Finance

Equities Market Rebounds after Three Weeks of Decline

Published

7 years ago

September 11, 2017

Equities Market Rebounds after Three Weeks of Decline

The Nigerian equities market closed last week on a positive note as stocks rebounded after three weeks of decline. Following weeks of rally, the market succumbed to the bears due to profit taking. As a result, the market remained under the control of the bears for three consecutive weeks. However, the bulls resurfaced last week following bargain hunting in some bellwether stocks.

Besides, impressive full year results by leading brewer, Guinness Nigeria Plc and Stanbic IBTC Holdings Plc bolstered investors’ confidence to increase their demand for stocks. Consequently, the Nigerian Stock Exchange (NSE) All-Share Index and market capitalisation appreciated by 1.27 per cent to close the week at 35,957.24 and N12.393 trillion respectively.

Similarly, all other indices finished higher during the week with the exception of the NSE Main Board, NSE Banking, NSE Insurance, NSE Oil/Gas and NSE Industrial Goods Indices that depreciated by 0.24 per cent, 1.08 per cent, 0.10 per cent, 3.77 per cent and 1.01 per cent respectively while the NSE ASeM Index closed flat.

Daily Market Performance

When trading resumed on Tuesday, sentiments remained negative, pushing the down by 0.28 per cent. The depreciation recorded in the share prices of Lafarge Africa, Total, Unilever, GTBank, and UBA was mainly responsible for the lower close. Investors traded 230.03 million shares worth N4.77 billion in 4,188 deals. The three most actively traded sectors were: Financial Services (189.55 million shares), Consumer Goods (24.09 million shares), and Conglomerates (4.74 million shares), while the three most actively traded stocks were: Access Bank (63.29 million shares) UBA (27.61 million shares) and Zenith Bank (17.84 million shares).

In terms of sectoral performance, the NSE Oil & Gas Index recorded the highest decline of 2.99 per cent, followed by the NSE Industrial Goods Index that fell by 2.11 per cent.The NSE Consumer Index shed 0.30 per cent, while the NSE Banking Index went down by 0.06 per cent. On the positive side, the NSE Insurance Index appreciated by 0.13 per cent. Analysts at Afrinvest were, however, bullish that the market would rebound the next day.

“We believe the five days of consecutive negative returns leave some legroom for positioning, as such, we expect the market to close positive in tomorrow’s trading session,” they said.

As expected, the market halted its losing streak on Wednesday with the index rising by 0.58 per cent to close at 35,609.07, pushing the year-to-date to 32.5 per cent. The rebound was propelled by gains in Dangote Cement, Zenith Bank, Nigerian Breweries Plc and Guinness Nigeria.

Similarly, activity level improved as volume and value traded rose 22.5 per cent and 13.6 per cent to 281.8 million shares respectively. A further breakdown of the performance the NSE Oil & Gas Index led sector gainers, up 1.3 per cent as a result of bargain hunting in Seplat that went up by 3.4 per cent.

In the same vein, buy interest in Nigerian Breweries and Guinness Nigeria boosted the NSE Consumer Index 0.8 per cent. Similarly, growth in Zenith Bank and Stanbic IBTC lifted the NSE Banking Index by 0.1 per cent.

On the flip side, despite an uptick in Dangote Cement the NSE Industrial Goods Index closed 0.5 per cent lower. Also, the NSE Insurance Index fell 0.4 per cent.

The stock market sustained its positive performance on Thursday as the index rose by 1.4 per cent to close at 36,112.37, while market capitalisation added N174.8 billion to closed higher at N12.4 trillion.

Guinness Nigeria Plc led the price gainers with 10.2 per cent, trailed by Dangote Cement Plc, which rose by 4.7 per cent.

Investors have increased demand for shares of Guinness following its impressive results for the full year ended June 30, 2017.

Details of the audited showed a revenue of N125.919 billion in 2017, up from N101.973 billion in 2016. Net finance cost increased from N6.763 billion to N7.524 billion, making the brewing to end the year with an operating profit of N10.186 billion, up from N4.415 billion in 2016.

Profit after tax stood at N1.923 billion, hence the directors have recommended a dividend of N963.7 million. The company recommended a dividend of N963.7million for the year ended June 30, 2017, showing an increase of 28 per cent compared with N752.9 million in 2016.

Stanbic IBTC Holdings Plc, which also released an improved results for the half year to June 30, 2017, closed as the third highest price gainer. It chalked up 3.8 per cent. AIICO Insurance Plc, African Prudential Plc, and Dangote Sugar Refinery Plc garnered 3.6 per cent, 3.5 per cent and 3.4 per cent respectively.

Conversely, Seplat Petroleum Development Company Plc led the price losers with 5.0 per cent, trailed by NCR Nigeria Plc with 4.9 per cent. May & Baker Nigeria Plc and Skye Bank Plc shed 4.7 per cent apiece.

However, the bears returned on Friday, leading a decline of 0.44 per cent. But the decline was not enough to offset earlier gains. Hence, the market closed with a weekly gain of 1.27 per cent.

Market Turnover

Meanwhile, market turnover was 887.024 million shares worth N17.450 billion in 16,955 deals, as against 998.973 million shares valued at N11.455 billion that exchanged hands in 13,626 deals the previous week.

The Financial Services Industry maintained its number one spot on the activity chart, accounting for 729.177 million shares valued at N8.816 billion traded in 10,744 deals, thus contributing 82.20 per cent and 50.52 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry trailed with 68.153 million shares worth N6.692 billion in 2,908 deals. The third place was occupied by Conglomerates Industry with a turnover of 32.109 million shares worth N183.098 million in 687 deals.

Trading in the top three equities- Access Bank Plc, Guaranty Trust Bank Plc, Zenith Bank Plc accounted for 320.549 million shares worth N6.909 billion in 2,643 deals.

Also traded during the week were a total of 3,000 units of Exchange Traded Products (ETPs) valued at N31,590.00 executed in one deal compared with a total of 86,063 units valued at N838,754.79 transacted two weeks ago in eight deals.

A total of 8,535 units of Federal Government Bonds valued at N8.660 million were traded last week in 11 deals, compared with a total of 12,244 units valued at N12.374 million transacted the previous week in 11 deals.

Price Gainers and Losers

The price movement chart displayed 28 price gainers higher than the 19 of the previous week, while 38 equities depreciated in price, lower than 48 equities of the previous week. Guinness Nigeria Plc led the price gainers with 27.5 per cent, trailed by Caverton Offshore Support Group Plc with 6.2 per cent. C & I Leasing Plc garnered 6.0 per cent, just as African Prudential Plc and AIICO Insurance Plc chalked up 5.7 per cent and 5.3 per cent respectively. Newrest ASL Nigeria Plc and Dangote Cement Plc appreciated by 4.9 per cent and 4.8 per cent in that order. Other top price gainers included: Redstar Express Plc (4.7 per cent); Conoil Plc (4.6 per cent) and Berger Paints Plc (4.2 per cent).

Conversely, Jaiz Bank Plc and Sterling Bank Plc led the price losers with 7.7 per cent apiece. Lafarge Africa Plc shed 7.3 per cent, while Seplat Petroleum Development Plc and Fidson Healthcare Plc went down by 6.6 per cent and 5.6 per cent respectively.

Other top price losers were: Beta Glass Plc(5.0 per cent), Julius Berger Nigeria Plc, Presco Plc, PZ Cussons Nigeria Plc and Cadbury Nigeria Plc (4.9 per cent apiece).

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Pension

PFAs Posted Decent Growth – Coronation Economic Note

Published

6 hours ago

May 6, 2024

Samed Olukoya

According to the latest monthly report released by Nigeria’s Pension Commission (PENCOM), the assets under management (AUM) of the regulated pension industry increased by +26.2% y/y to N19.7trn.

Meanwhile on an m/m basis, the AUM decline marginally by -0.5%.

This marks the first decline since September ’22. Notably, FGN debt securities accounted for 62% of the total AUM in March ’24. Meanwhile, other asset classes such as private equities, real estate, and infrastructure funds, accounted for 0.4%, 1.4%, and 0.8% of total AUM, respectively.

Total FGN debt securities held by the Pension Fund Administrators (PFAs) increased by +19.7%
y/y but declined marginally by -1.4% m/m.

Specifically, we note that the FGN bond instruments held by the PFAs increased by +17.2% y/y to N11.5trn, but declined by -2.4% m/m, on the back of a 10-year tenure FGN bond maturity (N719.9bn). The FGN bonds account for 58% of the total AUM.

FGN bonds remain attractive due to its lower risk profile and elevated yields. It is worth noting that the average FGN bond yield increased by +219bps m/m as at end-March ‘24.

The PENCOM report shows that NTBs held by PFAs grew by +120% y/y and increased by +42.5% m/m to N407.6bn in March ’24. We note that the average NTB yield increased by +250bps m/m as at end-March’24.

This asset class accounted for just 2.1% of the total AUM in the same month.

Meanwhile, State government securities held by the PFAs increased by 64.1% y/y to N266.2bn in March ‘24.

It is worth highlighting that domestic equity holdings surged by 99.6% y/y and 8.7% m/m to N2.1trn in the same period, accounting for 10.6% of the total AUM in March ‘24 compared with 9.7% in February ’24. The NGX-all-share index (NGX-ASI) rose by +90.6% y/y and +4.6% during the same period.

Furthermore, YTD (28-March ’24) return on index rose by +18.1% to close at 39.8% from 33.7% in February ’24.

Recently, the market has shown a bearish trajectory as the NGX-ASI declined by -6.1% m/m as at end-April ‘24, partly, on the back of relatively weak corporate earnings amid inflationary conditions. Given expectations of higher yields in the fixed income market on the back of continuous tightening or a hold stance of the CBN at the next MPC meeting, PFAs are likely to reallocate a greater portion of pension assets to fixed income securities.

According to PENCOM, the total pension contributions since inception remitted to the Individual Retirement Savings Account (RSA) increased by +17.3% y/y to N9.9trn as at end-December ‘23 compared with N8.5trn recorded as at end-December ‘22. Remittance from the public sector accounts for 52%, while private sector accounts for 48% of the total pension contributions.

This can be partly attributed to improvement in the efforts to expand pension coverage.

Notably, PENCOM added a total number of 8,927 micro pension contributors in Q4 ’23 bringing the total number of registered MPCs in the Micro pension plan from inception to 114,382 as at end-December ’23 from 89,327 as at end-December ’22.

Banking Sector

GTCO Plc’s Profit Before Tax Grows by 587.5% to N509.35 Billion in Q1, 2024

Published

8 hours ago

May 6, 2024

Samed Olukoya

GTCO Commemorates Listing on Nigerian Exchange - Investors King

Guaranty Trust Holding Company (GTCO) Plc, one of Nigeria’s leading financial institutions, has unveiled its first quarter (Q1) financial results for the period ending March 31, 2024.

According to the report submitted to the Nigerian Stock Exchange (NGX), GTCO recorded a 587.5% growth in profit before tax (PBT) to N509.35 billion.

This substantial increase in pre-tax profit represents a significant jump from the N74.089 billion reported in the corresponding period of the previous year.

The financial statement also revealed a 227.93% rise in income tax to N52.213 billion, compared to N15.922 billion in the same period of 2023.

As a result, GTCO’s profit after tax (PAT) for the first quarter of 2024 rose to N457.134 billion, an exceptional growth of 685.9% from N58.167 billion recorded in the first quarter of the previous year.

The strong performance of GTCO can be attributed to several key factors. The Group’s loan book increased by 21.9% rising from N2.48 trillion recorded in December 2023 to N3.02 trillion by March 2024.

Similarly, deposit liabilities grew by 26.0% from N7.55 trillion in December 2023 to N9.51 trillion in March 2024.

Despite the challenging economic environment, GTCO’s balance sheet remained well-structured, diversified, and resilient.

Total assets closed at an impressive N13.0 trillion while shareholders’ funds stood solid at N2.0 trillion.

Commenting on the outstanding financial results, Mr. Segun Agbaje, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, expressed optimism about the future.

He said the robust performance across all business verticals reaffirmed the value of the Holding Company Structure.

“Our first quarter results reflect the unfolding value of what we have created in all our business verticals through the Holding Company Structure – from Banking and Payments to Funds Management and Pension,” said Mr. Agbaje.

“We are positioned to compete effectively on all fronts and fulfill all our customers’ needs under a unified, thriving financial ecosystem.”

The growth in profitability underscores GTCO’s resilience, strategic focus, and unwavering commitment to delivering superior value to its stakeholders amidst evolving market dynamics.

As the Group continues to leverage its strengths and innovative capabilities, it remains well-positioned to navigate the ever-changing landscape of the financial services industry with confidence and resilience.

Banking Sector

UBA Plc Reports 166% Surge in Q1 Profit to N143 Billion

Published

8 hours ago

May 6, 2024

Samed Olukoya

United Bank for Africa (UBA) Plc has made a significant leap in its financial performance, reporting a 166% surge in its first-quarter profit to N143 billion.

The details, disclosed in the financial services group’s unaudited report for the first quarter, showed a robust growth trajectory despite challenging market conditions.

This surge translates to a 169.4% year-on-year increase in earnings per share (EPS) to N3.96 in the first three months of the year, up from N1.47 reported in the same quarter of 2023.

According to the financial results, interest income rose by 129.7% year on year to N440.76 billion. The bank also witnessed a significant uptick in investment, reporting a 147.1% year-on-year growth.

UBA’s interest expense saw an increase of 93.9% year on year to N140.09 billion. This was attributed to higher costs incurred on deposits from customers, deposits from financial institutions, and borrowings.

Despite this, customers’ deposits grew by 112.6% year on year to N18.38 trillion.

Net interest income also grew by 151.3% year on year to N300.68 billion from about N120 billion in the previous year.

Furthermore, non-interest income advanced by 38.9% year on year to N77.91 billion, fueled by expansions in net fees and commission income and net FX trading income.

At the end of Q1, UBA’s operating income stood at N373.31 billion, a 122.5% year-on-year increase.

However, operating expenses saw an uptick of 104.1% year on year, driven by expansions in employee benefits, regulatory costs, and inflationary pressures.

Despite these challenges, the group’s profit-before-tax surged by 154.7% year on year to N156.34 billion from N61.37 billion a year ago.

Net profit also increased by 166.1% year on year to N142.58 billion from N53.59 billion in the previous year.

UBA’s stellar performance in the first quarter underscores its resilience, strategic positioning, and commitment to delivering value to shareholders amid evolving market dynamics. As the bank continues to navigate challenges and seize opportunities, it remains poised for sustained growth and value creation in the financial services sector.