WEEKLY STOCK MARKET REVIEW

Transcription

1 4-Apr-16 5-Apr-16 6-Apr-16 7-Apr-16 8-Apr-16 4-Apr-16 5-Apr-16 6-Apr-16 7-Apr-16 8-Apr-16 WEEKLY STOCK MARKET REVIEW APRIL 4 APRIL 8 NSE ALL-SHARE INDEX MARKET CAP ( BILLION) VOLUME TRADED (SHARES) VALUE TRADED ( MILLION) Close 25, Close 8, Current 1, Current 6, Open 25, Open 8, Previous 1, Previous 6, Change (%) (0.) Change (%) (0.) Change (%) (11.97) Change (%) (3.50) WEEKLY VOLUME & VAULE TRADED NSE INDEX & MARKET CAPITALIZATION 1,0 1,0 1,400 1,200 1, Value Traded (RHS) Volume Traded ,0 25,200 24,0 24,200 23,0 NSE Index Market Cap ,200 TOP GAINERS ( ) CHANGE (%) E-TRANZACT INTERNATIONAL TIGERBRANDED CONSUMER GOODS FCMB HOLDINGS CUSTODIAN AND ALLIED INSURANCE ACADEMY PRESS UNITED CAPITAL DIAMOND BANK CAVERTON OFFSHORE SUPPORT GRP A.G LEVENTIS TRANSNATIONAL CORPORATION OF NIG MOST TRADED STOCK ( ) VOLUME GUARANTY TRUST BANK ,849, FCMB HOLDINGS ,854,96 EQUITY ASSURANCE ,779, FIDELITY BANK 1.38,5, STERLING BANK 1. 88,042, TRANSCORP INTERNATIONAL CORP ,150, FBN HOLDINGS ,454,413,.00 DIAMOND BANK ,832,48 SKYE BANK ,398,6.00 ZENITH BANK ,053,107.0 TOP LOSERS ( ) CHANGE (%) ASHAKA CEMENT (14.21) PORTLAND PAINT AND PRODUCT 2.75 (14.06) CEMENT COM. OF NORTEHRN NIG (13.95) OANDO 4.05 (11.57) ETERNA 1.56 (10.86) DANGOTE SUGAR 5.35 (10.83) LEARN AFRICA 0.72 (1) AIICO INSURANCE 0.76 (9.52) UNITY BANK 0.66 (8.33) TRANSCORP HOTELS 4.59 (8.20) LEAST TRADED STOCK ( ) VOLUME BETA GLASS UPDC REAL ESTATE INVESTMENT TRUST 1 5 U T C AFRICA ALLIANCE INSURANCE COMPANY S C O A PREMIER BREWERIES DAAR COMMUNICATIONS ,20.0 COSTAIN (WA) ,00 GOLDEN GUINEA BREWERIES ,00 DN TYRE AND RUBBER , COMPANY NEWS Twenty-seven (27) equities appreciated in price during the week, er than twenty-four (24) equities of the previous week. Forty (40) equities depreciated in price, er than Thirty-seven (37) equities of the previous week, while one hundred and twenty-two (122) equities remained unchanged er than one hundred and twenty eight (128) equities recorded in the previous week. A total of 6,8 units of Federal Government Bonds valued at N7.739 million were traded in 7 deals compared to a total of 22,030 units of Federal and State Government Bonds valued at N million transacted last week in 8 deals. PAST RECOMMENDED STOCK PREFERRED ENTRY ( ) 12M TARGET ASHAKA CEMENT DANGOTE CEMENT DIAMOND BANK GUINNESS FIDELITY BANK FLOUR MILLS UNITED BANK FOR AFRICA NIGERIAN BREWERIES OKOMU OIL GUARANTY TRUST BANK SKYE BANK UACN ZENITH BANK

2 WEEKLY EQUITY REVIEW In the just concluded week, the domestic bourse of the Nigerian Stock Exchange ended in the red-zone. Likewise, the volume and value of transactions also depreciated. Consequently, on a week-on-week (WoW) basis, the Benchmark dropped by bps pushing the YTD loss to 11.6%. In the same vein, the NSE Banking Index, NSE Consumer index and NSE Industrial Goods Index depreciated by 0.29%, 0.14% and 0.54% respectively, while the NSE Oil and Gas Index appreciated by 2.1%. Current Price (N) 1-Year Target Price (N) Best Entry / Exit Price (N) Rating WAPCO BUY GUARANTY BUY GUINNESS BUY ZENITH BUY LAFARGE AFRICA Lafarge Africa ( Lafarge ) recently released its full-year (FY) 2015 financial scorecard, which showed a 2.5% year-on-year (y/y) growth in revenue and a 20.0% decline in profit after tax (PAT) over the same period. Lafarge managed to grow its topline amid the challenging market and economic headwinds it faced during the year, largely driven by the growth in its Ready-mix sales and its Nigerian South-West operations. Lafarge s revenue grew by 2.5% to 267.2bn from 2.8bn. The growth attests to the company s resilience despite the headwinds and the competitiveness in the market. Its Ready-mix operations in Nigeria continued to show great strength with a 29.0% increase in sales from the previous year which help bolster the topline growth. PAT for FY 2015 fell by 20.0% to 27.0bn from 33.5bn recorded in the prior year. The decline in PAT can be attributed to one-off restructuring/ redundancy costs and the unrealized exchange impact of the foreign currency borrowing to fund its Mfamosing operations. Excluding these costs, profits improved by 6.0% compared to the previous year. The decline of 20.0% in bottom line resulted from one-off costs undertaken during the year for restructuring the company. 120 NSE-ASI & WAPCO WAPCO WAPCO Valuation remains positive for Lafarge. Lafarge Africa shares are trading on a 2016 forward P/E multiple of 12.87x and a P/BV of 3.14x. Adopting a blend of absolute and relative valuations tools, we reviewed our 12-month target for the year 2016 to 104.1, indicating a potential upside of 36.1% from its current share price of

3 GUARANTY TRUST BANK GT Bank recently released its audited financial results for the year ended December 2015 to the Nigerian and London Stock Exchanges. The bank defied the turbulent operating environment in 2015 and achieved impressive growth in all key financial indices. NSE-ASI & GUARANTY The bank recorded growth in gross earnings of 301.9billion, representing an increase of 8.4% over the 278.5billion recorded in the same period of 2014 and Profit Before Tax (PBT) of 120.7billion, 3.7% or 4.3billion er than the 116.4billion reported in December Topline growth was buoyed by 14.3% y/y rise in interest income while non-interest income dipped by 8.2%. The major drag in non-interest income was a slump in foreign exchange revaluation gains to 5.2 billion from an exceptional income of 16.2 billion in Thus, the other income line declined by 52.4% to offset the modest rise of 8.1% in fee and commission income. Quarter-on-quarter, the banks Q PBT result of 28.6bn was down 20.1% y/y while PAT only narrowed by 15.2% y/y to 22.7bn, due to a lesser tax rate of 15.2% in Q vs 22.4% a year earlier. GUARANTY GUARANTY GT Bank currently trades at a P/E ratio of 4.8x and a P/Bv of 1.2x compared with the 0.7x average multiple for tier-1 banks. Our revised 12 month price target for the lender is implying a 59.79% premium to its share price of as at APRIL 8th, GUINNESS GUINNESS released its unaudited Q (end-sept) results showing a mild 3.3% y/y increase in revenue, however gross earnings declined by 11.8% y/y despite the strong volume growth in the first quarter of 2015 and the success of its Orijin ready to drink (RTD). 120 NSE-ASI & GUINNESS Given the challenging environment and monetary uncertainties, cost of sales rose to 18.5% y/y. Finance cost on the other hand drifted downwards, after Guinness issued the first tranche ( 5 billion) of its 10billion commercial paper at 13.3% in May, which was used to refinance some of its debt averaging 15% - 16%. Against the backdrop of a spike in operating expenses by 50.8% y/y and aggressive marketing of its mainstream lager brand, Guinness profit after tax (PAT) has now recorded its third consecutive y/y decline paring 76%. The pass through effect contributed to the pressure on the company s earnings. We valued GUINNESS using a blend of absolute and relative valuation models and arrived at a 2015 target price of for the counter. At its current price of 10, GUINNESS has potentials to deliver 37.4% upside return in 12 months. Hence, we place a BUY recommendation on the counter. 40 GUINNESS GUINNESS

4 ZENITH BANK Zenith Bank recently released its audited financial results for the year ended December 2015 to the Nigerian Stock Exchange (NSE). NSE-ASI & ZENITH Key Financial Ratios Q Net Interest Margin (NIM) 7.8 Loan to Deposits 79.5% 50 Return on Average Asset (ROAA) Deposit Growth (0.8%) ZENITHBANK Cost to Income Ratio 54.3% Cost of Risk 0.7% NPL Ratio 2.2% ZENITH Capital Adequacy Ratio (CAR) 21.3% Returns on Equity (ROE) 18.4% Despite the weakened macroeconomic environment in 2015, the Bank recorded moderate growth in both top and bottom lines. Gross earnings for 2015 came in at 432.5bn, a 7.2% y/y rise relative to the 403.3bn recorded in Notwithstanding, 2015 s annual growth rate was materially er than Zeniths 5-year CAGR of 22.1% achieved between 2010 and A 93.0% drop in Commission on Turnover (COT) to N14.1bn weighed significantly on top line growth, foling the apex banks decision to phase out COT charges. Likewise, slumps in auction fee income and a foreign exchange trading loss, effectively limited trickle down to bottom line. Zenith Bank recorded an improvement in Cost to Income Ratio (CIR) for 2015 to 54.3% in from 55.2% in 2014 on the back of er (8.8% Y/Y) net interest income. Cost of funds increased to 4.2% from 3.8% in 2014 due to er interest expense of 15.6% y/y in 2015, while Cost of Risk was at a record of 0.7% for 2015 just 20bps er than 0.5% recorded in The bank proposed a final dividend of 1.55, closely in line with our 1.50 forecast based on a pay-out ratio of 58.5%. Zenith Bank trades at a P/E ratio of 3.9x and a P/Bv of 0.7x compared with the 0.7x multiple for tier-1 banks. Our revised 12-month price target for the lender is and its strong capital base (over %) will remain a solid buffer against operational headwinds. This suggests a.7% upside compared to its share price of as at April 8th, 2016.

5 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: Greenwich Trust Limited Plot 1698A, Oyin Jolayemi Victoria Island, Lagos. Research Team Usoro Essien Usoro.essien@gtlgroup.com Oluwaseun Dosunmu Seun.dosunmu@gtlgroup.com Tolulope Adepoju Tolulope.adepoju@gtlgroup.com Nigeria research@gtlgroup.com Visit us at: