Archive for the ‘companyanalysis’ Category

Afrinvest has diligently prepared analyses of the recently released bank results. Here are the reports as well as excerpts from each report for each bank.

Happy Reading!

Zenith Bank
Q3 ’10 Results:
- Zenith Bank reported gross earnings of N139.6bn, representing a 13.6% decrease from the N161.6bn reported in the corresponding 2009 period.
- Pre-Tax profits grew by 196.3% to N39.2bn from N13.2bn reported in Q3 ’09.
- Continuous improvement across the bank’s key efficiency and operating ratios has fuelled this impressive performance even as top-line growth continues to come under intense pressure.

FY ’10 Outlook:
- We remain confident in the bank’s ability to sustain this new level of efficiency as we do not envisage any significant risk to the bank’s operating model in the near term.
- We believe improved efficiency ratios will be a key driver in growing profits thus enhancing the bank’s valuation indices and creating additional upside potential.
- With a revised top-line forecast of N193.1bn for FYE 2010 and N54.1bn in pre-tax profits, we remain positive in our outlook on the bank.
- We hereby reiterate our LONG-TERM BUY recommendation on the bank and establish a 12-month price target of N16.85K which, at current valuations, translates to a 22.1% upside potential.
Company Report - Afrinvest - Zenith Bank Q3 2010 Earnings Update (338)

Unity Bank
Q3 ’10 Results:
- Unity Bank reported a 41.9% increase in gross earnings from N29.3bn (US$192.6m) in Q3 ‘09 to N41.6bn (US$273.3m).
- PAT went up to N10.7bn (US$70.0m) from a loss position of N11.9bn (US$78.2m) recorded in the corresponding 2009 period.
- Net Assets also grew from N7.2bn (US$47.3m) in FY ‘09 to N42.1bn (US$276.6m), following the successful conclusion of the bank’s rights issue.

FY ’10 Outlook:
- This result suggests that Unity Bank has turned the corner, after failing to meet the 10.0% Capital Adequacy Ratio (CAR) prescribed for banks during the CBN audit in 2009.
- While we have yet to speak with management regarding its current operations and strategic outlook for 2011, we reclassify the bank along with our mid-tier banks, which thus makes it an attractive value proposition.
- With a trading multiple of 3.7x its 2010E earnings, compared to a peer average of 8.2x 2010E for the mid-tier banks, we establish a 6-month price target of N2.23 and place a BUY recommendation on the stock.
Company Report - Afrinvest - Unity Bank Plc Q3 2010 Earnings Update (451)

GT Bank
Q3 ’10 Results:
- GTBank reported gross earnings of 119.8bn, 11.9% down from the N136.1bn recorded in the corresponding 2009 period.
- The company however reported an 82.1% increase in PBT to N39.0bn.
- Afrinvest Research believes this performance is efficiency-driven as the bank has driven down its interest expense by 43.6% to 24.7bn.

FY ’10 Outlook:
- Although we remain positive in our outlook on GTBank, we have reviewed our forecasts on the back of the bank’s decision to adopt a mono-line commercial banking business model, as against a holding company structure whereby accounts of subsidiaries are consolidated.
- Our updated forecasts show that the bank is currently trading at a discount to its peers (based on trailing and forward 2010 numbers) and still has room for further price appreciation.
- We revise our forecast turnover down by 20.0% to N169.2bn and our pre-tax profits up to N51.4bn. We also re-iterate our ACCUMULATE recommendation and expect GTBank’s price to trade between a 12.5% – 17.5% upside over the next 6 – 12 months.
Company Report - Afrinvest - GTBank Q3 2010 Earnings Update (400)

UBA
Q3 ’10 Results:
- UBA reported gross earnings of N136.4bn, representing a 6.9% decrease from the N146.4bn reported in the corresponding 2009 period.
- PBT also grew by 225.4% to N16.9bn from a loss of N13.5bn reported in Q3 ‘09.
- The bank’s lending activities however declined by 4.2% from N664.2bn in Q2 ’10 to N636.2bn in Q3 ’10.

FY ’10 Outlook:
- Overall, we remain optimistic on the future performance of the bank. We believe that the recently raised additional capital of N20.0bn will further strengthen the bank’s capital base and also enhance its capital adequacy ratio, currently standing at 17.0%.
- We are however cautious based on this recent performance and the probability of further exceptional item charges.
- Our forecasts also suggest that UBA is currently trading at a 2010E P/E of 20.4x, a significant premium to the top-tier bank average of 12.4x and mid-tier bank average of 8.2x.
- We therefore revise our FY 2010 forecast gross earnings downward to N190.4bn, and PBT to N24.7bn. We also downgrade our recommendation on UBA from an ACCUMULATE to a NEUTRAL/HOLD, as we do not envisage any significant upside potential at current valuation levels in the near term.

Company Report - Afrinvest - UBA Q3 2010 Research Update (350)

First Bank of Nigeria Plc
Q3 ’10 Results:
- First Bank reported gross earnings of N198.0bn, representing a 10.6% decrease from the N177.1bn reported in the corresponding 2009 period. This also falls 3.8% short of our projected N183.9bn.
- The bank reported an impressive pre-tax profit of N40.7bn for the period under review as against a loss of N6.7bn reported in the corresponding 2009 period.
- We would expect that the bank will focus more on driving its operating expenses further down. Operating expenses increased by 17.8% from N71.3bn in 2009 to N83.9bn, despite a 5.3% fall in operating income to N130.3bn from N137.6bn.

FY ’10 Outlook:
- First Bank continues to leverage on its strong brand to grow deposits at a remarkable rate. This growth continues to sustain its strong liquidity ratio, currently at 64.7%.
- We believe First Bank is likely to adopt the holding company structure business model and we remain optimistic that the anticipated new model will support the bank’s growth ambitions and further drive profitability.
- We review our initial top-line forecast of N249.8bn (US$1.7bn) down by 5.0% to N237.3bn (US$1.6bn), while maintaining our initial pre-tax projection of N56.3bn (US$374.1m).
- We also maintain our BUY recommendation on First Bank with a 12-month price target within the range of N16.00 – N16.50 (translating to a 27.3% – 31.2% upside potential at current valuations).
- The bank currently trades at a trailing P/E of 12.3x and forward multiple of 10.7x for FYE 2010; this is a discount to its top-tier peers with both trailing and forward multiples of 17.6x and 13.7x respectively.

Company Report - Afrinvest - First Bank Q3 2010 Research Update (362)

Sterling Bank Plc
Q3 ’10 Results:
- Sterling Bank reported gross earnings of N23.1bn (US$153.6m), representing a 13.0% decrease from the N26.6bn reported in the corresponding 2009 period.
- The bank however reported pre-tax profits of N5.7bn (US$37.9m) from a loss position of N7.0bn (US$46.5m).
- This performance is very much in line with the industry trend which has seen banks challenged for top line growth.

FY ’10 Outlook:
- We review our gross earnings forecast down by 14.1% to N31.8bn (US$211.4m), as the outlook for credit expansion and yield on interest bearing assets remains subdued.
- We do however expect the impressive cost efficiency gains achieved thus far in 2010 to be maintained and therefore revise our net earnings forecast to N6.7bn (US$44.5m) (+6.0%), implying a 2010E EPS of N0.53.
- Sterling Bank thus trades at 4.2x 2010E earnings, a significant discount to its peers (trading at 9.7x 2010E earnings). We therefore maintain our BUY recommendation on the stock.

Company Report - Afrinvest - Sterling Bank 9M 2010 Earnings Update (331)

Skye Bank Plc
Q3 ’10 Results:
- Skye Bank reported gross earnings of 66.2bn, 17.3% down from the N80.0bn recorded in the corresponding 2009 period.
- The bank however reported a huge boost in pre-tax profits to N10.2bn.
- Afrinvest Research believes that this is very much in tandem with the observed trend in the banking sector where the small universe of high quality borrowers has adversely impacted the capacity of banks for credit expansion, and by extension interest income.

FY ’10 Outlook:
- While we have yet to speak with management regarding these results, we are inclined to believe that the increased focus on cost containment (following the drastic cost cutting of Q4 2009) have had a positive impact on its performance.
- On this basis, we establish a 2010E PAT and EPS forecast of N11.2bn and N0.97 respectively.
- On a valuation basis, the bank is trading at 7.7x its 2010F earnings, which is at a discount to its peer average of 9.7x. We therefore establish a BUY recommendation based on a 6M price target of N9.37 (a 27.0% upside).

Company Report - Afrinvest - Skye Bank 9M 2010 Earnings Update (322)

Oceanic Bank Plc
Q3 ’10 Results:
- Oceanic Bank reported gross earnings of N89.4bn (US$594.7m), 31.1% down from the N129.7bn (US$862.6m) recorded in the corresponding 2009 period.
- The bank reported a pre-tax profit of N13.1bn (US$87.0m) for Q3, 2010 as against a loss of N88.4bn (US$587.8m) recorded in Q3, 2009.
- Our analysis shows that these profits were fuelled by a write-back of N14.5bn (US$96.7m) as it made a net operating loss of N1.5bn (US$9.7m) during the period under review.

FY ’10 Outlook:
- While the brand impairment (reputation damage) suffered by the bank in the wake of the CBN’s intervention on August 14, 2009 limited its ability to grow deposits in the early part of the year, recent performance suggests that it may have regained market confidence with deposits rising to N644.5bn and comparing favourably with the N633.2bn in deposits, pre-intervention (March 2009).
- The bank has also remained a net taker of funds in the inter-bank market, with net deficit of N143.9bn.
- Overall, we remain cautious in our outlook on the bank while watching to see how the sale of bad loans to AMCON could boost its liquidity and help fuel risk asset creation; we hereby put a HOLD recommendation on Oceanic Bank.

Company Report - Afrinvest - Oceanic Bank - Q3 2010 Earnings Update (382)

As usual, Vetiva Capital has prepared some very informative reports – September Monthly Economic Note, Economic and Financial Review for 2010 and Analysis of the Banking Sector.

I encourage you to take time to read of these reports. From the report on the banking sector, they broke down the banks into the following tiers:

The September 2010 Monthly Economic Note provides very valuable information on the major economic news so far in the month of September. And the 2010 Economic Review is one of the most detailed analysis of the Nigerian economy that I have come across this year.

Happy Reading!

Vetiva – Banking Update – The Next Chapter

Vetiva – Economic And Financial Review – 2010 Review and Outlook

Vetiva – Monthly Economic Note – September 2010

Here are the analyses of the recently released results of Nestle PLC, GT Bank, Unilever, Oceanic Bank, Oando and Access Bank by FSDH, Proshare and Vetiva Captial. Happy Reading! FSDH – Company Analysis – Nestle PLC – 2010FSDH – Company Analysis – GTBank – August 2010FSDH – Company Analysis – Unilever 2010Proshare – Results Analysis […]

Flour Mills, Union Bank, Benue Cement Company (BCC), Nigerian Breweries, Glaxo Smithkline, Zenith Bank, Nestle, Ashaka Cement, and Cadbury recently released results for their most recent quarters. Here are the analysis of their results by Afrinvest, FSDH, and Vetiva Capital. Afrinvest – Flour Mills Q1 2011Afrinvest – Union Bank 6M 2010 Earnings UpdateFSDH – BCC […]

Afrinvest has prepared a very detailed analysis of the banking sector. It is a top notch report and I recommend that everyone spends some time reading the entire report. From the stats, the 4 top tier banks are First Bank, Zenith Bank, GTBank and UBA. ?


Once again, apologies for the late post. Here are the stats and reports from IBTC, FSDH and Lead Capital for the week ended August 13th 2010:

In the past 2 weeks, FCMB, GT Bank, Zenith Bank, Fidelity Bank and Skye Bank released their Q2 and Half-Year results. Here are their financial statements, press releases, and presentations: FCMB H1 2010 Results PresentationFCMB H1 2010 Results Press ReleaseFidelity Bank H1 2010 ResultsFidelity Bank Q2 2010 PresentationFidelity Bank Q2 2010 Press ReleaseFSDH – Company […]

Courtesy of Lead Capital and FSDH Securities, here is the NSE Report for the week ended July 30th, 2010:

<blockquote>Transactions for the week were higher with total volume and value traded both appreciating by 22.87% and 54.45% respectively. A turnover of 2.31billion units of shares valued at N18.58billion, in contrast to a turnover of 1.88billion shares worth N12.03billion that was recorded two weeks ago.

The Banking subsector was the most active during the week (measured by turnover volume). Volumes traded in this subsector were largely driven by activity in the shares of Skyebank, Aiico, Transcorp, Tourist, Diamondbank, Uba, Firstbank, Guaranty, Zenithbank and Access. On the segmented index, NSE-30 increased by 3.50% to close at 1,075.99, Food and Beverages index increased by 3.30% to close at 844.15, NSE-Banking increased by 4.72% to close at 392.06, NSE-Insurance Index 4.31% to close at 187.52 and NSE-Oil & Gas decreased by 2.35% to close at 377.34.

During the period under review, fifty (50) stocks recorded price appreciation compared with fortyone (41) gainers two weeks ago. FTNCocoa led the top gainers’ chart to close with 16.92%, followed by Unhomes with 16.39%, followed by Aiico with 15.79%, followed by Fcmb with 13.70%. Other gainers in the top ten category were Nigerins with 11.11%, Fidelitybk with 10.48%, Springbnk with 10.00%, Intercont with 9.76%, FirstInlnd with 8.93% and Dangsugar with 8.88%.

On flip side, thirty-six (36) stocks depreciated in price last week compared with thirty-seven (37) decliners two weeks ago. AP led on the price losers’ table with 13.37%, followed by Redstarex by 12.37%, Cileasing by 12.22%, Tourist by 9.56%, Airservice by 9.23%, Rtbriscoe by 9.05%, Bigtreat by 8.57%, Bagco by 6.99%, Japauloil by 6.37% and Mobil by 5.00%.</blockquote>

And here are the stats for the week:
<a href=”http://www.naijalowa.com/wp-content/uploads/2010/08/results.bmp”><img src=”http://www.naijalowa.com/wp-content/uploads/2010/08/results.bmp” alt=”” title=”results” /></a>.

<a href=”http://www.naijalowa.com/wp-content/uploads/2010/08/dividends.bmp”><img src=”http://www.naijalowa.com/wp-content/uploads/2010/08/dividends.bmp” alt=”” title=”dividends” /></a>.

<a href=”http://www.naijalowa.com/wp-content/uploads/2010/08/gainers_and_losers.bmp”><img src=”http://www.naijalowa.com/wp-content/uploads/2010/08/gainers_and_losers.bmp” alt=”” title=”gainers_and_losers” /></a>.

And here are the reports from <a href=”http://www.leadcapital-ng.com/”>Lead Capital</a>, http://www.fsdhsecurities.com/, and <a href=”http://www.ibtcassetmanagement.com/research.html”>IBTC</a>:
<a href=”http://drop.io/hidden/ahltwvu68gm7ccy/asset/aWJ0Yy1tYXJrZXQtd2F0Y2gtMi1hdWd1c3QtMjAxMC1wZGY%253D”>IBTC – Weekly NSE Report – July 30th 2010</a>
<a href=”http://drop.io/hidden/ahltwvu68gm7ccy/asset/ZnNkaC13ZWVrbHktbnNlLXJlcG9ydC1qdWx5LTMwdGgtMjAxMC1wZGY%253D”>FSDH – Weekly NSE Report – July 30th 2010</a>
<a href=”http://drop.io/hidden/ahltwvu68gm7ccy/asset/bGVhZC1jYXBpdGFsLXdlZWtseS1uc2UtcmVwb3J0LWp1bHktMzB0aC0yMDEw%250ALXBkZg%253D%253D”>Lead Capital – Weekly NSE Report – July 30th 2010</a>

Courtesy of FSDH Securities, here is the NSE report for the week ended July 23rd 2010: Money and Fixed Income marketsThe money market was tight as a result of about N105bn that left the system through Federal Government Bond auction. Consequently, inter-bank rates inched up at the end of the week. Available data showed that […]


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