainers and 11 losers, the sector breadth stood at 0.18x.

The insurance sector, after two consecutive weeks of positive performance, closed on a bearish note as it declined by 1.35 per cent to close at 121.98bps.

The conglomerates industry followed with 93.206 million shares worth N138.014m in 916 deals.

The third place was occupied by consumer goods industry with a turnover of 71.404 million shares worth N3.170bn in 2,698 deals.

Trading in the top three equities, namely United Bank for Africa Plc, Zenith Bank Plc and Consolidated Hallmark Insurance Plc, (measured by volume) accounted for 447.620 million shares worth N4.453bn in 3,193 deals, contributing 30.83 per cent and 30.11 per cent to the total equity turnover volume and value, respectively.

There were 16 gainers and 50 losers in the market last week, compared to the 40 gainers and 25 losers recorded in the previous week.

The top five gainers were Associated Bus Company Plc, Mutual Benefits Assurance Plc, Beta Glass Plc, Sterling Bank Plc and UACN Property Development Company Plc, which saw respective gains of 24.14 per cent, 10 per cent, 9.09 per cent, 8.41 per cent and 8.18 per cent.

The top five losers were Consolidated Hallmark Insurance Plc, Niger Insurance Plc, Dangote Flour Mills Plc, Ikeja Hotel Plc and Academy Press Plc, whose respective share prices shed 17.14 per cent, 15.38 per cent, 10.77 per cent, 10.71 per cent and 10 per cent.

Analysts at Vetiva Capital Management Plc said, “In line with trend in the past few weeks, we see the possibility of a recovery in the market this week driven by bargain hunters.

“That said, though we expect cautious sentiment to remain prevalent ahead of the elections, we foresee select fund managers taking positions in beaten down stocks as the elections draw closer.”

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.

Banking Sector

Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development




In a bid to fulfill it’s objectives and mandate, the Pan African Bank has promised to support Nigerians living and working abroad through it’s partnership with NiDCOM.

The Managing Director, Ecobank Nigeria, Patrick Akinwuntan has stated that the bank is privileged to work closely with the Nigerians in Diaspora Commission, (NiDCOM) and will continue to pursue one of its key mandates of helping to enhance the economic development and integration of Africa through its support to Nigerians living and working abroad.

Speaking at the maiden edition of the Diaspora Quarterly Lecture Series with Ecobank as the sole banking partner which took place on Saturday, 8th May 2021, he noted that Ecobank remains a critical bridge for Nigerians abroad, as it has made huge investments in the necessary platforms to enable them connect with home seamlessly. The event held online and had over 2000 participants from across all the continents in attendance.

“Nigerians in the diaspora play a major role in nation building, their contribution goes a long way to catalyse economic development. For us at Ecobank, we are a pan-African institution positioned to foster the economic growth and integration of our continent, so we are particularly pleased to work closely with the Nigerians in Diaspora Commission (NiDCOM), ably led by the Chairman/CEO, Hon Abike Dabiri-Erewa”.

“We are committed to ensuring that every Nigerian living abroad is able to remit home seamlessly and affordably, access viable investment opportunities and as the financial institution of choice for Nigerians abroad, we have deployed the necessary resources to actualise this.” He stated.

The Minister of Interior, Ogbeni Rauf Aregbesola, who was also present, reiterated the readiness of the government to collaborate with Nigerians in the diaspora, highlighting the new processes put in place to facilitate passport issuance, noting that all backlog of passport applications would be cleared by the end of May 2021.

Also speaking, the Hon. Minister of State, Foreign Affairs Amb. Zubairu Dada said harnessing the human capital and material resources of Nigerians in the diaspora towards the socio-economic, cultural, and political development of Nigeria can no longer be ignored. He pointed out that the Nigerian diaspora community is well educated, resourceful, skilled, and exposed to global best practices.

The NiDCOM Chairman/CEO, Hon. Abike Dabiri- Erewa explained that the Diaspora Quarterly Lecture Series is projected to be a major aspect of national discourse, where Nigerians abroad can be kept abreast of the government’s policies, programmes and projects.

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Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021



Dangote Sugar - Investors King

Revenue of Dangote Sugar Refinery Plc rose by 41.5 percent to N67.394 billion in the first quarter (Q1) of 2021 from N47.643 billion recorded in the same quarter of 2020.

According to the leading sugar manufacturer, the increase in revenue was a result of the increase in the price of sugar in the first quarter. The company claimed price adjustment was necessary to mitigate the negative effect of inflation and depreciation on the company.

Volumes only rose by 5.7 percent during the quarter despite a 41.5 percent increase in revenue, meaning the increase in price was the main sales catalyst.

In the company’s unaudited financial statements, gross profit grew from N12.721 billion in Q1 2020 to N18.044 billion in Q1 2021.

Similarly, operating profit stood at N15.884 billion, up from N10.747 billion posted in Q1 2020.

Finance cost more than double from N1.353 billion in Q1 2020 to N3.412 billion in Q1 2021.

Dangote Sugar’s profit before tax rose from N9.509 billion recorded in the corresponding quarter to N11.949 billion in the quarter under review.

The company paid N3.646 billion in income tax, slightly higher than N3.137 paid in the same quarter of 2020.

Profit for the period grew from N6.372 billion in Q1 2020 to N8.302 billion in Q1 2021.

Commenting on the company’s performance, Dangote Sugar said “EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”

On price increase, the company hinged it on series of devaluation carried out in 2020 by the Central Bank of Nigeria (CBN), escalating inflation, port congestion and rising in price of global sugar. Dangote Sugar said its imported raw sugar from Brazil under Federal Government’s backward integration plan.

We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.

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FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021



FBN Holdings - Investors King

FBN Holdings Plc profit after tax declined by 39 percent from N23.140 billion recorded in the first quarter (Q1) of 2020 to N15.6 billion in the first quarter of 2021.

In the leading financial institution’s unaudited financial statements released through the Nigerian Exchange Limited, gross earnings declined by 14.5 percent to N137 billion in the period under review, down from N160 billion filed in the previous quarter.

Similarly, net interest income declined from N60.253 billion achieved in Q1 2020 to N52.793 billion.

Net interest income after impairment charge for losses also dipped from N50.547 billion in Q1 2020 to N39.619 billion in Q1 20201. While net fee and commission income rose from N20.773 billion in Q1 2020 to N28.427 billion in Q1 2021.

Profit before tax declined by 34 percent to N18.906 billion in the quarter under review, down from N28.680 billion posted in the corresponding quarter of 2020.

FBN Holdings paid N3.285 billion in income tax in the first quarter of 2020.

Therefore, profit for the period stood at N15.621 billion. While Net Assets contracted from N765.2 billion to N764.8 billion.

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