Stock recommendations for week of 22 October 2018   

23 October 2018 :The Nigerian equity market closed the week on a positive note, with the NSE ASI appreciating by 1.19% WoW to close at 32,841.69 index points. The bullish performance majorly reflected gains in DANGCEM (+5%). Asides DANGCEM, were gains in ZENITHBANK (+3.15%), GUARANTY (+0.82%), UBA (+0.62%) and NB (+0.57%). On a sectorial basis, the cement sector (+4.39%, banking (+0.76%), brewers (+0.55) Insurance (+0.28%) and oil & gas (+0.6%) closed positive. On the other hand, the Personal Care (-0.39%), Brewers (-1.73%), Food (-1.74%), Construction (-5.80%) and Real Estate (-0.31%) 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 – ( 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.

ZenithBankPlc–( 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 NigeriaPlc – ( 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 N 92.45, 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.

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  Last week

Seplat Petroleum Development Company Plc announced its disassociation to a $114 Million litigation involving the duo of Shebah Exploration & Production Company Ltd, Allene Ltd and Dr. Ambrosie Orjiako (who is also the Chairman of the Board ofDirectors of SEPLAT).

Med-View Airline Plc. has announced the disengagement of about sixty (60) staff, on the back of its current organisationals restructuring which has forced the firm to downsize its operation. 

The NSE announced the lifting of suspension on Thomas Wyatt Nigeria Plc and Union Dicon Salt Plc following their compliance of submitting their financial statements.

Reporting for EasyKobo on Tuesday ,23 October 2018 in Lagos, Nigeria

Source: ARM Securities Limited


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