06 November 2018 : The Nigerian equity market reversed the positive trend witnessed over the past two weeks, declining by 2.38% WoW. The negative performance was driven by declines in FBNH (-15.0%), ETI (-4.48%), GUINNESS (-5.2%), DANGSUGAR (-10.9%), DANGCEM (- 2.9%), NESTLE (-1.5%) and SEPLAT (-3.1%). The stocks that recorded the highest declines during the week were UNITYBNK (-21%), DANGFLOUR (-21.1%), CCNN (-18.8%) and DIAMONDBNK (-16.7%). On a sectorial basis, most sectors closed negative save for the Construction and Real Estate which closed flat. The Brewers (-4.7%), Cement (-3.1%), Personal Care (-5.1%) and Food (-3.3%) were the largest losers.

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 Plc – ( FIDELITYBK ) BUY (FVE: N2.92). Analysts are now more optimistic over their expectation for earnings growth over 2018 largely on the back of lower loan-loss provisioning. Analysts have revised their FY 18E EPS higher to N0.82 (previously N0.76) which is 25% higher YoY. Analyst's FVE of N2.92 (previously N2.82) translates to a BUY rating on the stock. Based on current price, their dividend expectation translates to a dividend yield of 8%.

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 0.95x, a premium to peer average of 0.85x. Strong valuation for zenith is premised on substantial decline in funding cost and improved asset quality.

CCNN Plc – ( CCNN ) SELL (FVE: N17.01). While analysts maintain their volume and earnings expectation for the company over 2018 and beyond, the expected increase in shares outstanding from the merger informed a material adjustment to analyst's FVE to N17.01 from previous estimate based on their expected 6.10 billion shares of N28.47, which translates to a SELL rating on the stock.

Unilever Nigeria Plc – ( UNILEVER ) STRONG BUY (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 18 due to lower revenue and higher cost, analysts have an OVERWEIGHT rating on Okomu based on their FVE of N92.45, as analysts believe current pricing presents an attractive entry point.

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.

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Last week

FCMB Group Plc announced the transfer of Credit Direct Limited (CDL) from FCMB Limited – the commercial banking business – to FCMB Group Plc, making CDL a direct subsidiary of FCMB Group Plc.

Shares of Unity Bank Plc, Fortis Microfinance Bank Plc, Thomas Wyatt Nig Plc, Multi-Trex Integrated Foods Plc, Golden Guinea Breweries Plc and Deap Capital Mgt & Trust Plc were suspended for trading due to failure to submit nine-month financial statements. The suspension on trading of Unity Bank was however lifted following due compliance.

This week

Dividend Payment: Cutix Plc, Seplat Plc, Nestle Nigeria Plc and Nigeria Breweries Plc

Reporting for EasyKobo on Tuesday , 06 November 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. Click here to view full corporate actions thus far in 2018