11 March 2019 : The Nigerian bourse closed positive the prior week, with the NSE ASI gaining 0.31% WoW to close at 31,924.51 points while market capitalization appreciated by ~ N36.27 billion. The market gain was bolstered by positive sentiments in the Banking (+3.41%) sector, while other sectors recorded declines WoW. Further breakdown of the sectoral performance revealed interests in bellwether stocks (GUARANTY: +5.07%, ZENITH: +4.18%, FBNH: +4.52%, STANBIC: +3.23%, and INTBREW: (+8.00).
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Zenith Bank Plc – STRONG BUY (FVE: N38.17): Analysts retain their STRONG BUY rating on Zenith with a revised FVE of N38.17/share (from N38.83/share). Over 2019, analysts forecast EPS of N6.57 which is 7% higher than 2018 (N6.16). Growth in earnings mainly reflects i) expansion in assets yield from increase in loan book which would more than outweigh funding cost to support moderate expansion in NIM ii) increase in NIR due to resilience in fee income and ii) improvement in asset quality with non-performing loan (NPL) ratio of 4.5% and slower expansion in cost of risk (CoR) to 1.0%. At current price, expected dividend of N2.92 over FY 19E translates to a dividend yield of 12.3%.
Guinness Nigeria Plc – OVERWEIGHT (FVE: N77.31). Despite stiff competition across the brewery sector, analysts expect the wider portfolio mix of Guinness and gains from the Spirit segment to support a slower moderation in margins. Coupled with lower finance cost for after recent deleveraging of its FCY debt using proceeds from rights issue, analysts see improved profitability for the brewer.
Seplat Petroleum Development Company Plc – 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.
Unilever Plc – STRONG BUY (FVE: N49.19): Analysts have a STRONG BUY rating on UNILEVER with their FVE of N49.19 (+13.1% upside), supported by their expectation of strong growth from the food business over 2019, given its resilience over the last two years - having maintained a double-digit growth. In addition, given Unilever’s strong cash balance and their anticipation of slight uptick in yields, analysts expect the company to report a higher net finance income over the year.
Okomu Oil Palm Plc – STRONG BUY (FVE: N97.75): Over their forecast period, analysts anticipate volumes growth emanating from the harvest of fresh fruit bunches from its extension 2 plantation. Based on their expectation for volumes growth, accompanied by margin expansion, analysts raise their FVE to N97.75.
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Reporting for EasyKobo on Friday , 11 March 2019 in Lagos, Nigeria
Source: ARM Securities Limited
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