…following mixed earnings releases
The Nigerian Stock Exchange All Share Index (NSEASI) pared by 2.74% this week, after the index waned in four (4) out of the five (5) trading days. Market capitalization stood at NGN10.03tn, as the Year-to-Date return of the bourse pegged at -15.77%.
Volume traded and market turnover appreciated by 36.27% and 97.97% WoW accordingly, just as 11 stocks recorded price appreciations as against 54 decliners. FIDSON topped the gainers’ list, after appreciating by 13.67% WoW to NGN3.41. DANGSUGAR (+8.29%), CONTINSURE (+5.26%), IKEJAHOTEL (+4.07%), and ETI (+2.76%) followed accordingly.
On the flip side, OANDO, LEARNAFRICA, UAC-PROP, STANBIC, and FBNH topped the laggards’ chart, after the respective counters recorded declines of 39.66%, 19.75%, 17.97%, 17.78%, and 14.00%.
The market witnessed an influx of not-too-impressive 9M2015 financial scorecards from different sectors in the week, which triggered negative reactions from investors. We expect a spillover of this negative investor sentiment to trickle into the subsequent week.
The likes of ETI, PRESCO, STANBIC, AIICO and UNILEVER amongst several other companies released their results during the week. NESTLE declared an interim dividend of NGN10.00 per share (implying a 1.21% dividend yield based on today’s closing price of NGN825.01), with closing and payment dates of 23rd November 2015 and 7th December 2015 respectively.
In this report, we review events in the economy, laying emphasis on the performance of different segments of the financial market, while presenting our expectations for the coming week Fixed Income: Demand for FGN Bond Subsists OMO maturities of NGN187bn and Foreign exchange refunds improved system liquidity during the week, cushioning the effects of the exit of foreign players from the market as J.P Morgan rounded up the exclusion of FGN bonds from its emerging markets bond index today.
The market also continues to anticipate increase liquidity from FAAC allocations. Average rates witnessed a week-to-date and monthto- date change of -0.70% and -1.13% respectively for the Nigerian Inter-bank rates, while the Money market rates also changed by -4.44% and -4.61% accordingly. The Nigerian Treasury Bills endured a bearish demand earlier in the week which later witnessed a reversal. Consequently, average yield across tenors declined by 3.79% week-on-week to peg at 8.12%.
Contrarily, demand for most FGN Bonds was sustained all through the week, as average offer yield across tenors declined by 1.06% week-on-week to peg at 14.00%. The domestic currency sustained its oscilliating trend against the dollar, recording a week-on-week value loss of 0.49% to peg at NGN197.47, thus dragging year-todate return to -6.54%.
Agric sector: PRESCO 9M2015 posts impressive result The Agric. sector endured a setback during the week, paring by 2.44% week-on-week as measured by our MERIAGRI index.
This further dragged the YtD return to 19.31%. Furthermore, no counter advanced during the week despite the good performance scorecard posted by some companies in the sector. OKOMUOIL continued its bearish run from the previous week, with a decline of 5.04% to emerge as the biggest underperformer in the sector, while LIVESTOCK (-5.88%) followed suit. PRESCO, ELLAHLAKES and FTNCOCOA traded flat for the second consecutive week. PRESCO released its 9M2015 result with turnover and Profit-After-Tax (PAT) growth of 16.23% and 58.84% Year-on-Year.
LIVESTOCK also released its 9M2015 result which showed a topline growth of 16.68% YoY, while PAT declined by 31.37% YoY on the back of higher financial charges (99.47%). Despite the corporate releases, investors’ sentiments still remains weak. However, we opine that given the relatively low prices of most of the counters, the sector might witness some bargain hunting in the coming week. Banking Sector: apathetic market mood despite impressive releases
The sector upturned prior week gains, after the banking index returned a 3.43% loss during the week, to peg the year to date return at -12.15%, measuring by the NSEBNK10 index.
There were 3 stocks that recorded price appreciations while 12 stocks waned in value. ETI, WEMA and UBN advanced by 2.76%, 2.11% and 2.76% to emerge the sector’s only gainers for the week. On the flip side, STANBIC recorded the largest price decline, after paring by 17.78% to close at NGN18.91. FBNH, UBA, UNITYBNK and FCMB also featured on the top losers’ list, after recording declines of -14.00%, -13.58%, -11.69 and -10.05% accordingly.
The market received influx of 9M2015 earnings releases from during the week. Amongst the companies were FIDELITYBK, STANBIC, FBNH, STERLNBANK, UBN, SKYEBANK and ETI. FBNH and STANBIC recorded respective revenue growth of 16.91% and 10.34% YoY, however, PAT pared by 19.24% and 52.57% accordingly. ETI, STERLNBANK and SKYEBANK grew revenue and PAT by 18.10%, 12.02% and 33.06%, and 15.10%, 6.86% and 21.46% YoY in that order.
In spite of the good numbers released by most banks, rally on banking stocks was weak during the week, indicating the general bearish sentiment in the equities market. On this note, we do not expect further releases to sway investors’ appetite towards the banking sector stocks. Consumer Goods: NESTLE declares NGN10.00 Interim dividend The sector performance wavered following the release of mixed results to the market during the week.
Subsequently, return for the week pegged at -1.97%, as measured by NSEFBT10 sector index. Sector breadth pegged at 0.25x, as 12 stocks declined, while 3 stocks recorded price appreciations. DANGSUGAR, FLOURMILL and CADBURY were the only gainers in the week, advancing by 8.29%, 0.76% and 0.75% respectively, while GUINNESS, UACN and HONYFLOUR depreciated in price by 12.10%, 8.69% and 7.53% accordingly.
In recently released 9M2015 result, DANGSUGAR recorded 1.02% decline in revenue, while PBT and PAT advanced by 1.81% and 2.07% in that order. NESTLE recorded growth in revenue, PBT and PAT of 5.18%, 3.25% and 2.22% accordingly. The company also declared NGN10.00/share interim dividend, with closure and payment dates of 23rd November and 7th December 2015 respectively.
UNILEVER recorded decline in revenue, PAT and PBT of 2.14%, 92.09% and 92.26% respectively. Honeywell Plc’s 6M2016 result showed 2.53%, 17.53% and 17.53% declines in revenue, PBT and PAT accordingly. In line with our earlier assertion, performance trended in consonance with the recent earnings releases. We opine that this trend might persist in the coming week, as companies strive to meet the deadline on corporate releases and investors react accordingly.
Healthcare Sector: Uninspiring releases from sector nobles The healthcare sector like most sectors in the equities market pared by 4.34% as measured by MERI-HLT Index to drag the year to date return to -4.73%. There were 3 decliners while a lone stock appreciated in value.
FIDSON enjoyed a significant rally over the course of the week, after the counter appreciated by 13.67% WoW to close at NGN3.41 (vs. NGN3.00 in the prior week). EVANSMED, GLAXOSMITH and MAYBAKER featured as the sector’s underperformers for the week, with WoW respective declines of 5.08%, 4.48% and 3.28%.
All other counters within the sector traded flat. PHARMA-DEKO, GLAXOSMITH and FIDSON released their 9M2015 during the week. PHARMDEKO and GLAXOSMITH recorded revenue and PAT declines of 3.25% and 0.74%, and 5.70% and 67.22% YoY respectively. FIDSON also joined with a revenue decline of 17.97% in top-line growth, while bottom-line grew by 1.53% to NGN0.47bn (vs. NGN0.46bn in 9M2014).
The unimpressive performance scorecards released by most companies in the sector may have resulted to the sell-offs witnessed in the sector during the week. In the subsequent week, we do not expect this mood to abate.
DANGCEM was the only gainer for the week, appreciating marginally by 0.01% WoW to close at NGN 163.03. BERGER topped decliners’ chart, depreciating in share price by 5.51% to close at NGN 9.77, while PAINTCOM, PORTPAINT, WAPCO and CCNN trailed respectively with 5.00%, 4.53%, 1.53% and 0.38% decline in share value. In the Industrial goods sector, DANGCEM, BERGER and CAP released their 9M2015 results which recorded 17.81%, 18.41% and 0.86% YoY growth in revenue respectively.
PAT also grew by 12.47%, 88.56% and 3.86% accordingly. Similarly, WAPCO grew revenue by 5.49%YoY, while its PAT pared by 7.05% in the same period. PREMIER PAINTS, CCNN and ASHAKA recorded YoY declines of (-32.25%, -6.30%, -15.84%) in topline figures and (-8,077.64%, -4.75%, -15.27%) in PAT accordingly.
The mood in the sector remained weak during the week, owing generally to negative market sentiments and also the unimpressive scorecards released by some companies in the sector. However, we expect a reversal of this mood in subsequent week.
Insurance Sector: Earnings releases project fair FY2015 showing Contrary to market performance during the week, the insurance sector returned 0.24% gains to trim the year to date return to -6.63% as measured by the NSEINS10 index.
Sector breadth (0.50x) skewed infavour of decliners, as 2 stocks recorded price declines as against a lone advancer. CONTINSURE gained 5.26% WoW to emerge the lone gainer during the week, closing its share price at NGN1.00 (vs. NGN0.95 in the prior week). NEM and AIICO on the other hand, witnessed price cuts, as the respective stocks waned by 5.41% and 1.16% WoW.
The seemingly impressive performance scorecards from most insurance companies for the 9M2015, projects a fair FY2015 performance. REGALINS, AXAMANSARD, ROYALEX, AIICO, HMARKINS, LINKAGE, UNITYKAP and CORNERST all released their 9M2015 performance scorecards during the week. AXA MANSARD Gross Written Premium growth waned by 8.48% YoY to NGN13.50bn, while PAT growth surged by 32.32% to NGN1.51bn.
CORNERST and HMARKINS recorded respective 39.72% and 25.02% YoY growths in top-lines, and 10.62% and 120.47% gowths in their PAT. AIICO on the contrary recorded a 7.90% and 0.81% YoY decline in GPE and PAT correspondingly. While we expect more earnings releases in the coming week, we anticipate that the results might not have significant impact on the demand for sectors’ stocks, given the generally weak appetite in the equities market.
Oil & Gas Sector: OANDO sheds 39.66% WoW The oil & gas sector as measured by the NSEOILG5 index pared by -5.96% WtD, as negative investors’ sentiments rubbed off on the sector stocks. Three stocks declined in share price, while an equal number traded flat. OANDO led the underperformers for the week given recent company activities and corporate releases, after declining by 39.66% WoW to close its share price at NGN6.01.
ETERNA and SEPLAT also recorded price declines of 5.85% and 1.90%. ETERNA released its 9M2015 earnings scorecard, which showed a turnover growth of 79% to NGN69.99bn, and a PAT decline of 28% to NGN0.68bn. OANDO Plc. also released its Q3:2015 result which reflected revenue and PAT declines of 5% and 547% respectively. Total Nigeria Plc 9M2015 result showed revenue and earnings declines of 10% and 19% respectively.
The company also proposed an interim dividend of NGN2.00/ share (implying a 1.33% dividend yield as at today’s closing price), with closure date of 30th November and payment date of 14th December 2015. We preach caution to discerning short-term investors, while we advise investors with long term horizon to aim at fundamentally justified stocks Services sector… AIRSERVICE’s releases impressive 9M2015 result.
The week-on-week return as measured by our MERISER index showed a 2.53% WoW decline to peg the Year-to-date performance at -2.43%. Sector breadth (0.4x) skewed in favour of decliners as 2 stocks advanced relative to 5 decliners.
