WEEKLY STOCK MARKET REVIEW AUG 17-21, 2015 NSE ALL-SHARE INDEX MARKET CAP ( BILLION) VOLUME TRADED (SHARES) VALUE TRADED ( MILLION) Close 29,878.33 Close 10,240.92 Current 174.53 Current 2,750.77 Open 30,705.62 Open 10,524.48 Previous 1,356,71 Previous 12,474.72 Change (%) 2.69 Change (%) 2.69 Change (%) 87.14 Change (%) 77.95 TOP GAINERS PRICE ( ) CHANGE (%) PAINTS AND COATINGS MANUFACTURES 1.10 14.58 NESTLE FOODS NIGERIA 965.98 12.59 ACCESS BANK 4.69 7.82 FORTE OIL 228.70 6.37 SKYE BANK 1.99 5.29 FIDSON HEALTHCARE 3.35 4.69 GREAT NIGERIA INSURANCE 0.52 4.00 N.E.M INSURANCE 0.65 3.17 VITAFOAM 5.80 1.93 7-UP BOTTLING COMPANY 191.00 0.26 MOST TRADED STOCK PRICE ( ) VOLUME (UNITS) EQUITY ASSURANCE 0.50 2,529,421,450 ACCESS BANK 4.69 525,610,456 UNITED BANK FOR AFRICA 3.22 195,656,993 ZENITH BANK 15.40 174,529,511 GURANTY TRUST BANK 22.00 119,634,083 TRANSNATIONAL CORPORATION 2.36 104,319,707 FBN HOLDINGS 5.78 94,680,329 SKYE BANK 1.99 91,237,525 NIGER INSURANCE 0.50 53,765,488 FIDELITY BANK 1.25 53,589,333 COMPANY NEWS A total volume of 370,500,000 and 311,930,000 units were added to the foling Federal Government Bonds - 12.1493% FGN JUL 2034 and 15.54% FGN FEB 2020 respectively on 20th August, 2015. PAST RECOMMENDED STOCK TOP LOSERS PREFERRED ENTRY PRICE PRICE ( ) PRICE ( ) CHANGE (%) EVANS MEDICAL 0.67 27.17 IKEJA HOTEL 2.85 0.81 CADBURY NIGERIA 28.56 4.74 SEPLAT 245.30 39.70 COSTAIN 0.57 0.09 OKOMU OIL 21.71 3.12 AXAMANSARD INSURANCE 2.42 0.34 HONEYWELL FLOUR MILL 2.52 0.35 FBN HOLDINGS 5.78 0.74 WEMA BANK 0.80 0.10 LEAST TRAED STOCK PRICE ( ) VOLUME (UNITS) BETA GLASS 43.00 50 UNIC INSURANCE 0.50 100 MORISON INDUSTRIES 1.82 100 EKOCORP 3.72 100 CHELLARAM 3.95 100 AFROMEDIA 0.50 100 CAPITAL HOTEL 4.07 222 BOC GLASS 4.62 265 INTERLINK ELECTRONICS 4.43 300 FORTIS MICROFINANCE BANK 5.42 361 12M TARGET PRICE ASHAKA CEMENT 19.00 22.00 34.00 DANGOTE CEMENT 175.00 177.00 245.90 DIAMOND BANK 2.90 3.00 8.05 FCMB HOLDINGS 2.00 2.20 3.95 FIDELITY BANK 1.20 1.25 2.30 FLOUR MILLS 24.00 25.07 60.30 INT. BREWERIES 17.80 18.45 35.43 NIGERIAN BREWERIES 197.00 120.02 184.20 OKOMU OIL 20.00 21.71 38.90 PZ CUSSONS 29.00 29.83 42.60 SKYE BANK 1.80 1.99 3.25 UACN 35.00 37.00 53.00 ZENITH BANK 15.00 15.40 22.18
WEEKLY EQUITY REVIEW The NSE All-Share Index and Market Capitalization retreated by 2.69% to close on Friday at 29,878.33 and N10.241 trillion respectively. Similarly, all the Indices finished er during the week. We 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) investor 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 SEPLAT 245.30 478.97 240.00 BUY GUINNESS 119.00 137.35 118.00 BUY TOTAL 155.00 131.92 155.00 SELL FBNH 5.78 14.15 5.00 BUY SEPLAT In its H1-15 results, crude revenue after lifting adjustments came in at US$221.1 million, a 42% dip y/y. This was due to oil price US$53.3/bbl (H1-14: US$112.4/bbl) and periods of downtime on the Trans Forcados System (TFS) compressed growth. Gas revenue spiked by 177% y/y to US$26.5 million given increased production capacity from wells, work-overs done during the year and the new sales agreement with the Nigerian Gas Company (NGC). During the period, working interest sales volumes decreased by 13% y/y to 4.1 MMboe, while direct operating expenses climbed by 44% y/y to US$63.4 million on the back of deferred crude handling fees, rig related and other field expenses. Hence, a 56% y/y decline in gross profit to US$108.6 million. PAT tanked by 73% y/y to US$41.5 million underpinned by the pressure on revenue as well as the 67% y/y spike in finance costs owing to the increase in gross debt foling facility in January. Despite the pressure on revenue from er crude oil prices, management has maintained its strategy of focusing on developing and exploring more oil assets, increasing its capacity in monetizing available gas resources with the view of filling the growing demand from off-takers as well as adequately minimizing possible losses peculiar to the Nigerian upstream operating environment. As a result, we maintain a BUY rating on the counter. SEPLAT 245.30 300.00 680 245.30 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. GUINNESS 113.40 214.98 214.98 113.40 We valued GUINNESS using a blend of absolute and relative valuation models and arrived at a 2015 target price of N137.35 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 2014. 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 break-down 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 N131.92. TOTAL 158.00 150.00 155.00 134.08 FBN HOLDINGS FBN Holdings (FBNH) recently released its unaudited results for the six months ended 30 June 2015. 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 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 H1 2015 from N2.2tn as at December 2014. FBNH 5.78 6.98 13.79 5.37 FBNH s annualized ROAE dipped sequentially to 14.8% from 15.7% in Q1 2015. Efficiency improved for the second consecutive quarter to 61.5% in H1 2015 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 3.0x and a P/Bv of 0.4x compared with the 0.7x multiple for tier-1 banks representing a 75% discount to peer average. Our revised 12 month price target for FBNH is N14.15.
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