Unilever Nigeria Plc. Capital Bancorp Plc (Member of the Nigerian Stock Exchange) Passionately Eager to weather the storm. Investment Summary

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1 3-Jan Jan-17 6-Feb Feb Mar Mar Apr-17 2-May May-17 5-Jun Jun-17 9-Jul-17 Unilever Nigeria Plc Capital Bancorp Plc (Member of the Nigerian Stock Exchange) Nigeria Equities Consumer Goods July 12, 2017 Passionately Eager to weather the storm Investment Summary Unilever Nigeria Plc, a consumer goods company last reported a significant increase in both top and bottom line in its Q1 17 earnings release showing signs of a better return on investments for investors. However, the company is still highly geared at a debt to equity ratio of 1.79x though down from a high of about 2.24x in FY 14. This high debt burden is expected to continue to impact the company s operations as it is expected to continue to service its loan obligations amidst the harsh economic conditions which the consumer goods company has continued to suffer from in recent time. Unilever Nigeria Plc has continued to leverage on its years of experience as well as its array of products which have remained market leaders in their various segments to keep its revenue base at decent levels over the years. Its top brands include the likes of Blue Band, Knorr, Lifebuoy, Omo, Vaseline, Sunlight e.t.c. Unilever Overseas Holding B.V owned about 50.04% of the company till 2016 when it increased its stake by another 10.02%; now approximately 60.06% while Stanbic Nominees Nigeria limited has a total holding of about 10.43%. Despite the stiff competition to grow market share from rival companies with substitute products coupled with the harsh economic conditions over the last three years, it is believed that the parent company still believe strongly in the potential of its Nigerian business to post significant profit in the long term thereby indicating its interest to increase its shareholding via a tender offer up to 75% in 2015 despite the company s profit plummeting to a new low during the period. Going forward, we anticipate that the company will strategize ways of actualising its initial target equity stake of 75% through its proposed rights issue which was approved at its last Annual General Meeting (AGM) except priorities have changed for the parent company. After proper analysis and valuation of the company s shares, we place a short term SELL rating on the shares given its future outlook and historical dividend payments to shareholders. We are of the opinion that improved returns to shareholders may only be possible in the long-term but at current market price the company shares may drift either way though profitability is expected to improve even as the economy continues on its path to recovery % 2017F % F Revenue (NGN m) 59,222 69, , Operating Profit (NGN m) 4,640 5, , Profit after tax (NGN m) 1,192 3, , Source company report, CBP Research Price:. - Current price Recommended entry price Target price Recommendation(Short term) SELL As at Monday July 10, 2017 STOCK DATA Year End 31 st Dec YTD high YTD low YTD change -2.86% 52 weeks high weeks low months Average volume 620,235 Market cap (NGN mn) 128, Trailing EPS (NGN mn) 0.81 Shares Outstanding ( mn) 3,783 Source company report, CBP Research Profitability ratios FY 16 FY 17F Gross profit margin 29.09% 27.00% Net Profit Margin 4.40% 7.66% Fixed Asset Turnover 0.42x 0.35x Valuations FY 14 FY 15 FY 16 FY 17F P/S ratio 2.31x 2.17x 1.84x 1.46x P/E 53.32x x 41.87x 19.10x Sales per share( ) NAPS( ) P/B 17.20x 16.07x 11.00x 7.62x ROE(%) ROA(%) Div. Yld% Source company report, CBP Research 40.00% 30.00% 20.00% 10.00% 0.00% % % % NSE ASI vs. Unilever 52-weeks movement Rebased NSE Unilever Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 1

2 Unilever Nigeria Plc Revenue base failed to impress; though year on year revenue growth for the company has been erratic, over a five year period Unilever managed to grow its revenue by a compound annual growth rate of 5.87% to billion in FY 16 from billion in FY 12. Drop in revenue was reported in FY 14 in which the company reported a 7.08% decline to billion (vs billion in FY 13). This drop for the period was as a result of a larger decline in income from its home and personal care segment which dropped by 15.33% to billion in FY 14 (vs billion in FY 13) though income from its food products increased by 3.14% to billion in FY 14 (vs billion in FY 13). FY 16 reported a much improved performance over a five year period as revenue grew by 17.82% to billion (vs billion in FY 15) though this growth was not replicated into improved profits as the company reported a faster rise in cost of sale for the period. As reported in its Q1 17 scorecard, the company seems well on the part to report a much improve top line growth as its revenue grew by 32.12% to billion (vs billion in Q1 16) Unilever Revenue F (Billion NGN) As reported in its Q1 17 scorecard, the company seems well on the part to report a much improve top line growth as its revenue grew by 32.12% to billion (vs billion in Q1 16). The impressive growth reported in Q1 17 was aided by the impressive growth in all its operating income segments for the period. Contribution to revenue from its home care product impressed the most for the period having grown by 49.73% to 5.64 billion (vs billion in Q1 16), personal care contribution to revenue was reported at 6.03 billion (vs billion in Q1 16) representing an increase of 37.20% while revenue contribution from its food products grew by 21.81% to billion (vs billion in Q1 16). This improved performance has been traced to the ability of the company to drive sales increase as well as benefiting from the price increase on all of its product offerings triggered by the high cost of production which was evidently reported in its cost of sale for the period. Going forward, we expect this growth in revenue to be reflected into the other quarters of the year and even into the FY 17 scorecard as the company is expected to benefit from the improvement in economic activity. Unilever Revenue HY'16 - HY'17F (Billion NGN) 69,777 41,344 32,278 49,871 22,172 HY'16 9M'16 FY'16 Q1'17 HY'17F Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 2

3 Rising input cost drive cost of sale higher; from 2012 to 2015, cost of sale to revenue has constantly been on the rise but remained below 65%, having been reported at 61.03% in FY 12, 62.59% in FY 13, 63.82% in FY 14 and 64.46% in FY 15. FY 16 saw cost of sale to revenue surge to 70.91% while Q1 17 followed in similar pattern, growing to 71.62% (vs % in Q1 16). Analysis into the spike in cost of sale showed a jump in cost of raw materials and consumables growing from billion in FY 15 to billion in Q1 16 representing an increase of 24.59% while bought in products also grew significantly by % to 6.10 billion in FY 16 (vs billion in FY 15). The significant rise in raw materials and bought in products was driven mainly by the massive depreciation of the naira which has led to a massive increase in cost of sale as raw materials become more expensive to acquire compared to previous quarters. Q1 17 cost of sale grew by 47.72% to billion (vs billion in Q1 16). NGN'bn REVENUE COS MARGIN GP MARGIN % 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% Operating expenses continues to fluctuate; over the last five years, Unilever Nigeria has impressively kept selling and distribution expense as well as marketing and administrative expense to revenue at decent levels. Selling and distribution to revenue has ranged between 4.51% and 4.86% while marketing and administrative expense has ranged from 16.43% to 23.40% over the last five years. Selling and distribution expense to revenue for Q1 17 was reported at 4.27% (vs. 4.59% in Q1 16) while marketing and administrative expense to revenue stood at 11.71% (vs % in Q1 16) respectively. Four year CAGR for selling and distribution expense stood at 3.37% having grown from 2.69 billion in FY 12 to 3.15 billion in FY 16 while CAGR for marketing and administrative expenses stood at 3.37% growing from billion in FY 12 to billion in FY 16. Q1 17 scorecard reported a 22.60% decline in marketing and administrative expense to 2.59 billion (vs billion n Q1 16) while selling and distribution expense grew by 22.95% to 0.94 billion (vs billion in Q1 16). Four year CAGR for selling and distribution expense stood at 3.37% having grown from 2.69 billion in FY 12 to 3.15 billion in FY 16 while CAGR for marketing and administrative expenses stood at 3.37% growing from billion in FY 12 to billion in FY 16. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 3

4 Cash flow position continues to oscillates; Apart from FY 14 in which net cash flow used in operating activities reported a net outflow of 1.82 billion, other periods between FY 12 to FY 16 reported a net inflow though net cash flow generated from operating activities have remained erratic over the five year period. The 58.89% drop ( 6.73 billion in FY 16 vs billion in FY 15) in cash generated from operations was significant enough to drop Net cash flow generated from operating activities to 5.99 billion (vs billion in FY 15) representing a decline of 61.55%. Decline in cash flow from operating activities for FY 16 was largely as a result of the % increase in trade and other receivables to the tune of 8.80 billion in FY 16 (vs billion in FY 15) as well as increase in stock pile (inventory) causing an out flow of 3.70 billion against an inflow of 2.44 billion in FY 15. Net cash flows generated from operating activities however improved for Q1 17 to 5.64 billion (vs billion in Q1 16) representing an increase of 61.60%. Over the five year period, net cash used in investing activities has mainly been driven by the purchase of property, plant and equipment. FY 16 reported similar trend as its Net cash used in investing activities stood at an outflow of 3.88 billion against an outflow of 4.68 billion in FY 15 while Q1 17 stood at an outflow of 0.61 billion against an outflow of 0.02 billion in Q1 16 even as purchase of property plant and equipment accounted for a significant portion of the investments. -7, Unilever Working Capital FY'12 - FY'17F (Million NGN) -9, , , , , Net cash used in financing activities reported net outflows in FY 12, FY 13 FY 15 and Q1 16 while it reported net inflows in FY 14, FY 16 and Q1 17 due to increased drawdown on short-term loans for this periods. Q1 17 net cash used in financing activities stood at an inflow of 2.42 billion against an outflow of 0.63 billion in Q1 16 as the company reported a drawdown of short term loan for the period to the tune of 3.26 billion against nothing in Q1 16. As at Q1 17, cash and cash equivalents at the end of the period stood at an inflow of billion against an outflow of 4.25 billion in Q % Debt Q1'16 Equity Q1'16 Decline in cash flow from operating activities for FY 16 was largely as a result of the % increase in trade and other receivables to the tune of 8.80 billion in FY 16 (vs billion in FY 15) as well as increase in stock pile (inventory) causing an out flow of 3.70 billion against an inflow of 2.44 billion in FY % Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 4

5 Debt to equity ratio remains high: The Company s debt to equity ratio has significantly grown over the last five years as the company has injected more debt financing into its operations while also increasing its gearing ratio in the process. Its debt to equity ratio stood at 0.45x for FY 12, 0.66x for FY 13, 2.24x for FY 14, 1.57x for FY 15 and 1.79x for FY 16. Total liabilities to equity has also significantly risen over the years as it stood at 2.61x for FY 12, 3.54x for FY 13, 5.12x for FY 14, 5.27x for FY 15 and 5.20x for FY 16. Given the current trend, returns to shareholders may continue to be threatened as a significant portion of its expected return would be paid out as interest on borrowing leaving little or nothing to worthy investors. Having reported a further rise in debt to equity ratio in Q1 17 to 2.07x (vs. 1.79x in Q1 16) while total liabilities to equity also rose to 6.12x (vs. 5.20x in Q1 16), we expect that any further capital injection should be more of equity financing than debt financing to give room for the company to effectively sweat its assets and significantly reward shareholders in the medium to long term. Its quick ratio stood at 0.59x for FY 16 and improved to 0.71x for Q1 17. Going forward, the company s liquidity ratios will need to be adequately managed to avert any unforeseen concerns regarding its operations. NGN"Mn 14, , , , , , , Marketing & Admin. Exp. 10, , , , , , Selling & Distribution Exp. 13, , , , , Expense margin remain fairly stable across board; Unilever Nigeria Plc has averaged a marketing and administrative expense of billion between FY 12 to FY 16. Marketing and administrative expense to revenue for the five year period stood at 18.07% in FY 12, 19.71% in FY 13, 23.40% in FY 14, 23.03% in FY 15 and 16.43% in FY 16. Over the five year period, the company s marketing and administrative expense has also grown by a compound annual growth rate of 3.94% signalling the company s intention to keep a large part of its expense line in check. Q1 17 result reported a 22.60% decline in marketing and administrative expense to 2.59 billion (vs billion in Q1 16) as all line items under marketing and administrative expenses dropped for the period. Marketing and administrative expense to revenue for Q1 17 period also dropped to 11.71% (vs % in Q1 16) while we anticipate that the company s marketing and administrative expense margin for FY 17E is expected to be at 8.10%. - Total Liabilities Q1' % Net Asset Q1' % Marketing and administrative expense to revenue for the five year period stood at 18.07% in FY 12, 19.71% in FY 13, 23.40% in FY 14, 23.03% in FY 15 and 16.43% in FY 16. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 5

6 Finance cost eating deep into company s operating profit; Net finance cost in the last five years have continued to negatively increase except for FY 16 in which it dropped. The company reported a negative net finance cost of 709 million in FY 12, which grew to 969 million in FY 13, to 1.74 billion in FY 14, to 2.8 billion in FY 15 before easing down to 1.69 billion in FY 16. The company has been unable to report a positive net finance cost over the years because it has continued to report significantly higher interest payable on borrowings and amortised cost interest, two line items under its finance costs which has continued to increase the company s total finance cost when compared to its interest income on call deposits and bank accounts, employee loans, derivative gains and Exchange gain which are line items under its finance income. Over the review period, finance cost to operating profit continued to rise eating into the company s profit as it stood at 9.18% in FY 12, 14.37% in FY 13, 41.39% in FY 14, 68.33% in FY 15 and 46.96% in FY 16. Q1 17 reported a slightly improved performance at 26.30% (vs % in Q1 16). NGN"Bn Operating profit Operating profit margin 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% NGN'bn Finance income Finance Cost Profits soar after three years of consecutive decline; profit after tax for the company suffered years of consistent decline having continuously dropped year on year (YoY) from FY 13 to FY 15. Having grown by 1.49% in FY 12 from the preceding year the company reported a 14.13% drop in FY 13, a 49.82% drop in FY 14 and a 50.57% drop in FY 15 before turning the tides into an increase of % in FY 16. Given the growth projectile in profits, the company now currently reports a negative compound annual growth rate of %. Profit margin for the last audit period has however failed to impress as the company s FY 16 profit margin stood below the level reported in FY 12 and FY 13. Profit after tax margin for FY 12 stood at 10.08%, FY 13 at 8.01%, FY 14 at 4.33% FY 15 at 2.01% and FY 16 at 4.40% while we have projected FY 17F PAT margin to impressively rise to 9.02% The company reported a negative net finance cost of 709 million in FY 12, which grew to 969 million in FY 13, to 1.74 billion in FY 14, to 2.8 billion in FY 15 before easing down to 1.69 billion in FY 17. Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 6

7 Q1 17 numbers suggest the company may be on its way to reporting an improved profit if things continue as reported in its unaudited account released to the market, having reported a bottom line increase of 53.94% to 1.60 billion (vs billion in Q1 16). We however estimate profit after tax for FY 17F at 8.02 billion (vs billion in FY 16) representing an increase of % as we expect cost of sales and finance cost to remain relatively moderate, even as the company continues revenue base is expected to grow on price increases and increased sales volume. Over the years, the company s profits have been mainly supported by its core business as income from investments and other segments have remained insignificant to boost profits. Finance income for FY 17F has therefore been estimated to come to 1.48 bn (vs bn in FY 16) representing a rise of 44.58% for the period. NGN'bn PBT PAT Tax Margin % -5.00% % % % % % % Consistent but uninspiring dividends payments: Over the last five years, the company s dividend paid to shareholders have continued to dwindle and have failed to impress in recent times evidently due to the company s inability to report improved profits. Though Q1 17 numbers have shown improvement in profits, we are weary to suggest that dividend payment to shareholders would significantly improve to previous levels in FY 17F as we are aware of the company s decision to raise funds by way of a rights issue to assist in managing its debt obligation. Thus we anticipate that the company may be more inclined to re-invest more of its profits back into its business operations to help improve productivity and enable it compete favourably in an environment packed full of aggressive competition to grow individual market share. Though dividends have significantly dropped, the company has remained consistent in rewarding its shareholders with dividend payment, having paid a dividend of 1.40 in FY 12, 1.25 in FY 13, 0.10 in FY 14, 0.05 for FY 15 and paid out 0.10 for FY 16 representing pay-out ratio of 94.62%, 98.37%, 15.68%, 15.68% and 12.31% respectively. We have also estimated dividend payment for the FY 17F to be at 0.30 (vs in FY 16). We have also estimated dividend payment for the FY 17F to be at 0.30 (vs in FY 16). NGN Div per Share Div % % 0.29% 0.15% 0.29% 0.88% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 7

8 8-Jul-16 8-Aug-16 8-Sep-16 8-Oct-16 8-Nov-16 8-Dec-16 8-Jan-17 8-Feb-17 8-Mar-17 8-Apr-17 8-May-17 8-Jun-17 8-Jul-17 Unilever Nigeria Plc Other highlights; Unilever rights issue; Unilever Nigeria Plc in June 2017 notified the public of its intention to do a rights issue of 1,961,709,167 ordinary shares of 50 kobo each at per share on the basis of 14 new ordinary shares for every 27 ordinary share held with a qualification date of June 28, In our view, we believe that the massive discount in the rights price is mainly to increase investor interest in picking up their rights as well as giving the share price enough room to trade and remain above the proposed rights issue price as we know that a market price below or similar to the rights issue price will negatively impact the success of the proposed rights issue. On the other hand the rights may be successful as we recall that in 2015, Unilever Overseas B.V. holding launched a tender offer for 75% of the company and they may be well in place to pick up shares from shareholders who do not pick up their rights thereby taking them closer to their initial target of 75% holding. Going forward, for investors with a long term interest in the company we advise them to pick up their rights as we see value in the company over the long term horizon, while for short term players we expect their rights to be sold as we anticipate the price to drop and further converge towards the rights issue price. Finally, on the use of the rights proceeds we envisage that most of the funds will be channelled towards paying down some of its debt obligation and also on expanding its businesses operation. This we expect to free up funds as interest expense is projected to drop in the next financial year and shareholders will eventually benefit in the long term though the company s shares outstanding would further increase after the listing of the rights issue. 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 optimistic forward estimates of key ratios and forecast of FY 17 earnings to arrive at a target price of per share, while Retained earning model was used to arrive at a value of We then took the average of all values and arrived at a target price of which suggests a downside potential of % at current market price. NGN Buy Unilever 52 - Weeks Price Movement Sell Hold In our view, we believe that the massive discount in the rights price is mainly to increase investor interest in picking up their rights as well as giving the share price enough room to trade and remain above the proposed rights issue price Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 8

9 Unilever Nigeria Plc Given the company s current financial position, its business operations as well as our financial forecasts and estimates, we have recommended a SELL position in the short term for the company shares. However for investors with interest in the company over the long term we advise that they gradually accumulate the company shares as we expect the company s business operations to improve in the long term and the value of their shares improve over the period. EPS for Q1 16 stood at 0.28 while for Q1 17 currently stands at 0.42 (FY 17F 2.12). Sales per share increased for the period, rising to 5.86 in Q1 17 from 4.44 in Q1 16, while price to sales ratio dropped to 5.80x for Q1 17 against 7.66x for Q1 16. The company s share price has also dropped by -2.86% year to date compared to the 21.36% year to date change on the NSE ASI as at July 10th Unilever vs. PZ vs. Flourmills 52-weeks Price Movement Rebased Unilever PZ Flourmill 80.00% 60.00% 40.00% 20.00% 0.00% % % % Conclusion; Unilever Nigeria has indicated plans to restructure its business operations, in April 2017 the company announced its intention to divest from its spread business and inform the public on subsequent development on the matter. Going by this decision our forecast estimates may quickly be adjusted depending on the outcome of events as the company s spread segment falls under the food business which accounts for a majority of the company s revenue, as the food business accounted for about 52% of total revenue reported in FY 16 (vs. 50% in FY 15). Thus, selling that segment of its business may affect the company s revenue from its food business in the short term except margins are quickly replaced by sales of other close substitutes or higher sales volume from other business segments. Going forward, we remain optimistic that the company s operations will improve in the long term and expect the company to leverage on the strength of its parent company to boost operations and improve top and bottom line in the long term. Sales per share increased for the period, rising to 5.86 in Q1 17 from 4.44 in Q1 16, while price to sales ratio dropped to 5.80x for Q1 17 against 7.66x for Q1 16. The company s share price has also dropped by -2.86% year to date compared to the 21.36% year to date change on the NSE ASI as at July 10th Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 9

10 Statement of profit or Loss million FY 14 FY 15 FY 16 FY 17F Revenue 55,754 59,222 69,777 87,919 % change -7.08% 6.22% 17.82% 26.00% Cost of sales (35,584) (38,174) (49,481) (64,181) % change -5.25% 7.28% 29.62% 29.71% Gross profit 20,170 21,048 20,296 23,738 % change % 4.35% -3.57% 16.96% Admin, Selling & Dist. exp. (2,516) (2,844) (3,151) (3,693) % change -7.52% 13.02% 10.79% 17.19% Operating profit 4,615 4,640 5,805 11,342 % change % 0.54% 25.12% 95.37% Net finance cost / income (1,742) (2,869) (1,699) (1,969) % change 79.70% 64.72% % 15.94% Profit Before Taxation 2,873 1,771 4,106 9,372 % change % % % % Profit After Taxation 2,412 1,192 3,072 6,734 % change % % % % Statement of Financial Position million FY 14 FY 15 FY 16 FY 17F Total noncurrent assets 27,165 29,165 30,949 32,442 Total current assets 18,571 21,008 41,543 58,194 Total Assets 45,736 50,172 72,491 90,636 TOTAL Current Liabilities 31,371 34,698 53,513 65,561 TOTAL Non-current Liabilities 6,887 7,472 7,288 8,194 Total Liabilities 38,257 42,169 60,801 73,755 Shareholders equity 7,479 8,003 11,690 16,880 Total liabilities and Equity 45,736 50,172 72,491 90,636 Profitability and Returns FY 14 FY 15 FY 16 FY 17F Gross Profit Margin 36.18% 35.54% 29.09% 27.00% Operating Profit Margin 8.28% 7.83% 8.32% 12.90% Net Profit Margin 4.33% 2.01% 4.40% 7.66% Tax Margin % % % % ROCE 46.99% 43.81% 44.01% 34.01% ROE 32.26% 14.90% 26.28% 39.89% ROA 5.27% 2.38% 4.24% 7.43% 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 Net income Debt to equity T. Liabilities 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 (%) 0.93% 2.39% 5.24% Growth Performance FY 15 FY 16 FY 17F Turnover Growth (%) PBT Growth (%) PAT Growth (%) Published by CBP Research, 1, Davies Street Off Marina Lagos Nigeria. research@capitalbancorpng.com Tel +234(1) , Page 10

11 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 11