Oil warrant holders invited to sell back warrants Power sector reforms update

Transcription

1 February 26 th 2007 Issue no. 241 Nigeria Update Issue No. 96 Politics & Economy Politics and Economy ` Oil warrant holders invited to sell back warrants Power sector reforms update Fixed Income & Currency Markets Interest rates ease Coupon on 5-year bond falls Parallel rate appreciates Oil & Gas Sector Developments Total considers independent development of Egina field MEND orders all foreigners to leave Nigeria Delta Federal Government to offer oil exploration licences in mid-march Corporate & Foreign Investment News Actis to invest $132million in Diamond Bank Standard Bank signs MOU to buy controlling stake in IBTC Chartered UBA, Oceanic Bank sell shares Capital Markets & NSE index up 3.9% Company Results Key blue chips release results Afrinvest 50 Stocks 3 rd Floor 2-4 King Street London, SW1Y 6QU Tel: Fax: info@afrinvest.com This report has been issued and approved by Afrinvest Limited. This report is based upon information from various sources that we believe are reliable; however no representation is made that it is accurate or complete. While reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any trading transaction. Any investments discussed may not be suitable for all investors. This report is provided solely for the information of clients of Afrinvest Limited ( Afrinvest ) who are expected to make their own investment decisions without reliance on this report. Afrinvest conducts designated investment business with Market Counter-parties and Intermediate Customers and this document is directed only at such persons. Other persons should not rely on this document. Afrinvest accepts no liability whatsoever for any direct or consequential loss arising from any use of this report or its contents. This report is for private circulation only. This report may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Afrinvest. Investments can fluctuate in price and value and the investor may get back less than was originally invested. Changes in rates of exchange may have an adverse effect on the value of the investment. Past performance is not necessarily a guide to future performance. It may be difficult for the investor to sell or realise the investment or to obtain reliable information about its value or the risk to which it is exposed. Afrinvest and/or a connected company may have a position in any of the instruments mentioned in this document. Afrinvest is authorised and regulated by the Financial Services Authority to conduct investment business in the United Kingdom. Issue 241

2 Politics & Economy Oil warrant holders invited to sell back warrants The Central Bank of Nigeria has invited holders of 1.76 million oil-linked warrants to submit offers to sell the oil warrants back to the Central Bank. The warrants were issued alongside Brady bonds as part of Nigeria s debt restructuring in However, the warrants were subsequently detached from the Brady bonds in In a modified Dutch auction process, holders of the warrants accepted for purchase by the Central Bank will receive an amount in US dollars equal to the clearing price, subject to a minimum price of $220 per right. The invitation expires on March 23, Citibank is the lead manager for the proposed cash tender offer. The buy back of the oil-linked warrants is part of an ongoing strategy to settle the remnant of Nigeria s debt to the London Club, which comprise the oil warrants and promissory notes. President Obasanjo had announced that the balance of the London Club debt shall be repaid by March Power sector reforms update President Obasanjo has commissioned the Geregu Gas Turbine Power Plant, the first brand new power plant funded and commissioned by his administration. The plant, built at a cost of 195 million euros, has a capacity to generate 414 megawatts of electric power. According to the Minister of Energy, Edmund Daukoru, two new plants in Omotosho and Papalanto, which will add an additional 670 megawatts to the national grid, will be commissioned by April. Seven other gas plants are to be commissioned before the end of Nigeria is seeking private sector participation in the power sector in a bid to boost power generation from about 3,000 megawatts to 10,000 megawatts by the end of The government also plans to privatise state owned power companies. In a related development, the Bureau of Public Enterprises has extended the deadline for the submission of expressions of interest by investors/ concessionaires in 11 power distribution and 3 thermal generation companies from February 16 to March 9. % 12.0 Inflation (12m moving average) Economic Indicators 06f 05e External Debt (US$bn) GDP Growth (%) Nov-06 Dec-06 Jan-07 Source: FOS, CBN Foreign Res. (US$bn) m Inflation (%) Prim. Bal % of GDP Issue 241

3 Fixed Income & Currency Markets Money Markets Interest rates stable Nigerian interbank interest rates eased over the period amid a rise in liquidity. Rates for 7, 30 and 90-day funds averaged 10.7% compared to 11.2% in the previous fortnight. The CBN sold 91-day T-bills at a yield of 7.0%. Government Bonds Coupon on 5-year bond falls The Federal Government 5-year bond issued in February offered a coupon of 9.5% compared to 12.99% for the previous issue in September Over the same period, the 30 day NIBOR rate fell from The current yield for the 3 year bond fell to 9.3%. Foreign Exchange Parallel rate apprecaites The Naira appreciated on the parallel market closing the fortnight up 0.6% at N129.7/ US$1. On the inter-bank market, the currency also remained stable at N128.4/US$1 while the official CBN rate was unchanged at N127.0/US$1. The CBN sold US$635m at its Wholesale Dutch Auction System (WDAS). NIBOR* 7-day 30-day 90-day Forex Rates US$/N Friday 2wks 6m Interbank N/US$ Jan Mar- 06 Parallel Rate May- Jul- Sep Nov- 06 Jan- 07 % Appreciation/(Depreciation) % - (0.0) * Nigerian Interbank Offer Rate Parallel Rate T-bills 182-day 91-day MPR* Appreciation/(Depreciation) % CBN* % Appreciation/(Depreciation) % * Monetary Policy Rate Source: CBN * Lowest accepted bid at auction Source: CBN, Commercial Banks, Bureaux de changes -3- Issue 241

4 Oil & Gas Sector Developments Total considers independent development of Egina field Total, the French oil company, has announced that its Egina offshore oilfield located in OML 130 may be suitable for stand-alone development. This follows a series of promising discoveries including the Egina-5 well, which has an estimated production potential of 12,000 barrels per day. In December 2003, Egina-1 was discovered 20 kilometres from Akpo, where Total s first stand-alone development in OML 130 is located. The Akpo field is expected to start production in 2008 and eventually reach peak production of 225,000 barrels per day. Egina-2 was discovered in October An appraisal of Egina-3, Egina-4 and Egina-5 confirmed the possibility of a stand-alone development of the field. Total estimates peak production of 150,000 barrels per day from the Egima field, which it hopes to bring into production by MEND orders all foreigners to leave Nigeria Delta The Movement for the Emancipation of the Niger Delta (MEND) has advised foreigners to leave the oil producing Niger Delta region as they risk being caught in an impending war. MEND has been in the forefront of attacks on oil installations in the Niger Delta and the kidnapping of expatriates even as it presses for the release of detained leaders from the region and compensation for communities devastated by oil activities. In an statement, the movement urged all countries to prepare to evacuate their nationals. Federal Government to offer oil exploration licences in mid-march Nigeria s energy minister, Edmund Dakoru announced that the government will offer oil exploration licences in about 30 plots of territory in mid-march In 2005, Nigeria offered 80 plots for oil exploration, selecting winners through an auction process. US$ 82 Bonny Light Prices Oil Prices (US$) Friday 2wks 6m mbpd 2.30 Nigeria Oil Production Bonny Light % change Brent Crude Feb-06 Apr-06 Jun-06 Aug-06 Source: Bloomberg, OPEC Oct-06 Dec-06 Feb-07 % change Nov-06 Dec-06 Jan Issue 241

5 Corporate & Foreign Investment News Actis to invest $132million in Diamond Bank The UK based Actis is to buy a 23% stake in Diamond Bank for N17 billion ($132 million). Diamond Bank shareholders would meet on March 12 to consider a resolution which would allow Actis, a private equity firm focused on emerging markets, to buy 2.2 billion shares of Diamond Bank at a concessionary rate of N7.50 per share. The deal is subject to regulatory approvals. Actis will contribute its banking industry investment experience to Diamond Bank, having made similar investments in other emerging countries such as India, Uganda and Rwanda. Diamond Bank has built a reputation as a leading provider of commercial banking services to small and medium sized firms in Nigeria. Standard Bank signs MOU to buy controlling stake in IBTC Chartered Standard Bank and IBTC Chartered Bank have executed a memorandum of understanding (MOU) which lays the foundation for Standard Bank to buy a controlling stake in IBTC Chartered Bank. The MOU provides that following a merger of Standard Bank s Nigeria subsidiary (Stanbic Bank) with IBTC, Standard Bank is to raise its stake in IBTC to between 50.1% and 55% by acquiring additional IBTC shares from existing shareholders via a tender offer. The tender offer is priced at N Afrinvest West Africa is acting as the adviser to Standard Bank. UBA, Oceanic Bank sell shares United Bank for Africa (UBA), Nigeria s largest Bank by assets, and Oceanic Bank have concluded arrangements to raise funds from the capital market through a combination of a public offer and rights issue to existing shareholders. UBA plans to raise N54 billion ($416 million) by selling 1.12 billion shares to the public and million shares to existing shareholders, all at N35.00 per share. Sixty three percent of the offer proceeds is allocated to fund the roll out of branches and the deployment of automated teller machines. Similarly, Oceanic Bank, Nigeria sixth largest bank by assets and market value, plans to raise N56.1 billion ($432 million) by selling 3.4 billion ordinary shares at N16.5 per share. The offer will be open from March 5 to April 13. Part of the proceeds of the offer would be used to fund expansion locally and internationally. Following the consolidation of the Nigerian banking industry from 89 to 25 banks in 2006, aggressive branch expansion and an increasing focus on retail banking has been a common strategy employed by many Nigerian banks. -5- Issue 241

6 Capital Markets News NSE Stats Friday 2wks % change NSE Index 40, , Turnover (US$m) (24.7) Shares traded (m) 4,519 4, P/E Ratio (x) Div. Yield (%) (2.7) NSE index up 3.9% The Nigerian Stock Exchange rose 3.9% over the forthnight closing at 40, Turnover over the two-week period was down 25% to US$382m. For the year, the NSE Index is up 23%. Guinness Nigeria released 6 months results to December 2006, recording an 8% increase in turnover to NGN29.4bn and a 20% growth in profits to NGN4.7bn. First Bank released 9 months results to December 2006, posting a 28% rise in gross earnings to NGN64.5bn and a 27% rise in profits after tax to NGN14.8bn NSE Index Over 5 Years Union Bank released 9 months results to December 2006, posting a 15% rise in gross earnings to NGN54bn and a 15% rise in profits after tax to NGN13.3bn. Nestle released 12 months results to December 2006, posting a 12% rise in turnover to NGN38.4bn and a 7% rise in profits after tax to NGN5.7bn. West African Portland Cement (WAPCO) released 12 months results to December 2006, posting a 49% rise in turnover to NGN39.6bn and a 291% rise in profits after tax to NGN10.8bn. NSE Index Over 90 Days Nov 6-Dec 19-Dec 1-Jan 14-Jan 27-Jan 9-Feb 22-Feb Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Main Unit Price Absolute Performance Relative to Index Company Period T/O (Nbn) % change PAT (Nbn) % change Movers Naira 2 wks (%) 6 m (%) 2 wks (%) 6 m (%) Results Mnths Current Y-on-Y Current Y-on-Y Gainers Eterna Oil & Gas Guinness 6 mths Dunlop Nigeria First Bank 9 mths Cornerstone Insuranc Union Bank 9 mths Losers Nestle 12 mths Presco (14.90) (21.57) (18.79) (53.15) WAPCO 12 mths Beta Glass 7.82 (12.23) (16.12) Oando (6.25) (8.54) (10.14) (40.12) -6- Issue 241

7 Afrinvest 50 Stocks Price PriceFortnightly YTD Market Fortnightly EPS EPS Div. P/E P/E Company and Sector Unit Per 100 sh Change Change Cap. Turnover Current* Historic* Yield Current Historic (N) US$ % % US$m US$'000 US$ US$ % (X) (X) AGRO ALLIED Okomu Oil (3.90) Presco (14.70) AUTO AND PARTS Dunlop Nigeria n/a n/a n/a n/a n/a RT Briscoe BANKING Access Bank , n/a n/a Afribank , First Bank of Nigeria , Guaranty Trust Bank , Intercontinental Bank , Oceanic Bank , Platinum Habib Bank , Sterling Bank , Union Bank of Nigeria , United Bank for Africa , Wema Bank , n/a Zenith Bank , BREWERIES/BEVERAGES 7 Up Bottling Company Guinness Nigeria , Nigerian Bottling Co Nigerian Breweries (0.03) , CEMENT AshakaCem , Benue Cement Co , n/a CCNN n/a n/a n/a WAPCO (5.34) , CHEMICAL & PAINTS DN Meyer n/a n/a 3.8 n/a n/a CONSTRUCTION Julius Berger (5.91) (1.55) UAC Properties CONSUMER GOODS Cadbury Nigeria , Flour Mills Nigeria (4.08) , Nestle Foods Nigeria , Northern Ng. Flour Mills n/a PZ Industries (3.70) (1.62) , Unilever Nigeria ,096 n/a 0.33 n/a n/a HEALTHCARE GlaxoSmithKline INSURANCE AIICO Insurance , n/a Cornerstone Insurance , Niger Insurance Royal Exchange As Wapic Insurance , OIL SERVICES Japaul Oil and Maritime OTHER MANUFACTURING Beta Glass (12.03) Vitafoam Nigeria PETROLEUM MARKETING African Petroleum ,800 n/a n/a Chevron Oil Nigeria n/a Conoil n/a n/a 3.1 n/a n/a Eterna Oil & Gas n/a n/a 0.7 n/a n/a Mobil Nigeria (2.34) Oando (6.03) , Total Nigeria (5.01) (2.46) TRADING & DIVERSIFIED *per 100 shares UAC , Issue 241

8 CONTACT: LIMITED 3 rd FLOOR, 2-4 KING STREET LONDON SW1Y 6QU TEL : FAX : PHILIP IHEANACHO, WOLE FAMUREWA wfamurewa@afrinvest.com Provided in co-operation with Afrinvest West Africa (AWA) 2A OSBORNE ROAD IKOYI, LAGOS NIGERIA TEL : FAX : CONTACTS: SADIQ WAZIRI swaziri@afrinvestwa.com -8- Issue 241