15 October 2018 : Last week, the Nigerian equity market closed the week on a positive note, with the NSE ASI appreciating by 23bps WoW to close at 32,456.98 index points. The bullish performance reflected gains in banking counters – Stanbic (+6.12%), FBNH (+2.25%) and Guaranty (+0.27%) – as investors took advantage of currently depressed valuations to position ahead of Q3 earnings releases. Apart from the Banking sector which gained +1.57% WoW, the Food (+0.26%) and Cement (+0.26%) sectors also closed positive. On the other hand, the Personal Care (-2.31%), Brewers (-1.73%), Oil & Gas (-1.69%), Insurance (-1.18%) and Real Estate (-0.03%) sectors booked losses.

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 – ( FBNH ) 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.

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 0.94x, a premium to peer average of 0.92x. Strong valuation for zenith is premised on substantial decline in funding cost and improved asset quality.

Dangote Cement Plc – ( DANGCEM ) STRONG BUY (FVE: N278.54). Analysts believe DANGCEM presents an attractive entry point in the cement sector in Nigeria and a quality name among Sub-Saharan Africa (SSA) peers, given its strong and diversified margins, balanced funding structure and exposure to growth markets in Africa.

Unilever Nigeria Plc – ( UNILEVER ) OVERWEIGHT (FVE: N50.98). Unilever is analyst's top pick in the consumer space with FY 18E EPS expectation of N2.13 (+19.7% YoY), based on revenue growth (+13.1% YoY) and significant moderation in interest expense (- 91% YoY) – following the sizeable deleveraging of its balance sheet. On analyst's numbers, Unilever trades at a FY 18E and FY 19F P/E of 20.2x and 18.7x relative to 5-year historical average of 33.5x.

Okomu Oil Palm Plc – ( OKOMUOIL ) OVERWEIGHT (FVE: N92.45). Although analysts expect PAT to be lower over FY 2018 due to lower revenue and higher costs, analysts have an OVERWEIGHT rating on Okomu based on their FVE of N92.45, as analysts believe current pricing presents an attractive entry point.

Total Nigeria Plc – ( TOTAL ) STRONG BUY (FVE: N244.28). Analysts upgrade their FVE on Total Nigeria Plc to N244.28, as analysts now model a 24% hike in domestic petrol price to N180 per litre and increase in finance income in 2019 - following robust subsidy receivables as at H1 18.

Corporate Benefit Tracker

Last week

The Cement Company of Northern Nigeria (CCNN) officially announced the company has received a requisite merger approval from the SEC and NSE with respect to its proposed merger with Kalambaina Cement Company Limited.

The Flour Mills of Nigeria Plc has filed an application to obtain an embedded electricity generation license to operate a 70MW

power plant to be located in Apapa Lagos.

Eterna Plc announced its proposed issuance of a N 10Billion 270–day Commercial Paper, which would be spent on working capital and general corporate purposes.

Reporting for EasyKobo on Monday ,15 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.