28 August 2018 : The Nigerian equity market overturned its three weeks of negative sentiment with the index shoring up 45 basis points WoW to close at 35,426.17pts. The positive performance was driven by a 6.82% price increase in Dangote Cement which masked declines in UBA (- 4.19%), Zenith Bank (-3.94%), Nigerian Breweries (-2.91%), FBNH (-1.53%), and Guaranty (-1.32%). Analysis of the performance on a sectorial basis shows that Banking, Brewers, Food, Oil & Gas, Personal Care and Real Estate sectors closed in the red territory while the cement sector closed positive supported by the sturdy price gain in Dangote Cement.
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 hinged on growth in its deposit, increased loan book, expansion in its trading book, healthier asset quality, lower loan-loss provision, and resilience in fee income.
Lafarge Africa Plc. – ( WAPCO ) SELL (FVE: N23.57). Analysts expect higher input costs, surge in OPEX and elevated finance cost to weigh on earnings over FY 18. On leverage, with total net borrowings of N256 billion as at H1 18, analysts expect persisting pressure on finance cost and have thus raised their net finance cost for the year higher to N39 billion, which would further swamp operating profit (EBIT) to instigate a loss after tax of N8.3 billion for the year.
Dangote Cement Plc – ( DANGCEM ) OVERWEIGHT (FVE: N278.54). Analysts expect Dangote Cement to sustain earnings growth over 2018, at faster pace than their earlier estimate. To be specific, analysts are now more positive on the write back of the tax provisions booked thus far.
Guinness Nigeria Plc – SELL ( GUINNESS ) (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.
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.
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Lafarge Africa announced an extra-ordinary general meeting to consider, and if though fit, pass key resolutions including the approval of Rights Issue and Debt-to-Equity Conversion.
CWG Plc is set to partner with Entersekt – a pan-African provider of information and communications technology to provide full suite of mobile-centred security and payments enablement products to banks and other enterprises in Nigeria.
Closure of Register: Triple Gee and Company Plc, Stanbic IBTC Holdings Plc
Dividend Payment: Zenith Bank Plc, Guaranty Trust Bank
Annual General Meeting: Smart Product Nig. Plc, Red Star Express Plc, Flour Mills of Nig. Plc, Linkage Assurance Plc.
Reporting for EasyKobo on Tuesday ,28 August 2018 in Lagos, Nigeria
Source: ARM Securities Limited
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