United Capital Research I Nigeria I Markets. Positive earnings surprises drive equities north. 2 May can this be sustained?

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United Capital Researc I Nigeria I Markets Positive earnings surprises drive equities nort can tis be sustained? Tis past week saw te equities market stage a rally as investors welcomed a deluge of impressive corporate releases as well as te launc of te CBN s Investors & Exporters FX window tat provided a solid boost to sentiments. As suc, at 25,758.51 points, te ASI closed te week 2.6% iger w/w, paring YTD loss to -4.2%. Te money market opened N220.2bn long in te past week. Tigt system liquidity observed in previous week extended into te earlier part of te week as te system priced in liquidity mop up of N231.7bn. Noneteless, tis was more tan offset by FGN Aprl-2017 bond maturity of N480bn as well as N53bn OMO maturity wic it te system towards te end of te week. At te end of te week, te Open Buy Back (OBB) and Overnigt (O/N) rates plunged 23.5ppts and 24.9ppts w/w, settling at 4.0% and 4.8% respectively vs. 27.5% and 29.7% in te previous week respectively. Going into te new week, we expect to see some profit-taking pressure following te previous week s rally. Also, debits from successful bids at FX wolesale intervention auctions as well as OMO auction are expected to drag liquidity. Tus, money market rates are anticipated to be pressured nortward from current teir levels. We expect activities witin te FI segment to be determined by investors sentiments around te PMA slated for mid-week. Nigeria Asset Class Returns (YTD, W-o-W) Equities: NSE Market Cap. (N bn): 8,912.9 NSE Market Cap. ($ mn): 29,141.4 YTD Return (%): -4.2% W-o-W Return (%): 2.3% P/E (x): 12.0x Fixed Income: Overnigt: 4.8% Open Buy-Back: 4.0% Treasury Bills 90 days: 19.0% 180 days: 20.2% 360 days: 20.8% Bonds 3-Year: 15.9% 10-Year: 15.8% 25.0% 20.0% 15.0% 10.0% Equities Bonds FX Oil Price 22.0% Excange Rate (NGN/USD): N 379 W-o-W Return: 0.5% 5.0% 0.0% -5.0% -4.2% 2.6% -2% 0.4% 0.5% -0.4% -10.0% -9% -15.0% YtD Return w/w Return Source: Bloomberg, Aboki FX (Parallel market rate), United Capital Researc Equities NSE All Sare Index; FX NGN/USD Parallel Market Rate; Oil Price Brent Crude oil price; Bond Access Bond Index 1

United Capital Researc I Nigeria I Markets Global and Macro-economic Market update European market celebrates Frenc election... but political uncertainties continue to sway sentiment on Wall Street Te week began wit a leap as developments in te global space provided a solid boost to sentiments. Market indices around te world trended iger in response to te Frenc election results wic point to a likely victory of Emmanuel Macron in te final round of te presidential election on May 7. Upbeat Q1-2017 numbers also boosted te indexes and elped te market carry momentum into mid-week. To close te week, te U.S. equity market finised lower as investors traded cautiously aead of te weekend marking President Donald Trump s 100t day in office. Continued lack of details in te president s muc-awaited tax plan gave investors pause. Te Dow Jones Industrial Average and S&P 500 index edged lower by 0.2% w/w apiece, to close te week at 20,940.51pts and 2,384.2pts respectively wile te Nasdaq rose 2.3% w/w closing at 6,047.61pts. However, all tree major equity bencmarks closed out April firmly in positive territory. Nigeria on te verge of late budget passage On te domestic scene, Nigeria's upper ouse of parliament aims to pass te 2017 budget week. According to Senate leader (Amed Lawan) wo inted tat te senate ad wanted to pass te bill in Marc and April but could not. President Buari as also asked te lawmakers to allow im borrow $6.93 bn from Cina and te World Bank to upgrade its rail network and elp rebuild te norteast. Te budget plans to pull te Nigerian economy out of recession by boosting infrastructure spending amid efforts to reduce to cost of governance and strengten non-oil revenue. Contrary to expectation, te presentation of te budget by te President in December would ave suggested earlier passage. However, te inability of te parliament to conclude teir contribution to te budget on time as kept passage tis late into te year. Bearing in mind te possibility of a furter delay in signing by te president, we note tat Nigeria is on te verge of yet anoter late budget passage in 2017. 2

Value Traded N'bn United Capital Researc I Nigeria I Markets Domestic Financial Markets Review and Outlook Equities: ASI Jumps +2.3% w/w amid earnings deluge Tis past week saw te equities market stage a rally as investors welcomed a deluge of impressive corporate releases as well as te launc of te CBN s Investors & Exporters FX window tat provided a solid boost to sentiments. As suc, at 25,758.51 points, te ASI closed te week 2.6% iger w/w, trimming YTD loss to -4.2%. Nigeria All Sare Index and Market Turnover 40,000 35,000 30,000 25,000 20,000 15,000 Turnover All Sare Index 30-Day Moving Avrg Source: NSE, United Capital 18 16 14 12 10 8 6 4 2 - TOP GAINERS PRICE (N) % CHANGE STANBIC 26.3 28.2% ASHAKACEM 10.4 15.6% NPFMCRFBK 1.3 12.8% UBA 5.8 12.4% WAPCO 50.9 10.7% TOP LOSERS PRICE (N) % CHANGE DIAMONDBNK 0.8-12.2% TRANSCORP 0.9-9.3% FBNH 3.2-7.0% MAYBAKER 0.9-5.6% JBERGER 39.9-5.0% Source: NSE, United Capital Sectorial performance was upbeat as 3 of 5 sector indices traded iger. Financials (+6.1%) led gains, driven by an uptick in te sares of STANBIC (+28.2%), UBA (+12.4%), GUARANTY (+7.3%), ETI (+8.6%), ACCESS (+6.2%) and ZENITH (+2.8%). Te Industrial Goods (+4.8%) and Oil & Gas (+2.0%) sectors calked modest gains on te backdrop of bullis investor sentiment on WAPCO (+10.7%), ASHAKA (15.6%), CUTIX (+9.9%), CCNN (+4.5%), MOBIL (+2.5%) and OANDO (+8.7%). On te flip side, te Consumer Goods (- 0.1%) srunk marginally on price depreciation in 7UP (-4.5%) and NESTLE (-3.1%). Wen compared to previous week, market sentiment was upbeat as market breadt came in at 1.5x (relative to 0.8x in te previous week) as 38 stocks appreciated against 25 decliners. Similarly, activity level surged wit average value traded increasing 159.9% w/w to N2.1b, just as average volume traded surged 113.6% w/w to 289.1m units. Going into te new week, we expect to see some profit-taking pressure following te previous week s rally. 3

United Capital Researc I Nigeria I Markets Money Market: OMO maturity drives money market rates lower w/w Te money market opened N220.2bn long in te past week. However, tigt system liquidity from te previous week persisted into te earlier part of te week as te market priced in liquidity mop up of N231.7bn. However, tis was more tan offset by FGN Aprl-2017 bond maturity of N480bn as well as N53bn OMO maturity wic it te system towards te end of te week. Accordingly, Open Buy Back (OBB) and Overnigt (O/N) rates plunged 23.5ppts and 24.9ppts w/w to settle at 4.0% and 4.8% respectively (vs. 27.5% and 29.7% in te previous week ) at end of te week. Tis week, debits from successful bids at FX wolesale intervention auctions as well as OMO auction are expected to drag liquidity. Tus, we expect money market rates to trend nortward from current teir levels. FI market relay mixed trading pattern Opening last week, expectation of FGN Bonds maturities and FAAC credits totaling over N600bn spurred a bullis sentiment across maturities in te T-bills market, leading to a 6bps decline in average rate at te end of te first trading session. Te bullis sentiment was sustained till te end of te week as average T-bills yield declined furter by anoter 2bps due to FGN Aprl-2017 bond maturity wort N480bn and N53bn OMO maturity wic eventually it te system on te last trading day. Average yield on T-bills across maturities was owever flat on a w/w basis. In a similar vein, te Bond space opened last week wit a rally wit players pricing in te expected FAAC credit as well as FGN Bond maturities. Te steam was sustained till te end of te week as evident in increased appetite across te curve as average bonds yield edged lower by 40bps w/w. We expect activities witin te FI space to be determined by investors sentiments around te PMA slatted mid-week. Naira finds furter support on increased intervention At te spot market, te naira appreciated to N305.9/USD in te past week from N306/USD in te previous week. Te parallel market also saw te domestic currency appreciate by 52bps to N379.0/USD on continuous CBN intervention. At te newly introduced investors & exporters window, te NAFEX rate closed at N374.91/USD (vs. N375.69/USD on Tuesday). Meanwile, oil prices fell furter to $ 51.73pb from $51.96pb amid stronger U.S. oil inventories oil production and rig counts. In te week aead, we expect te naira to remain tied to te tune of CBN's intervention in te spot and forward markets. 4

Stock Recommendations for te Week Ticker SHO (bn Units) MCap (N' bn) Source: Company filings, NSE, United Capital UR= Under Review Prices as at Friday 28 April 2017 United Capital Researc I Nigeria I Markets Mcap ($'mn) Financials 197.94 Current Price(N) Target Price(N) Upside/(Dow nside) Rating* P/E(x) Div Yield(%) ACCESS 22.9 152.3 46576.4 6.7 6.0-10% HOLD 4.0 13.9% DIAMONDBNK 23.2 18.3 5605.6 0.8 1.6 106% BUY 0.4 3.5% FBNH 35.9 113.8 34806.6 3.2 5.0 58% BUY 1.6 1.9% FCMB 19.8 19.0 5813.6 1.0 1.9 98% BUY 1.1 11.2% GUARANTY 29.4 782.9 239456.7 26.6 30.4 14% BUY 8.0 9.0% ZENITHBANK 31.4 467.9 143095.0 14.9 17.3 16% BUY 4.7 11.7% CUSTODYINS 5.9 17.8 5449.6 3.0 5.2 72% BUY 3.9 2.9% Non-Financials DANGCEM 17.0 2703.0 826712.6 159.0 192.8 21% BUY 9.4 5.0% DANGSUGAR 12.0 74.4 22755.2 6.2 7.9 27% BUY 7.2 6.2% FLOURMILL 2.6 46.8 14313.8 18.0 23.7 32% BUY 17.3 9.6% GUINNESS 1.5 90.0 27531.1 60.0 71.0 18% BUY 11.3 2.5% MOBIL 0.4 132.8 40616.9 332.0 165.3-50% SELL 17.3 4.7% NASCON 2.6 22.1 6751.3 8.5 8.0-6% HOLD 6.7 8.2% NESTLE 0.8 581.6 177882.4 727.0 714.3-2% HOLD 21.5 2.1% PZ 4.0 59.7 18253.1 14.9 16.2 9% HOLD 7.0 0.8% SEPLAT 0.5 205.0 62699.3 410.0 277.3-32% SELL 4.2 7.8% WAPCO 3.0 152.8 46721.6 50.9 61.4 21% BUY 5.7 3.5% UACN 1.9 27.5 8408.7 14.5 22.9 58% BUY 2.6 6.3% TOTAL 0.3 78.9 24131.6 263.0 302.1 15% BUY 18.9 6.3% 5

United Capital Researc I Nigeria I Markets Investment Rating Criteria and Disclosure United Capital Researc adopts a 3-tier recommendation system for assets under our coverage: Buy, Hold and Sell. Tese generic ratings are defined below; Buy: Based on our valuation and subjective view (if any), te total return upside on te stock s current price is greater tan our estimated cost of equity. Hold: Based on our valuation and subjective view (if any), te total return upside on te stock s current price is less tan te cost of equity, owever, te expected total return on te stock is greater tan or equal to te Standing Deposit Facility rate of te Central Bank of Nigeria (wic is currently MPR 500bps; i.e 9%). We consider tis as te minimum return tat may deserve our olding of a risk asset, like equity. Sell: Based on our valuation and subjective view (if any), te total return upside on te stock s current price is less tan te Standing Deposit Facility rate of te Central Bank of Nigeria (wic is currently MPR 500bps; i.e. 9%). We consider tis as te minimum return tat may deserve our olding of a risk asset, like equity, especially as we consider te average 4.5% total transaction cost for an average retail investor. NR*: Please note tat in addition to our tree rating eads, we indicate stocks tat we do not rate wit NR; meaning Not-Rated. We may not rate a stock due to investment banking relationsips, oter sources of conflict of interests and oter reasons wic may from time to time prevent us from issuing a rating on te sares (or oter instruments) of a company. Please note tat we sometimes give concessional rating on stocks, wic may be informed by tecnical factors and market sentiments. Current Stock Rating Dispersion and Relationsip Conflict of Interest: It is te policy of United Capital Plc and all its subsidiaries/affiliates (tereafter collectively referred to as UCAP ) tat researc analysts may not be involved in activities tat suggest tat tey are representing te interests of UCAP in a way likely to appear to be inconsistent wit providing independent investment researc. In addition, researc analysts reporting lines are structured so as to avoid any conflict of interests. Precisely, researc analysts are not subject to te supervision or control of anyone in UCAP s Investment Banking or Sales and Trading departments. However, suc sales and trading departments may trade, as principal, on te basis of te researc analyst s publised researc. Terefore, te proprietary interests of tose Sales and Trading departments may conflict wit your interests as clients. Overall, te Group protects clients from probable conflicts of interest tat may arise in te course of its business relationsips. Analyst Certification Te researc analysts wo prepared tis report certify as follows: 6

United Capital Researc I Nigeria I Markets 1. Tat all of te views expressed in tis report articulate te researc analyst(s) independent views/opinions regarding te companies, securities, industries or markets discussed in tis report. 2. Tat te researc analyst(s) compensation or remuneration is in no way connected (eiter directly or indirectly) to te specific recommendations, estimates or opinions expressed in tis report. Oter Disclosures United Capital Plc or any of its affiliates (tereafter collectively referred to as UCAP ) may ave financial or beneficial interest in securities or related investments discussed in tis report, potentially giving rise to a conflict of interest wic could affect te objectivity of tis report. Material interests wic UCAP may ave in companies or securities discussed in tis report are disclosed: UCAP may own sares of te company/subject covered in tis researc report. UCAP does or may seek to do business wit te company/subject of tis researc report UCAP may be or may seek to be a market maker for te company wic is te subject of tis researc report UCAP or any of its officers may be or may seek to be a director in te company(ies) covered in tis researc report UCAP may be likely recipient of financial or oter material benefits from te company/subject of tis researc report. Company Dangote Cement Plc Dangote Flour Plc Dangote Sugar Plc Diamond Bank Plc FirstBank Holdings Nigeria Plc Guaranty Trust Bank Plc Guinness Nigeria Plc PZ Nigeria Plc Transnational Corporation of Nigeria Plc United Bank for Africa Plc Disclosure g, Disclosure keys a. Te analyst olds personal positions (directly or indirectly) in one or more of te stocks covered in tis report b. Te analyst(s) responsible for tis report (wose name(s) appear(s) on te front page of tis report is a Board member, Officer or Director of te Company or as influence on te company s operating decision directly or troug proxy arrangements c. UCAP is a market maker in te publicly traded equities of te Company d. UCAP as been lead arranger or co-lead arranger over te past 12 monts of any offer of securities of te Company e. UCAP beneficially own 1% or more of te equity securities of te Company f. UCAP olds a major interest in te debt of te Company g. UCAP as received compensation for investment banking activities from te Company witin te last 12 monts. UCAP intends to seek, or anticipates compensation for investment banking services from te Company in te next 6 monts i. Te content of tis researc report as been communicated wit te Company, following wic tis re- 7

United Capital Researc I Nigeria I Markets searc report as been materially amended before its distribution j. Te Company is a client of UCAP k. Te Company owns more tan 5% of te issued sare capital of UCAP Disclaimer United Capital Plc Researc (UCR) notes are prepared wit due care and diligence based on publicly available information as well as analysts knowledge and opinion on te markets and companies covered; albeit UCR neiter guarantees its accuracy nor completeness as te sole investment guidance for te readersip. Terefore, neiter United Capital (UCAP) nor any of its associates or subsidiary companies and employees tereof can be eld responsible for any loss suffered from te reliance on tis report as it is not an offer to buy or sell securities erein discussed. Please note tis report is a proprietary work of UCR and sould not be reproduced (in any form) witout te prior written consent of Management. UCAP is registered wit te Securities and Excange Commission and its subsidiary, UBA Securities Limited is a dealing member of te Nigerian Stock Excange. For enquiries, contact United Capital Plc, 12t Floor, UBA House, 57 Marina, Lagos. United Capital Plc 2015.* Contacts: United Capital Plc Securities Trading: +234-1-280-8919 Securities@unitedcapitalplcgroup.com Asset Management: +234-1-2807822 assetmanagement@unitedcapitalplcgroup.com Trusteesip: +234-1-27157491 trustees@unitedcapitalplcgroup.com 8