Naija Lo Wa

Here are more bank and other companies’ analysis from FSDH and Afrinvest:

Nigerian Bottling Company Plc
Q3 ’10 Results:
- NBC reported an 14.1% increase in turnover from N64.7bn (US$430.2) in Q3 ’09 to N73.8bn (US$490.7m).
- While PBT fell by 38.7% to N1.7bn (US$11.3m), PAT grew by 30.2% to N1.7bn. The growth in PAT could be linked to the minimal tax payment made for the quarter (N5.0m), possibly as a result of capital allowances on new projects granted to the company.
- PBT margins dropped to 2.3% from 4.3% in Q3’09, indicating an increase in operating expenses.

FY ’10 Outlook:
- The company has launched a new juice (Cappy Juice), which is expected to boost the company’s profit and market share amid the fierce competition that currently exists in the juice manufacturing space.
- NBC is currently trading at a trailing P/E ratio of 17.7x, which is a discount to its peer average of 18.3x (Afrinvest Research Consumer Goods).
- We forecast FY 2010 Turnover and PBT of N94.7bn (US$629.7) and N2.4bn (US$16.0) respectively, and remain NEUTRAL on the stock pending the release of its full year numbers. We also establish a 6-month price target of N32.94.

Mobil (Oil) Nigeria Plc
Q3 ’10 Results:
- Mobil reported a marginal 3.9% dip in turnover from N47.1bn (US$312.9m) in Q3 ‘09 to N45.2bn (US$300.5m).
- The company however an impressive 74.6% increase in PBT from N2.5bn (US$16.6m) to N4.3bn (US$28.6m).Despite a drop in revenue, Mobil continues to maintain an impressive pre-tax margin of 9.5%, thus making it one of the most efficient downstream operators in Nigeria.

FY ’10 Outlook:
- This performance may not be unconnected to Mobil’s ability to book a significant proportion of its profit from non-core business activities (especially real estate). In addition, the recent restructuring and cost-cutting strategies implemented by the company has led to a reduction of nearly 40.0% in labour costs, thus making its supply and distribution more efficient.
- The recent share price performance has firmed up Mobil’s valuation metrics, with the company currently trading at a 2010 forward P/E of 11.7x, a discount to the sector average of 13.4x.
- We remain positive in our FY 2010 outlook on Mobil, with revenue and PBT forecasts of N60.8bn (US$404.0m) and N5.8bn (US$38.5) respectively. We therefore upgrade our rating on Mobil to ACCUMULATE with a 12-month price target of N178.75K, indicating a 16.9% upside potential.
Company Report - Afrinvest - Mobil Q3 2010 Earnings Update (244)

Diamond Bank Plc
Q3 ’10 Results:
- Diamond Bank reported gross earnings of N67.0bn (US$445.3m), representing a 20.8% decrease from the N84.6bn (US$562.1m) reported in the corresponding 2009 period.
- The bank however returned to profitability, posting pre and post tax profits of N7.0bn (US$46.5m) and N4.9bn (US$32.4m) in Q3 2010 respectively.
- The reduction in the top line is consistent with the trend that has seen banks struggle with lower yields on assets amid a challenging credit environment.

FY ’10 Outlook:
- Further analysis of the bank’s revenue profile by business segments indicates that the strategic drive towards expanding retail banking business has begun to yield benefits.
- Apart from the 5.2% QoQ reduction in operating expenses, the 52.2% drop in cost of risk had the most impact on profitability. Deposits largely held steady, while risk assets declined by 11.9% over the period.
- On this basis, we forecast a 2010E EPS of N0.49 implying a P/E of 15.2x which is at a premium to its peers. We place a SELL recommendation on the stock, based on our 6M price target of N5.22, representing a 29.4% downside.
Company Report - Afrinvest - Diamond Bank Q3 2010 Earnings Update (246)

Access Bank Plc
Q3 ’10 Results:
- Access Bank reported gross earnings of N78.0bn (US$517.6m), representing a 15.2% decrease from the N91.9bn (US$610.4m) reported in the corresponding 2009 period.The bank reported pre-tax profits of N14.1bn for the period under review, as against a loss of N10.6bn reported in the corresponding 2009 period.
- This performance is symptomatic of the overall industry trend that has seen profits soar on the back of significant reduction in costs: loan loss provisions dropped 87.0% YoY from N39.9bn to N5.2bn, while operating costs have consistently dropped by 3.0% and 15.0% between Q1, Q2 and Q3.

FY ’10 Outlook:
- Consequently, there has been a progressive, albeit marginal, drop in its cost-to-income ratio. We have therefore established a 2010 FYE of N97.0bn in gross earnings and N13.6bn in net earnings. This gives an EPS estimate of N0.75 for FY 2010.
- Access Bank currently trades at a trailing P/E of 17.6x, which is at a 16.3% discount to its peers. It however trades at 11.4x 2010E earnings, which represents a slight premium to its peers (trading at an average of 10.8x 2010E earnings).
- Afrinvest Research establishes a 6M price target of N8.04 (a 2.2% downside) and thus remain NEUTRAL on the stock.

And for Ashaka Cement:

And others from FSDH:

Company Report - FSDH - GTBank -Q3, 2010 (228).

And from Vetiva: