24 July 2018 ( Lagos ) : The Nigerian equity market traded bearish last week, posting losses for 4 out of the 5 trading days. The market ended the week 2.11% lower WoW, making it the third consecutive week of decline. The decline was largely due to negative performances in First Bank (- 12.98%), Guaranty Bank (-4.88%), Zenith Bank (-4.17%), Lafarge (-13.33%), Nestle (-6.35%), PZ (-11.58%) and Okomu Oil (-9.78%). Dissecting the performance on a sectorial basis, all sectors closed in the red save the Cement sector with Construction (-6.19%), Banking (-4.73%) and Food (-4.44%) sectors leading 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.
FBNHPlc–( FBNH )STRONGBUY(FVE:N14.40).FBNH looks increasingly attractive under pinned by improving asset quality. Precisely, analysts see further potential upside from lower provisioning, resilience in NIM, operational efficiency and possible streamlining of branches.
LafargeAfricaPlc.–( WAPCO ) NEUTRAL(FVE:N34.71).Despite analyst's expectation of improved fundamentals mainly from higher volumes, energy savings and lower finance cost, analysts believe Lafarge is still overpriced. Lafarge trades at 2018 EV/EBITDA and P/E of 9.7x and 49.9x compare to Bloomberg EMEA peers of 9.2x and 21.9x.
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.
Dangote Sugar Refinery Plc – ( DANGSUGAR ) OVERWEIGHT (FVE: N20.23). Analysts are cautiously optimistic on Dangote Sugar due to the recent smuggling of cheaper refined sugar which impacted on the company’s market share and, by extension, revenue. Irrespective, analysts believe the moderation in input costs would provide some support to 2018 earnings.
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 analyst's most preferred pick in the Palm oil sector, as 2018 presents opportunities for stronger growth in volumes, better operating efficiency, and lower finance cost which guides to improved earnings over FY 18.
Corporate disclosures
Last week
Great Nigeria Insurance Plc proposed voluntary delisting from the main board of the NSE.
The NSE announced the lifting of trading suspension in the shares of Royal Exchange Plc following its compliance to NSE rule.
Linkage Assurance Plc and University Press Plc proposed a dividend of 5kobo/share and 3kobo/share respectively to shareholders.
This Week
Closure of Register: Rak Unity Petroleum Company Plc
AGM: Presco Plc, Omoluabi Mortgage Bank Plc. The Initiates Plc, Cement Company of Northern Nigeria Plc
Dividend Payment: Presco Plc, Conoil Plc, Cement Company of Northern Nigeria Plc
Reporting for EasyKobo on Tuesday, 24 July 2018 in Lagos, Nigeria
Source: ARM Securities Limited
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