REGENCY RESEARCH WEEKLY MARKET REPORT MACROECONOMIC ENVIRONMENT MACROECONOMIC INDICATORS ALL SHARE INDEX & MKT. CAP. Friday February 10, 2017

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1 Friday February 10, 2017 REGENCY RESEARCH WEEKLY MARKET REPORT MACROECONOMIC ENVIRONMENT The total value of capital imported into Nigeria in the fourth quarter of 2016 was estimated to be $1, million, which represents a decrease of 15.00% relative to the third quarter, and a fall of 0.52% relative to the fourth quarter of The level of capital imported was similar in each month of the quarter, but the highest was in December, of $ million. The decline relative to the previous quarter was entirely due to a decline in portfolio investment and Foreign Direct Investment (FDI). The quarterly decline in portfolio investment was mainly due to base effects: there were large investments in money market instruments and bonds in the third quarter, which were not matched in the final quarter. In the year 2016, capital importation fell by 46.86%, from $9.64 billion in 2015 to $5.12 billion. This was the lowest value since the series started in 2007, which reflects the numerous economic challenges that afflicted Nigeria in The weakening of the naira may have had an impact: a weaker naira means more can be purchased with each dollar, and therefore investment projects requiring naira payments cost less in dollar terms. Portfolio investment fell the most, by 69.81%. This investment type, whereby investors seek quick returns rather than control of management in companies, is most likely to be affected by current market conditions. Foreign Direct investors take a longer-term view, and therefore Nigeria s recession and currency problems may carry less weight in investment decisions. Capital Importation can be divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment and Other Investments. In the final quarter of 2016, Other Investment was the largest component of imported capital and accounted for $ million, or 59.40%. This followed a quarterly increase of 63.95%, and a year on year increase of 91.16%. The second largest component of capital importation in the final quarter of 2016 was Foreign Direct Investment (FDI). This investment type accounted for $344.63m, or 22.25% of the total. This represented growth of 1.17% relative to the previous quarter, and of % relative to the same quarter of the previous year, the first year on year growth rate in 5 quarters. For the first quarter on record, Portfolio Investment was the smallest component of capital importation, and accounted for $284.22m, or 18.35% of the total. This was the lowest share accounted for by this investment type since the beginning of Whereas the other types increased relative to the previous quarter (albeit slightly in the case of FDI) Portfolio Investment fell by 69.12%. Capital Market Review.. Analysis of the market activity in the week ended February 10, 2017 technically reveal active speculative tendencies as investors were trading cautiously during the week. The Nigerian Stock Market thereby closed on negative note during the week with the All Share Index and market capitalization of listed equities depreciating by 1.38% and 1.79% from the opening figures of and N8,892 trillion to close at 25, and N8,770 trillion respectively. Its year to date (YTD) return stands at 5.71%. MACROECONOMIC INDICATORS GDP Growth Rate % January 27, 2017 Un-employment Rate 13.90% November, 2016 Broad Money Supply (M2) N21,634 Bn June, 2016 Credit to Private sector N21,425 Bn June.,2016 Consumer Index (YOY) 18.55% January 27,,2017 Monetary Policy Rate (MPR) 14% January 27, 2017 Deposit Rate of Banks (3 Months) Source: Central Bank of Nigeria (CBN) 9.34% August.,2016 Average Prime Lending Rate 16.78% August, 2016 Nigeria s Bonny Light Crude Oil US$54.81 February 10, 2017 Nigeria s Gross External Reserves ALL SHARE INDEX & MKT. CAP PERFORMANCE OF THE NSE INDICES NSE INDICATORS US$28.90Bn January 27, 2017 INDEX TITLE prev week curr week CHANGE % NSE PREMIUM 1, , (0.92) NSE MAIN BOA 1, , (2.35) NSE 30 INDEX 1, , (2.14) NSE CONS. GO (5.72) NSE BANKING NSE INSURANC NSE OIL & Gas (0.91) NSE LOTUS 1, , (3.34) NSE IND. GOOD 1, , (2.58) NSE ASeM 1, , NSE PENSION (2.29) Regency Research Weekly Market Report Committed to grow your wealth 1

2 Domestic Market Review Nineteen stocks appreciated in price during the week as against twenty three stocks in the preceding week. The top ten price gainers during the week were: MARKET SUMMARY Last Week Previous % Change week Volume 1,052 M 1,153 M Value N= N=8,037 B N=8,032 B 0.06 Total Gain Thirty eight stocks depreciated in price during the week as against Thirty seven stocks in the preceding week. The top ten price losers during the week were: Total Loss Deals 13,586 12, All Share Index 25, , Market Cap. N=8,770 N=8, EXCHANGE TRADED PRODUCTS (ETP) Trillion TOP TEN GAINERS Trillion Traded during the week were a total of 200 units of Exchange Traded Products valued at N338, in 8deals compared with 310 units of Exchange Traded Products valued at N19, in 8 deals traded in the preceding week Company Op. cl. Gain Gain in % CAVERTON BETAGLASS NEIMETH MANSARD TRANSCORP PHARMADEK GUARANTY TOURIST PRESCO NEWREST BOND MARKET A total of 1,135 units of Federal Government bond valued at N1,174, in 5deals were traded during the week under review compared with 100 units of Federal Government bond valued at N106, in 1 deal traded in the previous auction. TOP TEN LOSERS Company Op. Cl. Loss Loss in % UAC-PROP (0.59) (23.79) PZ (2.50) (18.46) FO (7.13) (11.69) FBNH (0.37) (10.57) NESTLE (55.60) (8.18) LEARNAFCA (0.06) (8.11) CUTIX (0.11) (6.96) FIDELITY (0.06) (6.74) STERLING (0.05) (6.67) NASCON (0.50) (6.33) Regency Research Weekly Market Report 2 Committed to grow your wealth

3 Domestic Market Review OUTLOOK AND STOCK RECOMMENDATION FOR THE WEEK (13/02/17-17/02/2017) The Nigerian Stock Market depreciated during the week under review. The market reveal active speculative tendencies as investors were trading cautiously during the week. Our opinion concerning the recommended stocks last week remained unchanged as most of the stocks recommended last week maintained their prices while some traded lower making their prices more attractive. The stock are: ACCESS BANK, DANFLOUR, UBA, UCAP, DANSUGAR, and ZEN- ITH. The stocks are recommended due to impressive quarterly results, attractive prices and sound fundamentals. These companies are valued stocks and most of them have consistent dividend payment over the years. We also advise our investors to continue with buy and hold of GTbank, TOTAL, and DANCEM because the fundamentals are strong, shareholding structure is good (prices may not likely depreciate significantly), good ROI, good perception, good patronage and their prices may continue to appreciate or remain stable in the current economic recession. RECOMMENDED STOCKS TO BUY Stocks STOCKS ON HOLD 52 wks Low 6 Mths Target N= price ACCESS BANK DANFLOUR UBA UCAP DANSUGAR ZENITH BANK Stocks 52 weeks LOW 6 Mths Target Expected % Change % Change GUARANTY TOTAL DANCEM FINANCIAL HIGHLIGHTS OF RECOMMENDED STOCKS Company Result Turnover PAT DANSUGAR N=m Last yr N=m N=m Last yr N=m Curr EPS Last Div. Paid 3RD QTER 115, ,058 10,117 11,535 N0.84 N0.50 YEAR END GTbank PLC 3RD QTER N interim 30/9/ , , ,927 75,160 N4.24 dividend UBA 3RD QTER N= interim dividend 30/09/ , ,492 52,269 48,557 N=1.50 TOTAL PLC 3RD QTER N Interim 30/9/ , ,299 11,632 2,770 N34.26 dividend UCAP 3RD QTER 30/09/2016 5,689 l 4,088 4,696 1,910 N0.78 N0.35 at 31/12/15 DANGOTE 3RD QTER FLOUR 30/9/ ,106 BILL 40,026 5,542-12,679 N1.11 NILL ZENITH BANK 3RD QUAR- PLC TER 30/9/16 380, ,853l 100,074l 83,087l N3.18 N0.25 Interim 3

4 MARKET DEVELOPMENTS (LAST WEEK ) Jaiz Bank Plc, Nigeria s first Non-Interest Bank during the week became a public quoted company further to the listing by introduction of its ordinary shares of N29,464,249,300 of 50kobo each at N1.25 on The Nigerian Stock Exchange s ( The Exchange or NSE ) Daily Official List on Thursday, February 9, To commemorate the listing, Jaiz Bank's Board and Executive Management, led by its Chairman, Alhaji (Dr.) Umaru Abdul Mutallab were honoured with a Closing Gong ceremony to officially close trading on the bourse for the day. The Nigerian Stock Exchange (NSE) also on Tuesday, January 31, 2017, listed by introduction 9.75Billion (9,750,649,400) ordinary shares of Med-View Airline at N1.50 Per Share on its Main Board. Med-View Airline Plc is one of Nigeria s foremost airlines, airlifting more than 3m passengers and 46m tons of cargo (annually) to 14 local, regional and international destinations, including London, Accra, Jeddah, Abuja, and Lagos amongst others. "This listing has added N14.65b (N14, 625,974,100) to the market capitalization of The Exchange, further deepening the Nigerian capital market. It will also increase the visibility of Med-View Airline Plc and differentiate it as a professionally run airline with high corporate governance standards, having met The NSE s listing criteria. With this listing, the Company is showing its commitment to a culture of strong corporate governance, excellence, professionalism and efficient services to its passengers, as well as providing increased returns to its shareholders" MARKET ANALYSIS AND EXPECTATION) Analysis of the market activity in the week ended February 10, 2017 technically reveal active speculative tendencies as investors were trading cautiously during the week. Volume analysis reveal active bargain tendencies towards CAVERTON, BETA GLASS, NEIMETH, and MANSARD while investors sustained sell postures towards FO, PZ, UAC-PROP and FBNH. The bears dominated the week, depressing the key benchmark index by points against loss recorded in the previous week to close at 25, The All Share Index traded within the range of (week-high) and 25, (week-low) to settle at 25, In the coming week we expect active value trading pattern as investors are positioning for release of 2016 year end results. INVESTMENT BASICS Different Types Of Funds At the fundamental level, there are three varieties of mutual funds: Equity funds (stocks), Fixed-income funds (bonds) and Money market funds Equity Funds Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income. The term value refers to a style of investing that looks for high quality companies that are out of favor with the market. These companies are characterized by low P/E and price-to-book ratios and high dividend yields. Money Market Funds The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe place to invest. You won't get great returns, but you won't have to worry about losing your principal. A typical return is twice the amount you would earn in a regular checking/savings account and a little less than the average certificate of deposit (CD). Bond/Income Funds Income funds are to provide current income on a steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cashflow to investors. As such, the audience for these funds consists of conservative investors and retirees. Bond funds are likely to pay higher returns than certificates of deposit and money Balanced Funds The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income. Global/International Funds An international fund (or foreign fund) invests only outside your home country. Global funds invest anywhere around the world. It's tough to classify these funds as either riskier or safer than domestic investments. They do tend to be more volatile and have unique country and/or political risks. Costs Costs are the biggest problem with mutual funds. These costs eat into your return, and they are the main reason why the majority of funds end up with lower performance. Fees can be broken down into two categories: 1. Ongoing yearly fees to keep you invested in the fund. 2. Transaction fees paid when you buy or sell shares in a fund (loads). The Expense Ratio The ongoing expenses of a mutual fund is represented by the expense ratio. This is sometimes also referred to as the management expense ratio (MER). The expense ratio is composed of the following: The cost of hiring the fund manager(s) - Also known as the management fee, this cost is between 0.5% and 1% of assets on average. Administrative costs - These include necessities such as postage, record keeping, customer service, cappuccino machines, etc. Some funds are excellent at minimizing these costs while others are not. 4

5 FIXED INCOME MARKET REPORT Money Market At the end of the week ended February 10, 2017, the Nigerian Interbank Offer Rates (NIBOR) closed negative for most of the tenors. The NIBOR rate decreased by 6.78%, 6.84%, and 0.01% for 1, 3 and 6 months tenors to close at 16.15, 18.18, and respectively. Treasury Bills The Central Bank of Nigeria during the week sold a total of N45.18 billion 91-day treasury bills at 12.80%, N80 billion 182-day treasury bills at 17.25% and N177.22billion 364 day treasury bills at 18.54% compared with N36.77 billion of 91 day treasury bills at 13.90%, N39.18 billion of 182 day treasury bills at 17.25% and N193 billion 364 day treasury bills at 18.65% sold in the previous auction Foreign Currency (EXCHANGE RATE). The official dollar rate closed at N305 to a dollar during the week under review. The naira during the week appreciated against some major currencies. It appreciated by 0.08%, 0.39% and 1.04% against US Dollar, Pounds and Euro to close at N305, N and N respectively. OIL PRICE The Nigeria s oil price went down slightly during the week under review. According to the latest data given by the Central Bank of Nigeria, the oil prices depreciated slightly and closed at $54.81 compared with $56.43 recorded in the previous week. NIGERIAN INTER BANK OFFER RATE NIBOR Source: Financial Markets Dealers Quotations (FMDQ) Source: Central Bank of Nigeria (CBN) This Week (%) Last Week (%) Open-Buy-Back (OBB) Overnight (O/N) TENOR Curr. Rate Prev.Rate % Change Overnight Month Months Months NAIRA EXCHANGE RATES Currency Cur. Rate Prev. Rate Change% US$ (0.08) POUNDS (0.39) EURO (1.04) FRANC (0.78) YEN (0.42) CFA (1.00) WAUA (0.46) YUAN (0.17) DANISH KRO (0.98) SDR (0.59) MONEY MARKET RATES % Change 7.90% 8.18% Source: Financial Markets Dealers Quotations (FMDQ) Disclaimer This report was prepared, issued and approved by Regency Assets Management Limited (RAML). The report is based on information from various sources that we believe are reliable. While due care has been taken in preparing it, investors are reminded that the stock prices fluctuate based on stock market forces. This report is provided solely for the information of clients of RAML who are expected to make their own investment decisions. Regency Assets Management Limited accepts neither responsibility nor liability whatsoever for any loss arising from the use of this report. All opinions on this report constitute the authors best estimate judgement as of this date and are subject to change without notice This report is for private circulation only. The report may not be reproduced distributed or published by any recipient for any 5