The Nigerian equities market rebounded from the previous week’s decline, as the NSE All Share Index (NSE ASI) advanced by 0.14 percent Week on Week (WoW) to close at 42,891.85pts. This gain propelled the Year-to-Date (YtD) return to 3.78 percent. Volume of transactions declined by 2.99 percent while value advanced by 2.63 percent and market capitalisation settled at N14.16 trillion.
MOBIL, WEMABANK, NPFMCRFBK, WAPCO, and MANSARD were the top gainers for the week, advancing by 20.16 percent, 13.27 percent, and 12.24 percent, 6.23 percent, and 5.95 percent, respectively.
The top five losers for the week were OANDO, COSTAIN, RTBRISCOE, JBERGER and NIGERINS, declining by 10.68 percent, 8.03 percent, 7.89 percent, 7.4 percent, and 7.4 percent in that order.
The major H1:2014 results released during the week were from WEMABANK and LIVESTOCK. WEMABANK grew its top and bottom line by 22 percent and 290 percent, respectively, while LIVESTOCK reported 24.19 percent and 31.9percent growth in that order. We maintain our position that the inflow of H1 numbers in the coming weeks will be the major driver of market returns.
Banking: Earnings releases so far are above expectation
The banking sector was largely positive this week as nine stocks advanced against four decliners, while UNITYBNK and ACCESS remained flat to bring the sector’s return to 1.30 percent WoW. The top gainers for the week were
WEMABANK (13.27%), SKYEBANK (3.98%), and UBA (2.68%), while the major decliners were UBN (-4.35%), FIDELITYBK (-3.00%), and ETI (-2.15%).
WEMABNK released its H1:2014 results this week in which the bank recorded a good performance. The bank posted an impressive 22 percent growth in top line supported by a 33 percent growth in interest income, which contributed 85 percent to the top line. Also, there was an impressive YoY growth of 290 percent in earnings recorded – N1.5 billion (vs. Q2:2014: N0.372bn). The stock was rewarded for this fantastic growth; hence, the WoW return of 13.27 percent.
There seems to be general positive sentiments that is currently moving the sector as the banks, which have released results so far, have performed beyond expectation; hence, position taking may ensue before the release of more earnings result in the coming week and beyond.
Industrial Goods Sector: Sector records gains in spite of DANGCEM
The industrial goods sector closed the week positive having gained 0.15 percent as measured by our Meri-IND index. WAPCO gained the most as its share price appreciated by 6.23 percent on the back of the company’s annual general meeting held last week during which shareholders approved the proposed consolidation of its Nigerian and South African businesses as well as an increase in its authorised capital from N2.29 billion to N5 billion.
ASHAKACEM continued to enjoy positive investor sentiments, although at a lower level compared with the previous week. The stock gained 1.47 percent to close at N33.03.
DANGCEM trended south for the second consecutive week, shedding 0.39 percent to drag the share price further down to N240.05. We attribute the recent downturn of DANGCEM to profit taking by investors, although we envisage a reversal in the short to medium term on the back of expectations of the market leader’s half year numbers.
PAINTCOM emerged as the highest gainer in the paints sub sector following Friday’s 5 percent gains, which took the share price to N1.47 up from N1.40, at the beginning of the week. CAP sustained last week’s upward trend with a 2.82 percent increase in share price while BERGER’s share price remained at N9.00 for the fifth successive week.
BERGER released its half-year scorecard on Friday, showing a 1.21 percent increase in revenue and a 6.51 percent growth in profit after tax from H1:2013. The company also recorded improvements in its cost management as cost-to-sales ratio declined to 54.96 percent from 61.28 percent, even as net margin settled at 8.74 percent up from 8.31 percent in the corresponding period last year.
We expect positive trading in the coming weeks, which will likely be driven by expectations of, and subsequent release of more impressive Q2:2014 results.
Consumer goods: Sector index up 0.59%
The NGSEFB10 index, which tracks the performance of the top 10 stocks in the consumer goods space, appreciated 0.58 percent this week, indicating an overall bullish sentiment on the sector for the week.
Sector performance was driven largely by gains posted by PZ (4.76%), UNILEVER (2.47%), NESTLE (1.35%), and NB (0.68%). GUINNESS (NGN198.02) dipped 3.40 percent, topping the decliners for the week, while 7UP, DANGFLOUR and FLOURMILL followed suit with 2.44 percent, 0.99 percent and 0.17 percent losses, respectively.
Our top picks for the sector include VITAFOAM (NGN4.38) and HONYFLOUR (NGN4.30) with 40.40 percent and 36.58 percent upside potentials, respectively. On the back of 2014H1 result expectation, our recommendations for dividend investors include NESTLE, NB, GUINNESS and INTBREW given their sound dividend payout history.
Oil and Gas: Interim dividend expectation favours TOTAL and MOBIL
Investors awaiting interim dividend declaration from two of the industry giants, swung into action this week. Impressive first quarter earnings and Q2 expectation from MOBIL, and anticipation that TOTAL will maintain its 2013 interim dividend action were the major drivers of investors’ position taking on the counters.
High level of demand by investors looking to share in MOBIL’s impressive Q1 earnings pushed the counter to top the industry’s positive return performance chart for the week, gaining 20.16 percent to close at N162.22. In the same vein, TOTAL also witnessed some rally on the expectation that the company’s corporate action (interim dividend) will be in line with 2013. TOTAL witnessed a price appreciation of 5.23 percent WoW to close at N180.00.
FO was the other gainer in industry for the week, advancing by 1.68 percent to close at N238.00. Industry underperformers for the week were OANDO, CONOIL, ETERNA and MRS, each shedding 10.68 percent, 5 percent, 3.37 percent and 1.19 percent to close at N25.00, N62.32, N4.30 and N62.43, respectively.
While our valuation indicates that both TOTAL and MOBIL are fully valued, we do not rule out the possibilities of further price gyration as position taking continues.
Agric: PRESCO dominates trade, sheds 1.47% WtD
The agricultural sector shed 0.80 percent in the week, as PRESCO dominated trade to close 0.16 percent down at N38.00. Volume traded was 397.66 percent higher than it was last week. OKOMUOIL, on the other hand, gained a marginal 0.03 pervent on Thursday to close at N33.01 for the week after trading flat on 10 consecutive trading days. LIVESTOCK gained 0.33 percent to close at N3.06 for the week, as volume traded climbed 7.95 percent over the previous week.
Q2:2014 results for the company was better than Q1:2014 as the company posted Sales and earnings growth of 24.19 percent and 31.92 percent, respectively (vs. 19.99% and 16.37% in Q1). The impressive results may be responsible for the 0.33 percent gain on Friday.
We maintain our position that OKOMUOIL is currently fairly priced by the market. PRESCO and LIVESTOCK are however trading above our estimated fundamentally justified prices.
Insurance Sector: LAWUNION posts +266.6% growth in Q1:2014 PAT
Following last week’s loss, the insurance sector rebounded with 1.04 percent gains, driven largely by respective 5.95 percent, 4.65 percent and 2.16 percent gains posted by MANSARD, WAPIC and CUSTODYINS.
On the converse, NIGERINS topped the losers’ chart during the week, shedding the NGN0.04 it gained last week, as it closed at N0.50. Other top losers for the week were AIICO and ROYALEX with losses of 2.44 percent and 1.85 percent in that order.
SOVRENINS released its 2013FY result with top-line and bottom-line declines of 0.9 percent and 76.5 percent, respectively. LAWUNION also released its 2013FY results, where profit after tax grew by an astounding 136.3 percent, despite the 6.6 percent decline in Gross Premium Earned. It also released its Q1:2014 results, where top line grew by 15.8 percent and bottom line by 266.6 percent.
CONTINSURE witnessed volatility in price movement during the week, as Emerging Capital announced its planned divestment of c.50 percent of the company’s shares.
However, following the managing director’s reassurance of the investing public about the expected continued positive performance from the company, the stock gained 0.88 prrcent and closed the week at N1.15.
Healthcare Sector: MAYBAKER tops losers’ chart
There was a noticeable calm in trading activities in the healthcare sector during the week, as the index closed 0.02 percent lower. The decline in the sector’s index did not pose a great danger on the sector’s return performance thus far as MtD, QtD and YtD returns however remain positive at 7.65 percent, 7.65 percent and 1.31 percnt in that order.
Top gainers for the week were FIDSON, NEIMETH and EVANSMED, which appreciated by 5.33 percent, 2.48 percent and 1.73 percent, respectively. Industry laggards conversely were MAYBAKER and GLAXOSMITH with losses of 1.13 percent and 0.01 percent, respectively. The remaining five companies in the sector traded flat for the week.
The ongoing doctors’ strike which has spanned 18 days, seems to have reached a deadlock, given the unyielding positions at which the government and the doctors currently stand.
We however maintain our positive outlook for the healthcare sector on the NSE, to be driven majorly by FIDSON and GLAXOSMITH.
Services Sector: Last day of trading reverse week-long somber mood
The mood in the sector appeared subdued the greater part of the week until Friday when positive investors’ sentiments drove the sector into the positive zone to peg WoW gains at 1.33 percent as measured by our MER-Services index.
TRANSEXPR led the gainers list with a 4.57 percent increase in share price followed by CAVERTON and UPL,, which gained 3.55 percent and 2.13 percent.
TRANSCORP, which was headed south as of Thursday, gained 2.25 percent on the last trading day of the week thus, driving the stock’s closing price to N5.91 (1.90% increase WtD).
RT BRISCOE led the losers list with a 7.89 percent price decline along with ABCTRANS and IKEJAHOTEL, which shed -2.22 percent and -1.32 percent in that order.
