25 June 2018 ( Lagos ) : According to analysts at ARM Securities Limited the Nigerian equity market ended negative last week, losing 2.74% over the week with YTD performance back to negative (-1.0%). The negative run was driven by losses in bellwether stocks: SEPLAT (-9.26%), DANGCEM (-5.86%), GUARANTY (-1.93%) and ZENITHBANK (-1.89%). On a sectorial basis, the Personal care, Cement, Oil & gas, and Banks led the decliners.
All opinions and recommendations on below stocks are from analysts at ARM Securities limited. Easykobo does not endorse or oppose any recommendations expressed in this article.
United Bank for Africa Plc ( UBA ) – STRONG BUY (FVE: N14.10). Analysts expect meaningful improvement in UBA’s profitability over 2018 on the back of deposit growth, increased loan book, expansion in its trading book, healthier asset quality, lower loan-loss provision, and resilience in fee income.
CCNNPlc. BUY ( CCNN ) (FVE:N32.68) : BUA, the largest shareholder of CCNN, recently announced the commissioning of the 1.5MMT plant in Sokoto State, expected to be operated by CCNN. Based on available data, analysts believe the capex was funded by BUA Group, as such, they assessed the possible structure on how the plant would be integrated into CCNN. Working on their best-case scenario, analysts assumed a debt related structure (finance lease) and arrived at a FVE of N 32.68.
Guinness Nigeria Plc ( GUINNESS )– SELL (FVE: N88.21). Guinness is poised for further earnings recovery into 2019 underpinned by lower operating and finance expenses. However, from a valuation standpoint, analysts believe the stock is expensive due to the dilutive impact of the recently concluded rights issue.
Flourmills of Nigeria Plc ( FLOURMILL ) :STRONG BUY (FVE: N39.40). Flourmills recently raised N39 billion via rights with proceeds earmarked to pay down some of its short-term debts amongst others. Following the payment of some of its debt, analysts expect tamer finance costs and, by extension, improvement in earnings in FY 19. To add, currently lower commodity prices (sugar and wheat) guides to expansion in gross margin and improvement in operating cash flow.
PZ Cussons Plc – ( PZ ) SELL (FVE: N16.57). Analyst’s sell rating on PZ is premised on expected slower recovery in volumes due to weak income levels. Additionally, the recent rise in Brent crude is expected to stoke pressures on petrochemical prices which would weigh on gross profit and earnings.
Seplat Petroleum Development Company Plc ( SEPLAT ) :STRONG BUY (FVE: N975.27). The case for Seplat remains higher crude oil prices and volumes, unrecognized capital allowance, reserve accretion, higher receipt from crude oil lifted in OML 55 as well as the company’s extended debt maturity profile which feeds into an improved cash position.
Okomu Oil Plc – ( OKOMUOIL ) NEUTRAL (FVE: N102.33). Okomu is the analyst’s most preferred pick in the Palm oil sector, as 2018 presents opportunities for stronger volumes growth, better operating efficiency, and lower finance cost which guides to improved earnings over FY 18.
Corporate Benefit Tracker
The NSE announced a review of the equities market structure, making changes which includes addressing imbalances in auction sessions, expansion of participants in the auction period and changes to the market price volatility mechanism. Click here to read more.
In addition, the NSE announced the likely incoming and outgoing companies on its various indices following the completion of the first stage of the Mid-Year review. Click here to read more.
AGM: Newrest ASL Plc, BOC Gases Plc, NPF Microfinance Bank Plc, CCNN Plc.
Dividend Payment: 11 Plc, Dangote Flour Mills Plc, Okomu Oil Plc, BOC Gases Plc, NPF Microfinance Bank Plc, CCNN Plc.
Source: Analysts at ARM Securities Limited
Reporting for EasyKobo on Monday, 25 June 2018 in Lagos, Nigeria
If you would like to post comments! Please log in.