20 August 2018 : The Nigerian equity market extended losses for the third consecutive week as the index dipped 51 basis points to close the week at 35266.29pts. The sell pressure was fueled by losses in UBA (-11.64%), Flourmills (-10.57%), Dangote Sugar (-4.52%), Nestle (-3.85%), Zenith (-3.18%) and Guaranty (-2.56%) which largely masked gains in Unilever (+4.76%), FBNH (+2.08%), and Dangote Cement (+2.80%). Analyzing the performance on a sectorial basis, the sectors that closed negative outweighed those that closed positive with the Banking, Food, Insurance, Oil & Gas and the Real Estate sectors closing negative while the Brewers, Cement and Personal Care sectors closed the week positive.
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.
First Bank of Nigeria Holdings Plc – ( FBNH ) STRONG BUY (FVE: N12.86). Analysts revise their FVE slightly to N12.86 from N14.40 following their revision of a higher impairment charge due to concerns on FBNH’s exposure to Atlantic Energy and also lower asset yield for 2018. Aside these, analysts remain strongly optimistic on FBNH on the back of sizable moderation in impairment charge. For context, analysts expect NPL to moderate to 18% (FY 19E: 16%) from 22.8% in FY 17.
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 ) STRONG BUY (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 – ( 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.
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.
Corporate Benefit Tracker
Last week
Dangote Cement Plc announced the proposed issuance of N50 billion Series 3 and 4 Notes under its N150 billion Commercial Paper Programme earlier announced on 27th June 2018.
The entire issued share capital of Paints and Coatings Nigeria Plc was delisted from the Daily Official List of the NSE in compliance with the company’s request for voluntary delisting.
Zenith Bank Plc announced a change of its dividend payment date from August 24 to August 29 due to the recently announced public holiday.
This Week
Closure of Register: Triple Gee and Company Plc, Linkage Assurance Plc, Custodian Investment Plc and Zenith Bank Plc.
Reporting for EasyKobo on Monday ,20 August 2018 in Lagos, Nigeria
Source: ARM Securities Limited
NOTE - THIS ARTICLE PUBLICATION IS COPYRIGHT OF ARM SECURITIES LIMITED AND NOT TO BE REPRODUCED OR REPRINTED IN ANY FORM WITHOUT THE EXPRESS PERMISSION OF ARM SECURITIES LIMITED.