WEEKLY STOCK MARKET REVIEW

Transcription

1 WEEKLY STOCK MARKET REVIEW AUG 31 - SEP 04, 2015 NSE ALL-SHARE INDEX MARKET CAP ( BILLION) VOLUME TRADED (SHARES) VALUE TRADED ( MILLION) Close 29, Close 10, Current 2, Current 21, Open 28, Open 9, Previous 2, Previous 17, Change (%) 2.42% Change (%) 2.42% Change (%) 18.98% Change (%) 19.74% TOP GAINERS PRICE ( ) CHANGE (%) IKEJA HOTEL TRANS-NATIONWIDE EXPRESS STANBIC IBTC HOLDINGS OKOMU OIL PALM UNITED BANK FOR AFRICA DIAMOND BANK VONO PRODUCTS TRANSCORP HOTELS P Z CUSSONS NIGERIA CUTIX MOST TRADED STOCK PRICE ( ) VOLUME ACCESS BANK ,190, ZENITH INTERNATIONAL BANK ,911, UNITED BANK FOR AFRICA ,248, MULTIVERSE ,873, SKYE BANK ,855, FBN HOLDINGS ,557, TRANSCORP HOTELS ,822, GUARANTY TRUST BANK ,050, FIDELITY BANK ,666, WAPIC INSURANCE ,222, COMPANY NEWS ACCESS BANK proposed a dividend payment of 25kobo on the 10th of September 2015 UNIVERSITY PRESS proposed a dividend payment of 20kobo on the 2nd of October PAST RECOMMENDED STOCK TOP LOSERS PREFERRED ENTRY PRICE PRICE ( ) PRICE ( ) CHANGE (%) NEIMETH INT PHARMACEUTICALS E-TRANZACT INTERNATIONAL CONOIL CADBURY NIGERIA COMPUTER WAREHOUSE GROUP DANGOTE SUGAR REFINERY SEPLAT PETROLEUM FORTE OIL BETA GLASS N NIG. FLOUR MILLS PLC LEAST TRADED STOCK PRICE ( ) VOLUME UNION HOMES REIT TOURIST COMPANY OF NIGERIA ALUMINIUM MANUFACTURING FORTIS MICROFINANCE BANK JOS INT. BREWERIES UNION DIAGNOSTIC & CLINICAL UNION DICON SALT W A GLASS IND PREMIER PAINTS AFROMEDIA 0.5 1, 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 reversed previous losses at Friday s trading session, gaining 2.42% to close at 29, and N10, trillion respectively. Similarly, most of the major Indices closed in the positive excluding the NSE Premium Index, NSE Oil and Gas and NSE Industrial Goods Index. We continue to 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) investors 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 GUINNESS BUY TOTAL SELL FBN HOLDINGS BUY ZENITH BANK BUY 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. TOTAL 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. 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 breakdown 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 GUINNESS

3 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 FBNH 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 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 3.5x and a P/Bv of 0.4x compared with the 0.8x multiple for tier-1 banks representing a 50% discount to peer average. Our revised 12 month price target for FBNH is N14.15.

4 ZENITH Zenith Bank recently released its audited results for the six months ended 30 June Gross earnings of N229.1bn, up 24.2% year-on-year (June 2014: N184.4bn) Net interest income of N112.6bn, up 14.2% year-on-year (June 2014: N98.6bn) Non-interest income of N53.1bn, up 42.0% year-on-year (June 2014: N37.4bn) Profit after tax of N53.2bn, up 12.1% year-on-year (June 2014: N47.4bn) Total assets of N3.9tn, up 3.4% year-to-date (Dec 2014:N3.8tn) ZENITH Zenith Bank displayed marked resilience in its H numbers, as Interest income from loans and advances increased by 33% y/y as a result of loan growth and appropriate pricing of risk assets. Sequentially, PBT of N39bn grew by 35% y/y while PAT of N20bn was down slightly, by -1.5% y/y on the back of a tax charge of N13.6bn in the quarter (an implied tax rate of 35%) and fair value losses from equity investments and FX translation losses. Net Interest Margin (NIM) increased y/y by 2.5% (from 8.1% in H to 8.3% in H1 2015) while it grew significantly by 33% q/q. Likewise, Cost-to-Income Ratio declined y/y by 3.7% (from 56.5% in H to 54.4% in H1 2015). Management cited the transient shortages in supply of Premium Motor Spirit during Q2 and the consistent rise in inflation as key contributors to Zeniths 15% rise in Opex. Zenith Bank shares are down 13.9% YTD, slightly less than the ASI s -14.9%. Zenith has proposed an interim dividend of 25 kobo the first for the bank; Recall, the Bank paid a dividend of 160 kobo per share for FY12 and 175 kobo per share for FY2013 and FY2014 apiece. Its ROAE has moved from 18.70% as at FY14 to 19.4% in H Zenith bank is trading at forward P/E and P/BV multiples of 4.8x and 6.5x relative to peer average (GTB) (tier 1 banks) of 0.9x and 1.9x respectively. Our 12 month TP is N22.18, denoting an upside of ~40% from current price of N15.86, hence our BUY rating on the counter.

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: 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: