Stock Recommendations for the week of 10 Sep 2018   

11 September 2018 : The Nigerian equities market declined further by 2.33% WoW to close at 34,037pts. The negative performance stemmed from persisting sell-pressure in bellwether stocks – SEPLAT (-7.23%), NB (-5.11%), ACCESS (-4.74%), GUARANTY (-2.78%), UBA (-1.25%) and ZENITHBANK (-0.48%). Analysis of the performance on a sectorial basis shows that Personal Care (-6.29%), Brewers (-4.82%), Banking (-2.24%), Cement (-2.16%) and Food (-0.43%) closed the week negative while the Insurance (+0.79%) and Oil & Gas (+0.07%) sectors closed 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.

First City Monument Bank Plc – ( FCMB ) BUY (FVE: N2.34). Analysts revise their FVE lower to N2.34 (previously: N3.38) following their revision of a negative loan growth, higher Non-Performing Loan, higher OPEX and a slightly lower Non-Interest Revenue (NIR) in 2018. Key drivers for 2018 earnings remain strong NIR, lower funding cost and loan-loss provision.

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.

Dangote Sugar Refinery Plc – ( DANGSUGAR ) NEUTRAL (FVE: N17.01). Over 2018, analysts expect weaker revenue for DSR owing to lower refined sugar prices and volumes with the latter driven by ongoing sugar smuggling activities within the country which has impacted on DSR’s share. Consequent to this, alongside higher operating expenses, analysts expect weaker earnings in 2018.

Forte Oil Plc – ( FO ) BUY (FVE: N34.55). Analyst's BUY rating on FO is premised on improvement in margins beyond 2018, hinged on the possibility of upward adjustment in domestic PMS Price. Accordingly, analysts forecast gross margin to average 13.1% over their forecast horizon (vs 5-year historical average of 10.2%). Also, the finance cost is expected to drop significantly as the company was able to pay down over 50% of its long-term borrowing this year.

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

The NSE lifted suspension on trading of shares of Standard Alliance following the company’s compliance of submitting its audited financial statement for the year ended 31 December 2017.

 Stanbic IBTC Holdings PLC announced its application to the Securities and Exchange Commission for voluntary suspension of its subsidiary’s (Stanbic IBTC Ventures Ltd) license as a venture capital manager. 

 Diamond Bank and Stanbic IBTC disclosed the debit of their accounts by the CBN with respect to foreign remittances on behalf of MTN Communications Nigeria.

This Week

 Closure of Register: Honeywell Flour Mills Plc, Access Bank Plc, UBA Plc.

 Annual General Meeting: Triple Gee and Company Plc.

Reporting for EasyKobo on Tuesday , 11 September 2018 in Lagos, Nigeria

Source: ARM Securities Limited


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