11 October 2018 : Last week, the Nigerian equity market declined by 1.17% WoW to close at 32,383.15 index points. The bearish sentiment was largely driven by persisting sell pressure in bellwether stocks – DANGCEM (-2.44%), STANBIC (-7.6%), UBA (-2.38%), NB (-1.97%), and ETI (-2.23%). Analysis of the market performance on a sectorial basis showed that Cement (-2.21%), Brewers (-1.55), Banking (-1.44%), Real Estate (-0.53%) and Insurance (-0.47%) closed the week negative while the Oil & Gas (+2.23%), Food (+0.5%), and Personal Care (+0.03%) sectors closed positive over the week.

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.

Fidelity Bank – ( FIDELITYBK ) BUY (FVE: N2.82). Fidelity Bank remains analyst's preferred pick in the tier 2 space (after Stanbic) on the back of its strong fundamentals. Fidelity trades at a forward P/B of 0.39x, a premium to Diamond (0.14x) and FCMB (0.18x) which analysts believe is justified based on its first-rate ROAE (10.7%) in FY 18E relative to Diamond (2.1%) and FCMB (6.0%). Over FY 2018, analysts expect a dividend yield of 8% based on current pricing.

First City Monument Bank Plc – ( FCMB ) BUY (FVE: N2.34). Analysts revise their FVE lower to N2.34 (previously: N3.38) following their expectation of negative loan growth, higher Non-Performing Loan, higher OPEX and a slightly lower Non-Interest Revenue (NIR) in 2018. That said, the 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.

PZ Cussons Plc – Sell ( PZ ) (FVE: N10.12). Over FY 2019, analysts expect earnings to be weaker due to volume pressures mirroring weaker consumer wallet and import competition. Analysts have cut their EPS forecast by an average of 22% owing to the slow recovery in topline.

Forte Oil Plc – ( FO ) BUY (FVE: N34.55). Analyst's BUY rating on FO is premised on improvement in margins beyond 2018, hinged on expected 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.

Corporate Benefit Tracker

Last week

The Nigerian Stock Exchange released a notification seeking comments from the public on the proposed amendments to dealing members’ rules (Part XVII) as well as the proposed rules for listing both the green bonds and close-ended funds on the exchange.

The Nigerian Stock Exchange announced the suspension of trading in the shares of the following six companies: DNTyre&Rubber Plc., FTN Cocoa Processors Plc., International Energy Insurance Plc., Thomas Wyatt Nigeria Plc., Union Dicon Salt Plc., and Unic Diversified Holdings Plc. This sanction was melted on them due to their failure to file their respective relevant accounts with the NSE at the appropriate period.

Reporting for EasyKobo on Thursday ,  11 October 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.