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Stock picks and market overview

Stock picks and market overview from FSDH, Zenith Securities, and BGL Securities:
FSDH Weekly Capital Report - June 13th (22)
BGL Market Overview - June 2008 (56)
Lead Capital Stock Recommendation - June 16th (28)
Zenith Capital Stock Recommendation - June 16th (25)

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Stock Market Review

Leadway Economic and Market Review - June (18)
Lead Capital Weekly Report - June 6th (20)
Zenith Securities Stock Recommendation - June 6th (18)
FSDH Weekly Report - June 6th (15)

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Market Sentiments for the week ending May 30th

Bearish trend depletes investor’s confidence.

The looming market downturn couldn’t be reversed as the bears again held sway for the week under review. The NSE all share index slipped by 189 basis points while total market capitalization plunged by 182%. The disparity in the index and market capitalization was as a result of the listing of 4.85 billion ordinary shares of Regency Alliance Insurance. There was an upside in volume traded with investors staking over 5.3 million units as against 3.94 million traded the previous week. Trades were buoyed by investors’ participation in the insurance and banking sector. The duo dominated the activity chart.

A week characterized with cautious trading, conflicting sentiments and a plethora of results failed in salvaging the downward market trend. United Textile moved northwards with 15.38% price upswing to lead the gainers’ camp. On the flip side, Eterna Oil & Gas slashed 18.55% to lead the top losers’ category. The petroleum marketing stock seems to be at the mercy of profit takers as the stock had rallied in the past. Most stocks in this category were preys to activities of bargain hunters and market correction.

The bulls failed to come out of the woods in the banking sector as prices of most stocks continued their downward trend. Bank PHB was the most affected as the stock shed 13.22% to close at N22.98. With the exception of Intercontinental Bank, Ecobank, Fidelity Bank and Skye bank, others recorded price declines. The bearish mood of this sector is one of the factors mitigating the expected market rebound as it accounts for about 60% of total market capitalization.

In the agro-allied sector, Presco sustained its bullish run chalking up 11.23%. It appears investors are still excited about the proposed corporate action. The agro-allied concern is proposing a cash dividend of N0.25k and a bonus of 1 for 1 for its investors. Afprint on the other hand shed 10.10% to close at N5.25 while Okomu oil suffered a 1.64% marginal price decline. Automobile concern Dunlop also moved with the bearish market mood, the stock slashed 3.43% at the end of proceedings.

A rather stagnant Breweries and Beverages’ sector in terms of price movement saw the bears on rampage for the week under review as most stocks plunged in prices.

7up was the most hit as the stock shed 9.73% to close at N53.26. Guinness and Nigerian Breweries suffered marginal declines as they both lost 0.38% and 0.10% respectively. Nigerian Bottling Company moved against sector trends to notch up 1.30%. The stock closed at N63.00.

The cement sector has been experiencing some sort of price volatility in recent times. A rather sluggish sector in terms of price movement reflected the downbeat outlook of the market. Ashaka’s free fall saw the stock losing 7.39%. Benue Cement and Lafarge Wapco also plunged 3.67% and 3.45% respectively while Cement Company of Northern Nigeria moved against sector trend with a 1.30% hike in price.

In the chemical and Paints sector, discordant sentiments were recorded as some stocks surged in prices while others suffered price depreciation. CAP closed on the fortunate side with a 5% upswing. While investors were indifferent to DM Meyer as the stock closed on a flat note. IPWA shed 9.59% to close at N6.60. In the construction industry, Julius Berger closed the week on a flat note while UAC properties got a 4.84% boost in price to close at N27.50.

Conflicting sentiments were reflected in the Consumer Goods’ sector. Sanction-plagued conglomerate-Cadbury was again the major loser in the consumer goods sector. The stock plummeted 5.52% to close at N34.20. Dangote Sugar and Dangote Flour also recorded price declines to close the week at N33.87 and N26.59 respectively. While Nestle, PZ and Unilever all scooped up 3.21%, 4.48% and 3.28% respectively.

The pendulum of activities in the Healthcare sector swung towards the bears as most stocks lost points. Neimeth International shed 10.22% for the week under review. GlaxoSmithkline, Nigeria-German Chemicals and May & Baker all recorded 2.65%, 4.97% and 5.97% price declines respectively. This sector seems to be experiencing a form of price correction as most stocks had rallied in the past.

Market tussle saw the bears almost matching the bulls as mixed fortunes were recorded in the petroleum marketing sector. African Petroleum is still currently under technical suspension following the application for a hybrid offer. Chevron closed the week on a flat note. Total and Oando recorded 4.83% and 4.67% price upsides respectively. The former released its first quarter result ended march, 2008 for the week under review. The oil marketing company grew its top and bottom line by 20.78% and 31.63% respectively. On the flip side, Conoil and Mobil recorded 6.99% and 5.00% price depreciations respectively.

The bears were agog in the insurance sector as most stocks recorded price downswings. Newly listed Invest and Allied Insurance continued its aggressive bullish run with 14.71% price hike. The stock closed the week as the third best performing stock. The fringe insurance company was listed at N1.30 but as continued to rally since then.

What appeared as resurgence some weeks ago seems to be a mirage as the bulls are still no where in sight. Analysts have attributed the lingering downbeat mood to several factors but the market still remains impervious to the attractive prices of most stocks. The lingering market downturn might persist for a few more trading days as the market continues to correct itself.

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Company Results for

New company results for Oando, Consolidate Hallmark Insurance, Dangote Sugar, Poly Producs

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FSDH Week Stock Report

Here is FSDH Securities’ Weekly Stock Market Report

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Anticipated Results

Here is a list of the anticipated financial results:

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Market Sentiments for the Week Ended May 9th, 2008 as prepared by Meristem Securities.

Market Sentiments for the Week Ended May 9th, 2008 as prepared by Meristem Securities.

There are strong indications and positive gestures that the stock market is on the path of transition from stability to recovery as all market performance indices inched up throughout the week ended Friday May 9, 2008. Market capitalization of listed equities bounced by 6.06 percent to stand at N12.12trn (US$2.0bn). The entire market reported positive and appreciable returns of 5.74 percent as The Nigerian Stock Exchange (NSE) All-Share Index (ASI) leapt by 574 basis points to close higher at 62,518.07 points. Activity level rose substantially as volume and value of equities traded jumped up by 44.1 percent and 56.4 percent respectively over the previous week’s statistics.

Market was buoyed by activities in key sectors- such as banking, insurance, building materials, food & beverage and conglomerates as a few companies in these sectors released outstanding period and full year results accompanied by stimulating corporate benefits. Market watchers and investments experts are optimistic about an imminent resurgence and thereby reassure investors of ‘goodies’ ahead in coming weeks. They however admonish market participants to look beyond only speculative positioning and give more consideration to value investing across all investment horizons.

Banking stocks rekindled investors’ hope as they topped performance charts all through the week. The sector performance was propped up by trading in shares of Zenith Bank, UBA, Oceanic, First Bank, Afribank, Ecobank, Access, Intercontinental Bank, and Diamond Bank Plc. There are strong beliefs that quite a few of the stocks above are trading below their intrinsic values and sentiments support a good entry for momentum traders and proactive investors at current pricing.  A segment of market commentators opines that another incentive for investors is the anticipated corporate benefits of banks like First Bank; Access Bank; Union Bank Plc (UBN), Afribank Nigeria Plc; Stanbic IBTC; Skye Bank Plc and Wema Bank Plc- all having their FYE March 30,  2008 and Intercontinental Bank Plc- FYE February 29, 2008; GTBank Plc – February 29, 2008. Meanwhile, Ecobank was also sought after by investors as it went on bid soon after lifting off technical suspension as a result of the termination of the Bank’s merger talks with Sterling Bank Plc.

In the insurance sector, activity level was probably fueled by the release of full year corporate results for the FYE December 31, 2007in favour of Custodian and Allied Insurance Plc, Nem Insurance Plc; Linkage Assurance Plc. There are strong sentiments that the further activities in insurance stocks will substantially be shaped and propelled by their full year 2007 results, anticipated corporate rewards and their first quarter results for the period ended March 31, 2008. We are of the opinion that a peer analysis of fundamentals of insurance companies remains a critical factor for consideration in screening out value stocks for short to medium term investment horizons.

Our analysis reveals that a couple of insurance stocks are trading at outrageously high price compared to their trailing multiples which calls for caution for investors to avoid further diminution in portfolio value. As at date, average pricing in the sector gravitates to N5 while the sector’s EPS and P/E hover around N0.13k and 53.5 xs respectively. Insurance stocks emerged from the recent market hiccups and correction to record appreciable daily gains that have ignited investors’ aspirations about the prospects of the sector in the post consolidation era. Although market analysts agree that with an average industry PE of 53.5x, most insurance stocks lack fundamental strength to justify their current pricing as well as sustain their momentum, the industry’s prospects seem bright enough to douse any negativity priced into insurance equities.

Building materials sector was also amongst dominant sectors in activity during the week ended. Trading in shares of Cement Company of Northern Nigeria Plc (CCNN) arouse market participants’ curiosity as the stock recorded maximum capital appreciation for almost 5 days to close the week at N19.60k against N17.01k it opened the week on Monday May 5, 2008. Market rumours have it that the recent surge in the stock price may not be unconnected with an impending corporate decision. On the other hand, a group of analysts expresses that stocks in this sector are currently trading at ridiculously cheap prices due to operational challenges raging from energy to equipment refurbishment facing all cement manufacturers in the country. Industry experts opine that this phase of operation is momentary and a recovery is near.

Market commentators applaud the authority of over a new regulation on share price movement. They also assert that going forward, bullish run will substantially be moderated as the authority of The NSE has come up with a new regulation such that before there could be movement in stock price, a minimum of 100,000 units must be traded. This is contrary to the hitherto 15,000 units, which some participants said was partly responsible for abnormal share price appreciation most especially amongst penny stocks which are less liquid in terms of volume available for trades.

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STOCK MARKET BRIEF FOR THE WEEK ENDED FRIDAY MAY 09, 2008.

STOCK MARKET BRIEF FOR THE WEEK ENDED FRIDAY MAY 09, 2008 as prepared by Meristem Securities.

Market Regains Upward Momentum: All Share Index Up by 5.74%
The capital market experienced a trend reversal during the week after a 2 months free fall in market indices. The NSE All Share Index (ASI) surged by 5.74% to close the week at 6,2518.07 points while the total market capitalization of the 219 listed equities also rose by 6.06% to stand at N12.12 trillion.

In the same vein, a cumulative total of 3.8 billion shares valued at N74.4 billion were exchanged by investors in 89,212 deals in contrast to last week’s trading statistics of 2.63 billion shares worth N47.6billion traded in 66,373.

OANDO Tops the Week’s Advancers’ Chart
A total of 89 stocks advanced this week higher than 33 during the previous week while there was an appreciable decrease in the decliners’ camp resulting in 29 equities depreciating in value. This is underscored by the recovery witnessed in the market. OANDO PLC led the gainers camp raking N13.10k to close at N258.00k while MOBIL PLC topped the losers’ table shedding N7.90k to close at N228.00k.

Banking Sector Dominates Trades
The Banking sector emerged most active during the week (measured in terms of turnover), with 1.64bn shares worth N47.63bn exchanged by investors in 43,692 deals. Activities in the sector were propelled by high trading in the shares of INTERCONTINENTAL, OCEANIC, UBA and FIRSTBANK. The insurance sector followed behind on the week’s activity table with 924.14 million shares exchanged in 15,681 deals valued at N3.45 bn. The building sector emerged third on the table with 654.08 million shares traded in 1,331 deals.

CORPORATE NEWS:
BERGER, FIRST ALUMINUM, JAPAUL and Others Post Performance Results
GOLDLINK, FIDELITY BANK, BERGER, FIRST ALUMINIUM, JAPAUL, ZENITH BANK, NEM INSURANCE, BETA GLASS, CUSTODIAN INSURANCE and LINKAGE ASSURANCE released their period results on the floor of the Exchange during the week. Also, UAC PLC recorded 35% and 10% increase in PAT and turnover respectively for the full year ended December 2007 while its first quarter result reflected 19% and 359% growths in turnover and PAT respectively compared to corresponding period in 2007.

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Analysis of Zenith Bank’s 9-Month Results

Here is an excerpt of a report prepared by Proshare NG analyzing Zenith Bank’s 9-month results.

Zenith has announced its 9M financial results with a triple digit growth in net profits. The bank’s performance showed that gross income grew by 70% to N120.3bn, profit before tax (PBT) increased by 111% to N40.6bn while profit after tax (PAT) rose by 136.6% to N33.3bn as at 31 March 2008. As a result, the bank’s last twelve months (LTM) earnings per share (EPS) rose to N2.26, 20.9% higher than the N1.87 reported for FY07. Also, our assessment of the results reveals that PAT grew faster following the improvement in the bank’s cost management as reflected in the estimated YoY cost/income ratio which declined to 66.2% from 72.8% in 9M07.

Results exceed management’s expectation… In April 2008, while publishing the basis of allotment for its last offering, Zenith’s management made conservative projections that forecast gross income of N127.5bn, PBT of N39.0bn and PAT of N28.8bn for FY08. Thus, Zenith Bank has exceeded both revenue and profit estimates for the current FY in just 9 months in view of its latest interim results.

… as Q3 results outpace H1 results. During the period to March 2008 i.e. Q3, Zenith Bank achieved a gross income of N62.7bn and a net profit of N17.6bn. This performance exceeds respective gross income and net profit of N57.6bn and N15.7bn reported in its H1 results i.e. July – Dec 2007. Whilst we believe the Q3 performance is strong and raises the stakes for industry competition particularly in terms of profitability, we are concerned about the bank’s ability to maintain this run rate in the months ahead.

Recent capitalization and increased market positioning are key value drivers. At present, Zenith is the second most capitalized bank with over N313bn in shareholder funds. This will enable it finance branch expansion, invest in subsidiaries, enhance IT infrastructure and engage in big ticket transactions, which includes funding infrastructure development. Also, the bank is currently raising N8bn consisting Equity, Income and Ethical funds for N5bn, N2bn and N1bn respectively under an authorized and registered unit trust scheme.

Strong earnings growth rules out dilution in earnings. In spite of Zenith’s post-offer outstanding shares of 16.74bn, full year EPS is expected to improve substantially as the growth in earnings is currently ahead of the growth in shares outstanding. In view of this, we forecast FY08 net profit, EPS and Return on Average Equity (RoAE) of N43bn, N2.57 and 19.3% respectively. Consequently, our EPS estimate suggests that Zenith Bank should trade at N61.6, while a forecast book value per share of N19.72 yields a fair value of N66.9 per share. We take an average of these values to arrive at our estimated fair value of N64.30 per share..

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UAC Declares Audited Year End Results for Period Ended 31 Dec 2007

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Fidelity Bank Plc declare Q3 results - 310308

Fidelity Bank Plc released their unaudited Q3 financial results for the period ended March 31, 2008 on the floor of the Nigerian Stock Exchange today.

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Zenith Bank’s Unaudited Q3 Results

Zenith Bank Plc declare Q3 results - 310308

Zenith Bank Plc released their unaudited Q3 financial results for the period ended March 31, 2008 on the floor of the Nigerian Stock Exchange today.