Impressive Earning Reports Drive Equities to Positive Close

Egypt Stocks
  • Impressive Earning Reports Drive Equities to Positive Close

The equities market recorded yet another positive close for second week in a row as investors continue to react favourably to impressive corporate earnings by some of the companies that released their results last week.

Although the impacts of macro-economic challenges varied across sectors, corporates exposed to the downside risk of macroeconomic headwinds were able to navigate the negatives in the operating environment by leveraging on scale, non-core earnings growth strategy, operating cost optimization, local input sourcing and other accounting ingenuity (usage of deferred tax assets) in order to stay profitable.

Specially, Nascon & Allied Industries Plc recorded year-on-year growth of 13.06 per cent, 16.53 per cent and 14.70 per cent in revenue to N18.29 billion, Profit-Before-Tax to N3.52 billion and Profit-After-Tax to N2.42 billion respectively. Also, the company proposed a dividend of N0.70 per share.

In the banking sector, Wema Bank recorded a positive full year result with the bank’s audited result showing growth in gross earnings by 18.48 per cent to N54.25 billion from N45.79 billion in 2015, while, PBT grew by 9.7 per cent to N3.28 billion from N2.99 billion in 2015.

The Okomu Oil Palm Plc recorded a 50.28 per cent increase in revenue to N14.364 billion and a 80.13 per cent increase in PAT to N4.91 billion, among other companies that released their results during the week. Consequently, the equities market by market capitalisation rose by N9 billion to N9.91 trillion, from N8.83 trillion penultimate week, representing 0.9 per cent increase. Similarly, the All Share Index, ASI, rose by 0.9 per cent from 25,516.34 points to settle at 25,746.52 points.

Sectoral Performance

Performance across the sectors was bullish, with exception of the banking sector that fell by 0.20 per cent. The insurance, consumer goods, oil and gas and the industrial sectors appreciated by 1.97 per cent, 0.80 per cent, 4.27 per cent and 5.15 per cent to close at 126.26 points, 632.83 points, 304.90 points and 1,678.80 points respectively.

Access, Unilever, Okomu Oil get buy rating

Meanwhile, analysts at Cowry Asset Management Limited have assigned buy rating to Access Bank Plc, Unilever Nigeria Plc, Okonu Oil Palm Plc and United Bank for Africa, UBA Plc with full year price target of N12.54, N85.66, N85.99 and N12.38 in that order. Others are Total Oil Nigeria Plc, Chemical and Allied Products Plc and Presco Plc with price target of N394.00, N43.00 and N58.40 respectively.

Expectation for the week

Analysts are of the opinion that the profit taking and bargain hunting would dominate activity in the market this week. They opined that investors are expected to maintain positive stance in the agriculture consumer goods and banking and sectors with more positive reactions to Okomu Oil and Gl;axoSmithKline results. They, however, stated that a reversal of the positive sentiment is expected in the health and insurance and oil and gas sectors within this week.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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