Archive for April, 2010

Here are the NSE stats for the week ended April 23rd 2010:

Courtesy of Cordros Capital Nigeria, here is the NSE report for the week ended April 23rd 2010: Market overview The stock market had been mixed so far in the week having given up part of the gains accrued in the past weeks. The market ended last week’s trades with some declines after witnessing fluctuations in […]

In the past 2 weeks, the following companies have released either their full year or quarterly results.And the some of the stockbrokers (FSDH, Afrinvest, ARM) have prepared some analysis of their results. The highlights and results are below:

FSDH – Nigerian Aviation Handling Company Plc: Interim Results – Q3, Sept. 2009
FSDH - Nigerian Aviation Handling Company Plc: Interim Results – Q3, Sept. 2009 (382)

FSDH – PZ Cussons Plc: Interim Results – Q3 2010
FSDH - PZ Cussons Plc: Interim Results – Q3 2010 (330)

ARM – Nestlé Nigeria Plc FY 09
ARM - Nestlé Nigeria Plc FY 09 (1027)

Afrinvest – GTB – Full Year ended 31 December 2009
Afrinvest - GTB - Full Year ended 31 December 2009 (593)
<blockquote>FY’09 Results:
* GTBank reported a 61.6% growth in gross earnings to N162.6bn (US$1.1bn) from N100.6bn (US$669.4m).
* Total loan and advances grew by 35.4% to N563.5bn (US$4.6bn).
* The bank’s operating income increased by 22.0% to N188.2bn (US$1.3bn).
* Non-Performing Loans (NPL), as a proportion of gross loans, grew from 2.0% in FY ‘08 to 12.0%.
* Pre-tax profits went down 20.9% to N27.9bn as further provisioning for risk assets eroded profits.

FY’10 Outlook:
* We believe that GTBank will continue to demonstrate a healthy potential for earnings growth and improved operational efficiency.
* We expect the bank to leverage on its strong brand and its perceived conservative business model to capture more market share in order to increase current profitability levels.
* While we are positive on the bank’s outlook, as we expect it to maintain its history of strong asset growth, we are however concerned with the velocity of liability generation which needs to be at par with asset growth.
* On this basis, we establish a 12-month price target of N25.70 (ex-div), indicating a 12.5% upside based on its market price as at April 08, 2010 (N22.80) and hereby reiterate our ACCUMULATE recommendation on GTBank, as we believe that a greater part of its upside potential has been priced in at current valuation.</blockquote>

Afrinvest – Oando Nigeria Plc – FY09
Afrinvest - Oando Nigeria Plc - FY09 (326)
<blockquote>FY’09 Results:
* Oando reported a relatively flat turnover of N336.9bn when compared with N339.4bn reported in the previous year.
* PBT and pre-tax margins went up by 25.8% and 4.0% respectively.
* The pre-tax margin of 4.0% is the company’s best in the last five years; this suggests improved efficiency amidst an increasingly challenging operating environment.

FY’10 Outlook:
* We are however positive about the company’s outlook as we expect it to leverage on the high margin potential of producing upstream assets to deliver additional top-line growth.
* We also expect that proceeds from its recent capital raising exercise will be used to pay down on some existing debt.
* On this basis, we upgrade our recommendation on Oando to a BUY at current valuation, as we forecast the ex-div price to settle within a N97.50 – N102.50 range over the next 12 months.</blockquote>

Afrinvest – PZ Cussons (Nigeria) Plc – Q3 2010
Afrinvest - PZ Cussons (Nigeria) Plc - Q3 2010 (464)
<blockquote>FY’09 Results:
* PZ Cussons reported improved profit margins despite reduced turnover.
* Turnover fell by 4.6% to N44.2bn (US$293.6m), while PBT grew by 23.0% to N5.3bn (US$35.0m).
* The company embarked on cost containment strategies as reflected by the growth in PBT margins from 9.3% in Q3 ’09 to 11.9% in Q3 ’10.

FY’10 Outlook:
* Although we recognize the potential impact of the company’s cost reduction strategies on its earnings, we however note that the increased strain on sales volumes poses a major downside risk.
* On this basis, we forecast FY 2010 PBT and PAT of N8.6bn (US$56.9m) and N6.0bn (US$39.8m) respectively.
* Our recommendation therefore is to REDUCE at current valuations as we forecast a FY’10 (12 month) price target of N26.61. </blockquote>

Afrinvest – Zenith Bank Plc – 3 Months Ended March 31, 2010:
Afrinvest - Zenith Bank Plc - 3 Months Ended March 31, 2010 (412)
<blockquote>Q1’10 Results:
* Zenith Bank reported a 4.6% growth in gross earnings to N55.0bn (US$365.9m).
* PBT went up by 12.3% to N13.2bn (US$87.8m), with a 6.7% increase in profit margin to 24.0%.
* Deposits grew by 9.0% to N1.3tn (US$8.6bn), while the bank still maintains a loan to deposit ratio of 52.0%.

FY’10 Outlook:
* We expect Zenith Bank to continue to leverage on its market share in the corporate banking sector.
* We therefore review our full year gross earnings forecast to N255.1bn (US$1.7bn), and PBT to N54.1bn (US$359.7m).
* We also establish a 12-month price target of N19.00 and hereby re-iterate our ACCUMULATE recommendation on Zenith Bank at current valuation.</blockquote>

The Monetary Policy Committee of the CBN held their monthly meeting on April 15th. Afrinvest prepared an analysis of this communique. Read below and you can also download the report below too.

1. MPR is still retained at 6.0%, with an asymmetric corridor of +2.0% and -5.0%;
2. Technical Committee’s recommendations on the injection of the N500.0bn financing facility for the emergency power projects for industrial clusters, as well as modalities regarding the refinancing/ restructuring of banks’ exposures to the manufacturing sector and SMEs approved;
3. Banks required to submit their risk-based interest rate pricing models on a monthly basis. Loan pricing should henceforth be stated at a fixed spread above MPR and adjusted along with MPR movements;
4. Complementary policies being put in place by the CBN Board endorsed, including the revised guidelines for loan loss provisioning, the N200.0bn guarantee for real sector lending and regulations governing margin lending;
5. CBN to continue its efforts towards the expedited passage of the AMCON Bill and its speedy implementation.

Key Domestic Macroeconomic Statistics
Provisional data from the National Bureau of Statistics (NBS) show that in Q1 2010, real Gross Domestic Product (GDP) grew by 6.68%, largely driven by the non-oil sector. Overall GDP for 2010 is however projected at 7.53%, with the non-oil sector still expected to be the main driver.

The year-on-year inflation fell to 11.8% in March 2010, from 12.3% in February 2010. This could be attributed to numerous factors, including the on-going money contraction, delays in the passage of the 2010 federal budget and the improvement in the supply of petroleum products.

The MPC re-stated its position that the risk of inflationary pressure in the near-to-medium term remains real; it however asserted that it will continue to monitor price developments to facilitate an enabling environment for sustainable growth and employment.

Implications
Afrinvest Research re-iterates its position that the N500.0bn facility for emergency power projects is a step in the right direction. We also believe that the ongoing review of regulations governing margin lending as well as prudential guidelines on loan loss provisioning will improve transparency and corporate governance in the banking sector. It will also help the banks to more efficiently hedge against risks.

Retail lending rates have remained stubbornly high despite the significant fall in interbank rates, deposit rates and the Standard Deposit Facility rate. This has therefore resulted in a wide spread between lending and deposit rates. Banks are still unwilling to lend to the real sector, given their rather reticent approach to the creation of new risk assets. The MPC is therefore trying to establish a proper transmission mechanism from policy rate adjustments to market (interest) rates and, hopefully, channel funds from the banks to the real sector.

Afrinvest Research is of the opinion that though banks may still be unwilling to resume lending, they will however be forced to do so over time as they come under increasing pressure from a number of angles; coupled with recent CBN measures taken to encourage lending, shareholders would also begin to press for better returns than what currently obtains (deposits with the CBN at a low rate and money market securities with low yields), thus mounting pressure on the banks to resume lending. We also believe that the sector will witness even more intense competition amongst operators, which would naturally force them to resume lending as they fight for turf.

Central Bank of Nigeria Communiqué No. 69 (281)

Proshare and Vetiva Securities have both prepared the market reports for the March 2010 NSE performance. Happy Reading!

Vetiva Research - Economic Note - March Update (547).

Proshare March 2010 Report (300)

UBA released its FY09 result for the 15-month period ended December 2009. The highlights are:

• UBA reported gross earnings of N246.7bn (US$1.6bn) for the 15 months ended 31 December 2009, representing a 45.6% increase from the corresponding 12 month period to September 2008.
• Total assets decreased by 7.5% from N1.7tn (US$11.5bn) in 2008 to N1.5tn(US$10.3bn) as at FY2009
• Total loans and advances grew by 40.6% to N606.6bn ($4.0bn) while its loan to deposit ratio went up to 48.7% from 32.4% recorded in the prior year. • Operating income was up 46.0% from N128.2bn (US$852.6m) to N187.1bn (US$1.2bn)
• Deposits and other accounts decreased by 6.6% from N1.3tn (US$8.9bn) as at September 2008 to N1.2tn(US$8.3bn)
• Keeping loan quality at an acceptable limit seemed to be a challenge as Non-Performing Loans (NPL) (as a proportion of gross loans) went up from 4.0% in FY2008 to 8.0%
• The exceptional item reported included a net charge of N38.2bn (US$254.0m) for diminution in the value of assets which significantly hampered the bank’s bottom-line earnings potential; After-Tax Profits went down 94.9% from N41.2bn(US$274.4m) in 2008 to N2.1bn(US$14.1m) for FY2009.

Afrinvest, ARM and Meristem each prepared analyses of the company’s results:

Afrinvest - UBA FY 2009 Earnings Update (570).

ARM - UBA Plc 15M Dec 2009 (500).

Meristem - UBA - FY2009 (440).

This is quite late – the weekly stats for the week ended April 9th 2010:

Below are the NSE reports for the Month of March and for Q1 2010. Also below is the stats of the market performance:

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Apologies for the late post. Here is the market analysis and stockbroker reports for the week ended April 1st 2010:

Afrinvest Forthnightly Report - April 1 2010 (527).

FSDH - Weekly Report - Apr 1 2010 (346).

And below are the stats:


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This blog is dedicated to informing users on the latest business and economic news news from the CBN and Nigerian Stock Exchange. Happy reading!

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