Stock Recommendations for the week of 17 Sep 2018   

17 September 2018 : The sell-off in the Nigerian equities market worsened last week with the NSE ASI declining further by 5.02% WoW to close at 32,327pts. The negative performance stemmed from persisting sell-pressure in bellwether stocks - ACCESS (-13.8%), FBNH (-9.44%), ZENITHBANK (-4.1%), DANGCEM (-5.8%), NESTLE (-8.7%) and DANGSUGAR (-13.1%). An overview of the sectorial performance showed no sector was spared off the sell-off with Banking (-4.9%), Brewers (-0.3%), Cement (-6.1%), Personal Care (-5.8%), Food (-8.6%), Insurance (-3.9%), Oil & Gas (-3.8%) closing the week negative while the Construction and Real Estate sectors closed flat.

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.

Zenith Bank Plc – ( ZENITHBANK )STRONG BUY (FVE: N35.25). Zenith Bank now looks very attractive following sell-off across the equity market. Zenith trades at a P/B of 0.7x, a discount to peer average of 0.9x. Strong valuation for zenith is premised on substantial decline in funding cost and improved asset quality.

First City Monument Bank Plc – ( FCMB ) BUY (FVE: N2.34). Analyst's 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). Analyst's expect Dangote Cement to sustain earnings growth over 2018, at faster pace than their  earlier estimate. To be specific, analyst's are now more positive on the write back of the tax provisions booked thus far.

 Okomu Oil Plc – BUY (FVE: N102.33). ( OKOMUOIL ) 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 in 2018.

 Forte Oil Plc – BUY (FVE: N34.55). ( FO ) Analyst’s BUY rating on FO is premised on improvement in margins beyond 2018, hinged on expected upward adjustment in domestic PMS Price. Accordingly, analyst's 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 R.T. Briscoe Plc following the company’s compliance of submitting its audited financial statements for the periods ended 31 December 2017, 31 March and 30 June 2018.

 Prices of Honeywell Flour Mill Plc, Access Bank Plc and United Bank for Africa Plc were adjusted last week for dividend as recommended by their Board of Directors.

This Week

 Annual General Meeting: Aluminium Extrusion Industries Plc, Honeywell Flour Mills Plc.

 Dividend Payment: Smart Product Nigeria Plc, Honeywell Flour Mills Plc, Triple Gee and Company Plc, Access Bank Plc,UBA Plc.

Reporting for EasyKobo on Monday , 17 September 2018 in Lagos, Nigeria

Source: ARM Securities Limited


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