WEEKLY STOCK MARKET REVIEW AND STOCK RECOMMENDATION

Transcription

1 1-Aug-16 2-Aug-16 3-Aug-16 4-Aug-16 5-Aug-16 1-Aug-16 2-Aug-16 3-Aug-16 4-Aug-16 5-Aug-16 WEEKLY STOCK MARKET REVIEW AND STOCK RECOMMENDATION WEEKLY STOCK MARKET REVIEW AND STOCK RECOMMENDATION AUGUST 01 July 05 NSE ALL-SHARE INDEX MARKET CAP ( BILLION) VOLUME TRADED (SHARES) VALUE TRADED ( MILLION) Close 27, Close 9, Current 1, Current 12, Open 28, Open 9, Previous 1, Previous 16, Change (%) (2.09) Change (%) (2.09) Change (%) (37.61) Change (%) (20.35) WEEKLY VOLUME & VAULE TRADED NSE INDEX & MARKET CAPITALIZATION Volume Traded Value Traded (RHS) NSE Index Market Cap (RHS) , , , , , , , , , ,200 27,700 27,200 26,700 26,200 25,700 25,200 24,700 24,200 23,700 23, TOP GAINERS NEWS ( ) CHANGE (%) TOTAL AIRLINE SERVICES AND LOGISTICS ETERNA MOBIL MRS CUTIX FLOUR MILLS LAW UNION AND ROCK INSURANCE LIVESTOCK FEEDS P Z CUSSONS FBN HOLDINGS PLC MOST TRADED STOCK ( ) VOLUME GUARANTY TRUST BANK ,969,810, DANGOTE CEMENT ,931,116, ZENITH BANK ,309,716, LAFARGE AFRICA ,094,250, UNITED BANK FOR AFRICA ,146, NESTLE ,901, NIGERIAN BREWERIES ,706, TOTAL ,305, INTERNATIONAL BREWERIES ,105, FBN HOLDINGS ,835, United Bank for Africa (UBA) has notified the Nigerian Stock Exchange (NSE) of the Board of Directors decision to make available the call option for the redemption of its seven years 13% Fixed Rate Subordinated Unsecured Bond Maturing TOP LOSERS ( ) CHANGE (%) SEPLAT PETROLEUM DEV. COMPANY (18.54) FIDELITY BANK 1.05 (14.63) DIAMOND BANK 1.37 (13.84) 7-UP BOTTLING COMPANY (9.62) FCMB HOLDINGS 1.27 (9.29) LAFARGE AFRICA (8.66) AFRICA PRUDENTIAL REGISTRARS 2.77 (8.28) AIICO INSURANCE 0.68 (8.11) TRANS-NATIONWIDE EXPRESS 0.98 (7.55) ECOBANK TRANSNATIONAL INCORP (7.22) LEAST TRADED STOCK ( ) VOLUME SECURE ELECTRONIC TECHNOLOGY STUDIO PRESS MORISON INDUSTRIES TANTALIZERS COMPUTER WAREHOUSE GROUP UNIC INSURANCE UNIVERSITY PRESS COSTAIN (W A) DAAR COMMUNICATIONS N NIG. FLOUR MILLS PAST RECOMMENDED STOCKS PREFERRED ENTRY/EXIT ( ) 12M TARGET DANGOTE CEMENT DIAMOND BANK GUINNESS FIDELITY BANK FLOUR MILLS UNITED BANK FOR AFRICA NIGERIAN BREWERIES GUARANTY TRUST BANK UACN ZENITH BANK LAFARGE CEMENT ACCESS BANK NESTLE

2 Recommendation for the Week Current Price (N) 1-Year Target Price (N) Best Entry / Exit Price (N) Rating Latest Support Latest Resistance 52 Week High 52 Week Low NB SELL DANGCEM SELL GTB HOLD ZENITH BUY NIGERIAN BREWERIES Nigerian breweries was incorporated in 1946 and it is the pioneer and largest brewing company in Nigeria. Its first bottle of beer, STAR Lager, rolled off the bottling lines of its Lagos brewery in June In December 31st 2014, Nigerian Breweries Plc completed the merger with Consolidated Breweries Plc, and also in November 2015, Nigerian Breweries launched the international brand Strongbow Cider which made it the first in Nigeria to produce and bottle the cider category beverage. FY 2015 Q Q TURNOVER (bn) 293,905 81,751 79,818 COST OF SALES (bn) (151,443) (41,443) (43,117) GROSS PROFIT (bn) 142,462 40,308 36,700 PBT (bn) 54,514 16,551 10,541 PAT (bn) 38,056 11,375 8,612 RATIOS (%) Q PBT MARGIN 0.13 GROSS MARGIN 0.46 EBITDA 0.74 OPEX/SALES 0.48 At the current price NB has a PE and PB of 29.5x and 6.5x. We recommend a SELL on the counter as the share price has exceeded our 12 month target price of NSE-ASI & NB /31/2015 8/5/2016 NB

3 DANGOTE CEMENT Dangote Cement Plc is a multinational publicly traded company engaged in the manufacture, preparation, importation, packaging, and distribution of cement and related products across the African continent. Dangote Cement Plc is a subsidiary of Dangote Industries Limited and is the largest company traded on the Nigerian Stock Exchange. Dangote Cement has a market capitalization of 2 Trillion, over 20% of the total market capitalization of the Nigerian Stock Exchange. FY 2015 Q Q TURNOVER (bn) 491, , ,670 COST OF SALES (bn) (201,808) (44,503) (76,983) GROSS PROFIT (bn) 289,917 82,974 74,687 PBT (bn) 188,294 58,558 70,351 PAT (bn) 181,323 53,188 50,641 RATIOS (%) Q COST TO SALES PBT MARGIN GROSS MARGIN ROAA ROAE The company recorded a 20.6% y/y hike in topline growth in Q2-2016, due to an increase in sales. However, the downturn in the economy trickled down as the cost of sales increased by 23.8% q/q. We view the counter as a SELL as the share price has exceeded our 12 months target price of NSE-ASI & DANGCEM /31/2015 8/5/2016 DANGCEM

4 GUARANTY TRUST BANK Guaranty Trust Bank plc is a Top tier Nigerian financial institution with business outlays spanning Anglophone/Francophone, West Africa, East Africa and the United Kingdom. The Bank presently has an asset base of over N2.5 Trillion, Net Assets in excess of N433.4 Billion and employs over 10,000 people in Nigeria, Cote d'ivoire, Gambia, Ghana, Kenya, Liberia, Rwanda, Sierra Leone, Uganda and the United Kingdom. FY 2015 Q Q GROSS EARNINGS (bn) 301,850 LATEST FY RESULT 26,563 PREVIOUS QUARTER 25,614 CURRENT QUARTER TURNOVER NET INTEREST INCOME 160,046 39,163 40,793 (bn) Recent activities COST OF SALES PBT (bn) Recent activities 232,472 32,652 30,676 GROSS PROFIT PAT (bn) Recent activities 98,678 26,372 25,397 PBT TOTAL Recent ASSETS activities (Tn) PAT Recent activities RATIOS (%) RATIOS COST OF RISK EV/EBITDA COST TO INCOME PBT MARGIN CAPITAL ADEQUACY GROSS MARGIN ROAE RETURN ON EQUITY ROAA RETURN ON ASSET 2,524,593 Q ,484,784 FORECAST ,655,568 GT Bank currently trades at a P/E ratio of 6.7x and a P/Bv of 1.6x compared with the 0.7x average multiple for tier-1 banks. Our revised 12 month price target for the lender is N24.8 implying a 7.5% upturn to its share price of N23.1 as at August 05, NSE-ASI & GTB /31/2015 8/5/2016 GTB

5 ZENITH BANK Zenith Bank is a dominant player in Nigerian Banking Industry, operating within the Tier-1 space with Strong earnings capacity and growth and solid/liquid capital base. The International Finance Corporation (IFC), a member of the World Bank Group, signed a bilateral agreement to provide a US$ million loan facility to Zenith Bank in order to increase the bank s lending capacity to the various economic sectors. FY 2015 Q Q GROSS EARNINGS (bn) 432,535 LATEST FY RESULT 113,322 PREVIOUS QUARTER 99,435 CURRENT QUARTER TURNOVER NET INTEREST INCOME 224,582 40,541 55,580 (bn) Recent activities COST OF SALES PBT (bn) Recent activities 125,616 33,128 32,121 GROSS PROFIT PAT (bn) Recent activities 105,663 27,680 26,573 PBT TOTAL Recent ASSETS activities (Tn) PAT Recent activities RATIOS (%) RATIOS COST OF RISK EV/EBITDA COST TO INCOME PBT MARGIN CAPITAL ADEQUACY GROSS MARGIN ROAE RETURN ON EQUITY ROAA RETURN ON ASSET 4,006,842 Q ,938,003 FORECAST ,992,079 The bank proposed a final dividend of N1.55, closely in line with our N1.50 forecast based on a pay-out ratio of 58.5% to take FY 2015 total dividend to N1.80 with an implied yield of 12.2%. Zenith Bank trades at a P/E ratio of 4.9x and a P/Bv of 0.8x compared with the 0.7x multiple for tier-1 banks. Our revised 12-month price target for the lender is N20.9, above its share price of 16.0 as at August 05, NSE-ASI & ZENITH /31/2015 ZENITH 8/5/2016

6 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 following 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 below the current market price. Address: Greenwich Trust Limited Plot 1698A, Oyin Jolayemi Victoria Island, Lagos. Nigeria research@gtlgroup.com Visit us at: Research Team Usoro Essien Usoro.essien@gtlgroup.com Oluwaseun Dosunmu Seun.dosunmu@gtlgroup.com Tolulope Adepoju Tolulope.adepoju@gtlgroup.com Somto Okeke Somto.okeke@gtlgroup.com