Flour Mills of Nigeria Plc

Transcription

1 Capital Bancorp Plc (Member of the Nigerian Stock Exchange) Nigeria Equities Consumer Goods April 12, 2017 High Finance Costs Continue To Pressure Profit Margins Investment Summary Flour Mills of Nigeria s drive to become the nation s foremost food business company has seen the company undertake various expansion and investments strategies thought necessary to place it at the top of the ladder. The company is presently engaged in flour milling, production of pasta, noodles, edible oil and refined sugar, production of livestock feeds, farming and other agro-allied activities, distribution and sale of fertilizer, manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials, operation of terminals A and B at the Apapa Port, custom clearing, forwarding and shipping agents and logistics. Not until recently when it sold off all its holding, Flour mills of Nigeria was also a major shareholder in UNICEM, a producer of cement. Flour Mills of Nigeria have over recent years gradually continued to expand its product offering, shifting base solely from flour to other flour based and agro allied businesses, while also creating activities that will create synergies along the value chain. Given the fact that the Nigerian government projects a rapid increase in population and speculates that the country may witness food shortages in the near future if investment in agriculture is not encouraged, we believe that Flour mills of Nigeria s strategic investment in large scale commercial farming to support its food processing units with locally produced raw material is well thought out as it will reduce its dependence on imported raw materials and make the company more profitable in the long term as cost will be managed within reasonable limits. Over the last five years, the company s performance has been erratic as the company has struggled with several factors which include the insurgency in the North, increased competition and the rising cost of production which has hampered consistent top line and bottom line growth. Going forward by our valuation, we recommend a long term BUY rating on the company shares as we anticipated a gradual recovery to improve profitability in the medium to long term with expectation of consistent dividend payment % 2017F % F Revenue (NGN m) 308, , , Operating Profit (NGN m) 10,215 9, , Profit after tax (NGN m) 8,463 14, , Source company report, CBP Research Price:. - Current price Recommended entry price Target price Recommendation ACCUMULATE. As at Monday April 10, 2017 STOCK DATA Year End 31 st Dec YTD high YTD low YTD change -2.70% 52 weeks high weeks low Months Average Volume 1,151,017 Market Cap (NGN mn) 47, Trailing EPS (NGN) 5.50 Shares Outstanding ( mn) 2,624 Source company report, CBP Research Profitability ratios FY 16 FY 17E Gross Profit Margin 10.98% 14.50% Net Profit Margin 4.21% 1.69% Fixed Asset Turnover 0.62x 0.44x Valuations FY 14 FY 15 FY 16 FY 17F P/S ratio 0.14x 0.15x 0.14x 0.10x P/E 8.79x 5.58x 3.27x 5.62x Sales per x x x x share NAPS( ) P/B 0.56x 0.54x 0.49x 0.47x ROE(%) ROA(%) Div Yld% NSE Index vs Flourmills, YTD Price Movement - Rebased 2.00% 0.00% 3-Jan-17 3-Feb-17 3-Mar-17 3-Apr % -4.00% -6.00% -8.00% % Flourmills NSE ASI Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 1

2 Growth in food business consistently boosts revenue base; over the last 5 years, revenue growth has witnessed a compound annual growth rate of 7.32% to bn (vs bn in FY 12). Year on year, revenue grew by 10.96% from bn in FY 15 to bn in FY 16 while as at 9M 17 revenue has grown by a massive 47.89% while we project a FY 17E top line of bn representing a growth of 45.00%. Segment contribution to revenue has shown its food business to be the major contributor to revenue base, contributing bn (81.82% of total revenue for FY 16), 17.69% higher than bn reported in FY 15 accounting for 77.13% contribution to revenue for the period. Its agro allied business came as the second largest contributor to revenue, contributing 13.64% in FY 16 (vs % in FY 15). FY 16 saw other segments contribute the remaining 4.55% in FY 16 (vs. 6.50% in FY 15). Flourmill Revenue F (Billion NGN) FY'13 FY'14 FY'15 FY'16 FY'17F In its most recent result for 9M 17, the company reported similar segment income as its food segment remained the major contributor to revenue, contributing bn accounting for 74.56% of total revenue (vs bn which accounted for 73.11% of revenue in 9M 16). 9M 17, also saw income from its agro allied segment account for 21.43% of revenue and grew significantly by 40.54% to (vs bn in 9M 16). Other revenue segment also reported growth in income as its packaging segment grew by 35.76% to bn (vs bn in 9M 16), port operations and logistics segment grew by 54.46% to mn (vs mn in 9M 16) while real estate grew by 52.98% to mn (vs mn in 9M 16). Though real estate segment grew for 9M 16 period, that segment of the business remains challenged, as it has dropped from a revenue of 5.35 bn in FY 15 to a low of mn in FY 16 representing a decline of %. Given the contraction in the Nigerian economy we expect income from that segment to remain depressed until there is an improvement in economic activities while also anticipating the food segment to continually grow as consumption remains inevitable. Other revenue segment also reported growth in income as its packaging segment grew by 35.76% to bn (vs bn in 9M 16), port operations and logistics segment grew by 54.46% to mn (vs mn in 9M 16) while real estate grew by 52.98% to mn (vs mn in 9M 16). Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 2

3 Increase in inventory remarkably accompanied by revenue growth; for 9M 17 period, the company reported a 87.92% growth in inventories to bn (vs bn in 9M 16). This growth was largely due to price increase in most of its products, as approximately all of its goods reported price increase as input cost continued to rise while production volumes also slightly improved. This rise in prices was also evident in revenue growth from its food and agro allied segment which grew by 50.81% and 40.54% respectively as at 9M 17. On the demand side, we observe that price increase in its food segment didn t induce a slowdown in the demand for its products as the company was able to maintain market share and continue to drive sales volume in the face of growing competition in the market. In the medium term we remain optimistic on the outlook of the company as we expect a much improved return from its investments in the core food and agro allied business given the country s growing population. NGN'Mn Inventories FY'13 - FY'17F 120, , , ,000 80,000 60,000 40,000 20,000-65,650 63,684 68,426 58,699 FY'13 FY'14 FY'15 FY'16 9M'17 FY'17F Given the company s production capacity, subsidiaries and partnership, we are of the view that the company continues to underutilise its capability with respect to economics of scale and sales marketing as it currently runs an 8,000 metric tonnes per day wheat grinding plant for its flour business, a 350,000 metric tonnes pasta factory in Agbara Ogun State an approximated 10,000 hectares of sugarcane plantation and an advanced sugarcane refinery as well as a 15,000 tons per month animal feed factory while its subsidiaries also run at reasonable capacity. Certainly, the country has a large market for flour and as consumption of bread and flour based products rises, the demand for flour will increase in a bid to meet the growing demand as urbanization spreads across the country. For us, the expectation of a rise in the demand for flour which remains its flagship products puts the company in a pole position to grow its business and further increase market share, given that it already controls a larger portion of the market. On the demand side, we observe that price increase in its food segment didn t induce a slowdown in the demand for its products as the company was able to maintain market share and continue to drive sales volume in the face of growing competition in the market Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 3

4 High cost of sale continues to shrink margins: Flour Mills of Nigeria Plc has in the last five years reported a cost of sale to revenue margin varying from 84.63% to 89.02%. Its high margins has continued to exert negative pressure on profit margins as the company is left with between 10.00% and 15.00% to run other operational activities and also report decent net profit for the period. 9M 17 result saw some moderations in Cost of Sales (COS)/revenue as it eased to 86.28% compared to 89.50% reported in the same period of the previous year, amounting to a decline of 3.22%. In our view, this slight moderation signals management s dedication towards managing its input cost especially as the company begins to benefit from its investments in the agricultural sector which has constantly continued to reduce its dependence on imported raw materials. The company continues to produce raw materials locally wherever possible to ensure that products are developed through the full supply chain from growing to final consumer consumption. Though COS/ revenue stood reduced for the period, absolute numbers showed that cost of sale grew by 42.57% to bn (vs bn for 9M 16). Analysis further shows that major drivers of the increase reported in cost of sale were petrol, gas and oil and material costs. Petrol, gas and oil stood at bn (vs bn for 9M 16) representing an increase of 69.83% while material cost grew by 48.00% to bn (vs bn for 9M 16). NGN'bn REVENUE COS Margin GP Margin % 85.50% 87.45% 86.86% 89.02% % 13.14% 11.45% 10.98% 14.50% FY'13 FY'14 FY'15 FY'16 FY'17F 95.00% 85.00% 75.00% 65.00% 55.00% 45.00% 35.00% 25.00% 15.00% 5.00% Going forward, we expect that volatile commodity prices caused by erratic changes in global supply, the punitive import tariffs and barriers, and the continuous depreciation of the naira which exposes any firm to exchange rate risk, will have direct impact on input cost as unstable and rising prices of imported raw materials will continue to drive overall input cost higher. However, in the short to medium term, we project the company s COS / revenue to remain within same levels as variables responsible for the current high cost remain visible. Analysis further shows that major drivers of the increase reported in cost of sale were petrol, gas and oil and material costs. Petrol, gas and oil stood at bn (vs bn for 9M 16) representing an increase of 69.83% while material cost grew by 48.00% to bn (vs bn for 9M 16). Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 4

5 Cost of Sale & Total Expense Movement FY'13 - FY'17F NGN'bn Cost of Sale Total Expense FY'13 FY'14 FY'15 FY'16 FY'17F Rising operating expense remains a burden to profit; in the last five years, the company has continued to report erratic movement in operating expense, as its administrative expenses and selling and distribution expenses have continued to reduce operating profit. For 9M 17, operating profit reported a significant growth of % to bn (vs bn for 9m 16). This increase was largely as a result of the significant rise in revenue for the period, while growth in operating expenses moderated to decent levels. For the 9M 17 period, selling and distribution expense grew by 11.19% to 4.43bn (vs bn for 9M 16) while administrative expenses grew by 12.34% to bn (vs bn for 9M 16). The company also reported a net operating loss of bn against a loss of 3.12 bn for 9M 16 representing an increase of %. This significant rise was as a result of the exchange rate volatility during the period as the company reported an exchange loss of bn against a loss of 5.98 bn for 9M 16. The company also reported a net operating loss of bn against a loss of 3.12 bn for 9M 16 representing an increase of %. NGN'Bn Operating profit Operating profit margin 40,000 35, % 8.0% 7.0% 30, % 5.8% 6.0% 25, % 20,000 15,000 10, % 2.6% 4.0% 3.0% 2.0% 5, % - FY'13 FY'14 FY'15 FY'16 FY'17F 0.0% Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 5

6 Finance cost continues to rise on increased borrowing; finance cost has consistently risen over the last five financial years, growing from as low as 8.49 bn in FY 12 to as high as bn in FY 16 representing a CAGR of 27.43%. Over the last nine months, finance costs has also grown by 6.98% to bn (vs bn for 9M 16) while we project finance cost for FY 17E to average at bn. In FY 15, the company reported a significant increase of 35.30% in gross debt to bn (vs bn in FY 14). This rise in borrowing was as a result of the company s increased expansion activities as it also ventured into the agro-allied and core food business as well as the development of modern production facilities. Having consistently serviced its debt obligations, the company s gross debt dropped by 2.33% to bn in FY 16 (vs bn in FY 15), though profits have constantly weakened on the back of increased interest expense. NGN'bn Finance Cost Investment income Cash flow position remains healthy; Its FY 16 numbers showed the company report a % growth in net cash from operating activities to bn (vs bn in FY 15), while its 9M 17 was reported at a net outflow of 6.04 bn against an inflow of bn in 9M 16. This negative position was driven by the increase in inventory, prepayments and deposits for import which requires the use of cash. More so, the rise in inventory was driven by the % increase in raw materials to bn (vs bn in 9M 16) as we believe the company is accruing raw materials to keep its operations running especially with the volatility in the FX market which could hamper its operations if not properly managed. Net cash utilized in investing activities stood at an inflow of 8.49 bn for 9M 17 against an outflow of bn in 9M 16. This was largely as a result of the drop in the company s investments in capital projects to bn for 9M 17 (vs bn in 9M 16) representing a drop of 57.08%. Net cash utilized in financing activities also stood at an outflow of 5.99 bn against an inflow of 1.81 bn as at 9M 16 which was as a result of a drop in proceeds from borrowing which stood at bn while repayment of borrowings and bond, dividend paid and interest paid stood at bn FY'13 FY'14 FY'15 FY'16 FY'17F More so, the rise in inventory was driven by the % increase in raw materials to bn (vs bn in 9M 16) as we believe the company is accruing raw materials to keep its operations running especially with the volatility in the FX market which could hamper its operations if not properly managed. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 6

7 High debt to equity ratio pressure balance sheet position; Flour Mills of Nigeria have in the last five years continued to increase its leverage structure as total borrowing has continued to grow. Debt to equity ratio over the period stood at 1.29x in FY 12, 1.56x in FY 13, 1.82x in FY 14, 2.16x in FY 15 and eased down to 1.73x in FY 16. 9M 17 has witnessed a further rise in debt to equity as it stood at 2.32x signalling a further increase in leverage position as the company total borrowing has grown from bn in FY 16 to bn as at 9M 17 representing an increase of 41.38%. This rise gives us concern bearing in mind the impact it would have on the company s balance sheet especially given the fact that its shareholders fund isn t growing as fast as anticipated due to its inability to post increased profits on the back of higher finance cost. Its Debt to total asset came in at 0.49x for 9M 17 against 0.48x as at FY 16 indicating that the company financed approximately 49.00% of its assets with debt financing, while its total asset to liabilities stood at 1.27x for 9M 17 (vs. 1.38x in FY 16) % Debt 9M'17 Equity 9M'17 Its most recent 9M 17 result showed a 47.97% drop in Profit before tax to bn (vs bn in 9M 16) as the company reported zero income from disposal of investment for the period % Tax credit and divestment from subsidiaries boosts profits; the last two years has seen Flour Mills of Nigeria report improved profit after tax which has been significantly aided by both the income from its divestment from UNICEM and tax credit for both periods. For both FY 15 and FY 16, the company reported net income from disposal of investment in associate (UNICEM) to the tune of bn and bn respectively. This income was significant enough to keep the company profitable for the period despite the huge drop in operating profit and significant rise in finance cost. Profit before tax stood at 7.72 bn for FY 15 and grew by 48.73% to bn in FY 16. Its most recent 9M 17 result showed a 47.97% drop in Profit before tax to bn (vs bn in 9M 16) as the company reported zero income from disposal of investment for the period. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 7

8 Profit after tax also recorded further growth in FY 15, 8.46 bn and FY 16, bn, on the back of tax credit for the period as the company reported a tax credit of 0.73 bn for FY 15 and 2.93 bn for FY 16 on the back of its deferred taxation. Profit after tax for 9M 17 has been reported at 7.40 bn (vs bn for 9M 16) representing a drop of 61.04%. Profit before tax and Profit after tax margin 9M 17 was reported at 2.64% (vs. 7.50% for 9M 16) and 1.90% (vs. 7.21% for 9M 16). Profit before tax for FY 17E has been projected at bn (vs bn in FY 16) representing an increase of 1.60% while profit after tax has also been projected to drop by 41.79% to 8.39 bn (vs bn in FY 16) due to our projected tax charge of 28.10% for the period amounting to 3.28 bn against a tax credit of 2.93 bn reported in FY 16. NGN'bn PBT PAT TAX Margin % 14.00% 12.00% 10.00% 8.00% 6.00% Profit after tax for 9M 17 has been reported at 7.40 bn (vs bn for 9M 16) representing a drop of 61.04%. Profit before tax and Profit after tax margin 9M 17 was reported at 2.64% (vs. 7.50% for 9M 16) and 1.90% (vs. 7.21% for 9M 16) Q1'14 Q2'14 Q3'14 FY'14 Q1'15 Q2'15 Q3'15 FY'15E 4.00% 2.00% 0.00% Dividends have been low but consistent; Flour Mills of Nigeria has consistently continued to reward investors with dividend payment over the last four years though dividend yields have remain significantly low due to its share price during those periods. Dividend per share has also fallen to 1.00 per share (vs in FY 15) while the company has not maintained a definite pay-out ratio over the last four years. Its dividend pay-out ratio stood at 60.90% in FY 13, % in FY 14, 65.11% in FY 15 and 18.20% in FY 16. For FY 17E, we have projected a total dividend of 1.00 per share same amount paid in the previous year as we expect the company to remain burdened by the rising cost of sale, high interest expense and FX loss in the short term. On the long term, we remain optimistic of higher returns to shareholders when input cost and FX volatility begin to stabilize and have therefore projected a 1.50 dividend per share for FY 18F. NGN Div per Share Div % 11.67% 9.73% 5.56% 6.11% FY'13 FY'14 FY'15 FY'16 FY'17F 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 8

9 Other highlights; The company has the capacity to significantly grow; with over 30 subsidiaries in various business segments, Flour Mills of Nigeria has the capacity to grow into a more profitable company in the medium to long term especially if it can create value through the full supply chain from growing to final consumption which is expected to reduce the company s dependence on imported raw materials. The company in 2014/15 calendar year announced the sale of its holding in UNICEM of which the final payment for the holding was made in 2015/16 period. It also expended business with one of its subsidiaries ROM Oil Mills Limited in which it owns a 90% stake, by building an automated edible oil refinery and margarine plant in Ibadan. As at today, the company holds a 53% stake in Northern Nigeria Flour Mills Plc (quoted on the NSE), a 62% stake in Premier Feed Mills Company Limited, 75% stake in Thai Farm International Limited, and a 51% stake in Nigerian Eagle Flour Mills Limited while its holds a 100% stake in other subsidiaries. Going forward, we see these investments as strategic as income from these subsidiaries will continually flow into the group s operations and boost overall performance over time. Valuation; we used the discounted cash flow model for our valuation, though the model is based on forecasted cash flows and therefore represents cash generating nature of the business and provides long term outlook. The model was based on a five year projected cash flow and terminal value in a bid to calculate the target price of the company which led us to a fair value of per share. We also used other valuation metrics such as optimistic forward estimates of key ratios and forecast of FY 17F earnings to arrive at a target price of per share, retained earnings method to arrive at 16.91, residual income method to arrive at 41.97, dividend discount model method to arrive at We then took the average of all values and arrive at a target price of which suggests an upside potential of 30.79% at current market price. NGN Hold Flourmills YTD Price Movement BUY With over 30 subsidiaries in various business segments, Flourmills of Nigeria has the capacity to grow into a more profitable company in the medium to long term especially if it can create value through the full supply chain from growing to final consumption Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 9

10 Flour Mills of Nigeria Plc We thus recommend a BUY (ACCUMULATE) position on the company stock as we believe the stock continues to hold value for the long term, but also advice investors to gradually accumulate the company stock if market sentiments force the share price lower in the near term. EPS for 9M 16 stood at 7.24 while for 9M 17 currently stands at 2.82 (FY 17E 3.20). Sales per share improved for the period, increasing to in 9M 17 from in 9M 16, while price to sales ratio reduced to 0.12x for 9M 17 against 0.18x for 9M 16. The company s share price has reduced by -2.70% year to date compared to the -4.64% 52 weeks drop on the NSE ASI. Nascon vs. vs. Flourmill vs. Dangflour 52-weeks Rebased Nascon Flourmill Dangflour % % % % 80.00% 60.00% 40.00% 20.00% 0.00% % % Conclusion; In conclusion, we remain convinced that Flour Mills of Nigeria Plc has the ability to remain the market leader in its core business segment and further grow market share. We also do not see any significant threat from competitors to its dominance in the flour business; as the company has continued to expand and constantly innovate. Going forward, we expect net income for the company to remain subdued in the short term due to current realities but anticipate a growth in the medium to long term as its debt burden begin to ease and the company returns to improved profitability. Thus, shareholders of the company are expected to remain patient as they will reap the benefit in the no distant future Sales per share improved for the period, increasing to in 9M 17 from in 9M 16, while price to sales ratio reduced to 0.12x for 9M 17 against 0.18x for 9M 16. The company s share price has reduced by -2.70% year to date compared to the 4.64% 52 weeks drop on the NSE ASI. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 10

11 Statement of Profit or Loss million FY 14 FY 15 FY 16 FY 17F Revenue 332, , , ,750 % change 10.00% -7.04% 10.96% 45.00% Cost of Sales (288,486) (273,390) (304,962) (424,722) % change 9.26% -5.23% 11.55% 39.27% Gross Profit 43,657 35,367 37,625 72,029 % change 15.19% % 6.38% 91.44% Total operating Expenses (28,156) (24,466) (20,852) (21,857) % change 10.64% % % 4.82% Investment income 5,028 2,304 1,103 1,242 % change -8.00% % % 12.54% Finance cost (16,101) (18,704) (22,398) (23,844) % change 41.15% 16.16% 19.75% 6.46% Profit Before Taxation 8,228 7,725 11,489 11,674 % change % -6.12% 48.73% 1.60% Profit After Taxation 5,368 8,463 14,420 8,393 % change % 57.66% 70.39% % Statement of Financial Position million FY 14 FY 15 FY 16 FY 17F Total noncurrent assets 196, , , ,191 Total current assets 100, , , ,082 Total Assets 297, , , ,273 TOTAL Current Liabilities 128, , , ,361 TOTAL Noncurrent Liabilities 85,031 76,636 66,543 84,766 Total Liabilities 213, , , ,127 Shareholders equity 83,560 87,410 95, ,147 Total liabilities and Equity 297, , , ,273 Profitability and return FY 14 FY 15 FY 16 FY 17F Gross profit margin 13.14% 11.45% 10.98% 14.50% Operating profit margin 5.83% 3.31% 2.64% 6.90% Net profit margin 1.62% 2.74% 4.21% 1.69% ROCE 11.49% 6.23% 5.58% 0.67% ROE 6.42% 9.68% 15.06% 8.30% ROA 1.81% 2.47% 4.18% 1.76% Asset Utilization FY 15 FY 16 FY 17F Cash/Sales Sales to inventory Sales to total Assets Sales to fixed asset Equity multiplier Fixed asset turnover Liquidity Ratios FY 15 FY 16 FY 17F Quick ratio Current ratio Cash ratio Interest Coverage Debt to asset Debt to equity Inventory Turnover Inventory Turnover days Acct Receivable days Account Payable days Valuation Multiples FY 15 FY 16 FY 17F P/E (x) on current price P/B (x) on current price Dividend Yield (%) Pay-out ratio (%) Sales per share P/S ratio Stock Data FY 15 FY 16 FY 17F Total Div Paid ( bn) Earnings per share( ) Div. per share( ) NAVPS Earnings yield 17.92% 30.53% 17.77% Growth Performance FY 15 FY 16 FY 17F Turnover -7.4% 10.96% 45.00% PBT -6.1% 48.73% 1.60% PAT 57.6% 70.39% % Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 11

12 Our investment recommendation is supported by the upside or downside potential of a stock under coverage. This potential is estimated by comparing the stock s current market price to its target price and fair value, on a percentage increase or decrease basis. Analyst: Chiazor Victor vchiazor@capitalbancorpng.com Ratings Specification 15%BUY -15% to < 15% HOLD -15% SELL Source: CBP Research From our analysis, fair value is our opinion of the actual fundamental worth of a stock, irrespective of what the market thinks of the stock or what investors are willing to pay for it. A BUY recommendation directly means investors should accumulate the stock according to their risk appetite. A SELL recommendation prompts investors to exit their positions in the stock, as the analyst believes the stock will lose value. A HOLD recommendation tells investors to do nothing; if you have not bought the stock, do not buy it and if you have bought it, do not sell it. Disclaimer & Disclosure The value of any investment is subject to fluctuations, i.e. may arise and fall. Past performance is no guide to the future. The rate of exchange between currencies may cause the value of investment to increase or decrease. Hence investors may not get back the full value of their original investment. This document is not an offer to buy or sell any security. This document does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular investment will depend on an investor s individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for all investors. This document is based on information Capital Bancorp Plc received from publicly available reports and industry sources. Capital Bancorp Plc may not have verified all of this information with third parties. Neither Capital Bancorp Plc nor its advisors, shareholders, directors or employees can guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither Capital Bancorp Plc nor its advisors, shareholders, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document. This document is not to be relied upon and should not be a substitute for the exercise of independent judgment. This document includes certain statements, estimates and projections with respect to the anticipated future performance of securities listed on the Nigerian Stock Exchange and as to the market for these shares. Such statements, estimates and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates and projections or as to their appropriateness for the purpose intended and it should not be relied upon such. Opinions expressed are current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views and analytical methods of the analysis who prepared them. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 12