WEEKLY STOCK MARKET REVIEW

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1 WEEKLY STOCK MARKET REVIEW AUG 17-21, 2015 NSE ALL-SHARE INDEX MARKET CAP ( BILLION) VOLUME TRADED (SHARES) VALUE TRADED ( MILLION) Close 29, Close 10, Current Current 2, Open 30, Open 10, Previous 1,356,71 Previous 12, Change (%) 2.69 Change (%) 2.69 Change (%) Change (%) TOP GAINERS PRICE ( ) CHANGE (%) PAINTS AND COATINGS MANUFACTURES NESTLE FOODS NIGERIA ACCESS BANK FORTE OIL SKYE BANK FIDSON HEALTHCARE GREAT NIGERIA INSURANCE N.E.M INSURANCE VITAFOAM UP BOTTLING COMPANY MOST TRADED STOCK PRICE ( ) VOLUME (UNITS) EQUITY ASSURANCE ,529,421,450 ACCESS BANK ,610,456 UNITED BANK FOR AFRICA ,656,993 ZENITH BANK ,529,511 GURANTY TRUST BANK ,634,083 TRANSNATIONAL CORPORATION ,319,707 FBN HOLDINGS ,680,329 SKYE BANK ,237,525 NIGER INSURANCE ,765,488 FIDELITY BANK ,589,333 COMPANY NEWS A total volume of 370,500,000 and 311,930,000 units were added to the foling Federal Government Bonds % FGN JUL 2034 and 15.54% FGN FEB 2020 respectively on 20th August, PAST RECOMMENDED STOCK TOP LOSERS PREFERRED ENTRY PRICE PRICE ( ) PRICE ( ) CHANGE (%) EVANS MEDICAL IKEJA HOTEL CADBURY NIGERIA SEPLAT COSTAIN OKOMU OIL AXAMANSARD INSURANCE HONEYWELL FLOUR MILL FBN HOLDINGS WEMA BANK LEAST TRAED STOCK PRICE ( ) VOLUME (UNITS) BETA GLASS UNIC INSURANCE MORISON INDUSTRIES EKOCORP CHELLARAM AFROMEDIA CAPITAL HOTEL BOC GLASS INTERLINK ELECTRONICS FORTIS MICROFINANCE BANK M TARGET PRICE ASHAKA CEMENT DANGOTE CEMENT DIAMOND BANK FCMB HOLDINGS FIDELITY BANK FLOUR MILLS INT. BREWERIES NIGERIAN BREWERIES OKOMU OIL PZ CUSSONS SKYE BANK UACN ZENITH BANK

2 WEEKLY EQUITY REVIEW The NSE All-Share Index and Market Capitalization retreated by 2.69% to close on Friday at 29, and N trillion respectively. Similarly, all the Indices finished er during the week. We advise clients to exercise caution on equities in the near term particularly stocks with positive YTD returns and view the market as a BUYERS market for the seasoned long term (1-3year) investor and not for short term speculative interest with the objective of turning around funds earmarked for seasonal transaction (rent, fees etc); desperation will likely get this class of investor burnt. Current Price (N) 1-Year Target Price (N) Best Entry / Exit Price (N) Rating SEPLAT BUY GUINNESS BUY TOTAL SELL FBNH BUY SEPLAT In its H1-15 results, crude revenue after lifting adjustments came in at US$221.1 million, a 42% dip y/y. This was due to oil price US$53.3/bbl (H1-14: US$112.4/bbl) and periods of downtime on the Trans Forcados System (TFS) compressed growth. Gas revenue spiked by 177% y/y to US$26.5 million given increased production capacity from wells, work-overs done during the year and the new sales agreement with the Nigerian Gas Company (NGC). During the period, working interest sales volumes decreased by 13% y/y to 4.1 MMboe, while direct operating expenses climbed by 44% y/y to US$63.4 million on the back of deferred crude handling fees, rig related and other field expenses. Hence, a 56% y/y decline in gross profit to US$108.6 million. PAT tanked by 73% y/y to US$41.5 million underpinned by the pressure on revenue as well as the 67% y/y spike in finance costs owing to the increase in gross debt foling facility in January. Despite the pressure on revenue from er crude oil prices, management has maintained its strategy of focusing on developing and exploring more oil assets, increasing its capacity in monetizing available gas resources with the view of filling the growing demand from off-takers as well as adequately minimizing possible losses peculiar to the Nigerian upstream operating environment. As a result, we maintain a BUY rating on the counter. SEPLAT GUINNESS In spite of the challenging domestic environment, Guinness Nigeria posted revenue growth of 8.6% year-on-year (y/y) in its 9 months result (end March 2015) to N84.7 billion. We suspect that the growth remains largely driven by its Origin product and value brands as hinted by the management in its Management Discussion and Analysis presentation for Q2:2015. The company s profit after tax (PAT) continued its free fall, paring 12.2% y/y. The decline is attributed to an uptick in operating expenses against the backdrop of aggressive marketing investments in selected brands especially Guinness, Origin and Malta Guinness. Also, significant investments were made to established routes to market. The finance charges surged by 42.0% y/y owing to unfavorable interest rate environment for borrowers as MPR currently pegs at 13.0%. This, contributed to the pressure on the company s earnings. GUINNESS We valued GUINNESS using a blend of absolute and relative valuation models and arrived at a 2015 target price of N for the counter. At its current price of N119.00, GUINNESS has potentials to deliver 13.0% upside return in 12 months. Hence, we place a BUY recommendation for value accretion.

3 TOTAL Total s H1-15 revenue declined by 6.8% to N111.9 billion y/y, with cost of sales (COS) tracking sales (300bps ser) to N98.9 billion y/y. As a result, gross profit came in at N13.0 billion, 8.8% er than the comparable period in However, PBT notched 7.6% to N3.6 billion y/y on the back of a 439.2% spike in other operating income while PAT dipped 9.7% to N1.9billion y/y, as the effective tax rate climbed by 37.8% to N1.7bn y/y. Meanwhile, OPEX climbed by 10.4% to N11.2 billion driving operating profit er by 56.7% to N1.7bn y/y. Although no break-down was provided, we believe additional costs from the logistics involved in products distribution pushed operating expenses er during the period under review. The weak performance further shows the teething troubles players are currently experiencing in the downstream sub-sector. The elusive outlook for the industry will continue to weigh on performance, as players look to play cautiously along the product chain in order to minimize exposure to possible unfavorable policy direction in the near term. Hence our SELL rating on the counter, given our revised TP of N TOTAL FBN HOLDINGS FBN Holdings (FBNH) recently released its unaudited results for the six months ended 30 June Key Highlights: Gross earnings of N271.3bn, up 28.0% year-on-year (June 2014: N212.0bn) Net interest income of N132.6bn, up 15.2% year-on-year (June 2014: N115.2bn) Non-interest income of N61.2bn, up 41.7% year-on-year (June 2014: N43.3bn) Profit after tax of N40.1bn, up 7.7% year-on-year (June 2014: N37.2bn) Total assets of N4.4tn, from N4.3tn in December 2014 and N4.5tn in March 2015 Topline was once again buoyed by non-core banking activity in H1 2015, albeit with reduced momentum sequentially; as the regulatory noose around foreign exchange transactions tightened. The Seawolf transaction appears all sorted out, with an impairment credit loss of N22.6bn foling FBNH s equity stake of 42% in the oilfield service company. This specific transaction more than likely contributed to the 4.3% reduction in loan book to N2.1tn in H from N2.2tn as at December FBNH FBNH s annualized ROAE dipped sequentially to 14.8% from 15.7% in Q Efficiency improved for the second consecutive quarter to 61.5% in H from 65.1% in Q1 2015, although NPL ratio spiked by 110bps to 4.1% year-on-year. We remain optimistic on the counter in the long term but recognize that these numbers are unaudited ; FBNH trades at a P/E ratio of 3.0x and a P/Bv of 0.4x compared with the 0.7x multiple for tier-1 banks representing a 75% discount to peer average. Our revised 12 month price target for FBNH is N14.15.

4 DISCLAIMER AND IMPORTANT DISCLOSURES This publication is for general information only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed in this article represent the current, good-faith views of the analyst(s) at the time of publication. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Greenwich Trust to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy, completeness or otherwise. Opinions expressed are our own unless otherwise stated. Past performance is no guarantee of future results. The inclusion of past performance figures is for illustrative purposes only. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This is not in any sense a solicitation or offer of the purchase or sale of securities. Neither Greenwich Trust Limited nor any of its officers or employees accept any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents. Investments in general and, equities, in particular, involve numerous risks, including, among others, market risk, counterparty default risk and liquidity risk. The ratings and company profile assessments reflect the opinion of the individual analyst and are subject to change at any time. This material has been issued by Greenwich Trust Limited, which is regulated by the Securities and Exchange Commission. Further information on any security mentioned herein may be obtained by ing: research@gtlgroup.com Ratings Definition: Ratings may be defined by the foling standard: BUY (OVERWEIGHT): Target Price of the stock is above the current market price by at least 20 percent; HOLD (NEUTRAL): Target Price of the stock ranges between < -10 percent and < +20 percent from the current market price and; SELL (UNDERWEIGHT): Target Price of the stock is more than 10 percent be the current market price. Address: Research Team Usoro Essien Usoro.essien@gtlgroup.com Oluwaseun Dosunmu Seun.dosunmu@gtlgroup.com Nelson Iziogba Nelson.iziogba@gtlgroup.com Abiodun Olayiwola Abiodun.olayiwola@gtlgroup.com Greenwich Trust Limited Plot 1698A, Oyin Jolayemi Victoria Island, Lagos. Nigeria research@gtlgroup.com Visit us at:

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