Activity in the Nigerian equities market ended the week low as the NSE-ASI dipped marginally by 0.08 percent, pegging the YtD (Year-to-Date) return at 0.49 percent. However, the volume and value traded increased by 30.19 percent and 30.95 percent, respectively, vs. -24.60 percent and -7.60 percent declines recorded in the previous week. Market mood was largely bearish for most part of the week as the market shed points for three out of the five trading days.
The gainers’ chart was topped by small-cap stocks such as PREMBREW, with a week-on-week (W-o-W) return of 31.65 percent. BETAGLAS, TRANSCORP, 7UP and UBA followed suit with returns of 10.17 percent, 6.64 percent, 5.69 percent and 5.26 percent, respectively.
On the flipside, VONO, NEIMETH, CADBURY, MAYBAKER and DANGFLOUR share prices declined by 16.00 percent, 13.33 percent, 10.27 percent, 10.13 percent and 6.67 percent in that order.
We review the sector performance for the market whilst stating our expectation for the coming week below. Banking: Massive gains at week close-up sector index
The sector traded positive during the week as the MERI-BNK index closed with a 1.00 percent YtD gain. Six of the 15 banking stocks closed positive, while another six counters traded negative, and three traded flat. The top three gainers for the week were UBA, GUARANTY and FBNH, appreciating by 5.26 percent, 4.80 percent, and 2.94 percent in that order.
On the losers’ chart, DIAMONBK, FCMB, and WEMABANK declined by 1.61 percent, 1.16 percent, and 1.02 percent, respectively. ACCESS released H1:2014 numbers. Gross earnings and profit before tax advanced by 15 percent and 4 percent, respectively, as a combination of both increased income generation and increased operational efficiency boosted the bank’s performance in the quarter.
After consternation about GUARANTY’s H1:2014 performance had abated, the stock gained markedly (+4.8 percent) during the week, along with other banking stocks.
We expect trading on banking stocks to generally oscillate over the next month until the guidelines from the CBN regarding calculation of capital either swing the sector positive or negative. Industrial goods: Bearish mood swings returns to -2.04 percent WtD
Market negative sentiment impaired sector’s performance as the MERI-IND index shed -2.04 percent. PORTPAINT gained 4.79 percent and emerged as the only industrial goods stock to close the week positive. The cement stocks, which had hitherto driven sector gains, lost with DANGCEM shedding the most (2.16 percent to close at NGN225.00). CCNN, ASHAKACEM and WAPCO also declined by 2.12 percent, 1.47 percent and 1.10 percent, respectively, while BERGER followed suit by losing 2.17 percent during the week.
We believe the recent re-emergence of the bears during the week is due to the cautious trading on the part of investors as they continue to factor in the country’s rising security challenges ahead of the 2015 elections, as well as the continued northern insurgency. We, however, anticipate a reversal of the trend in the coming weeks given the attractiveness of the industrial goods sector on the back of expected increase in building and construction activities across the country.
Consumer goods: Sector index stays negative
Sentiment on the consumer goods stocks stayed largely negative this week, as selling pressure on key sector players depressed the NSE-FB10 (which tracks the sector performance) by 0.23 percent.
PREMBREW, driven by unconfirmed rumours concerning its acquisition, remained the best performer in the sector, returning 31.65 percent for the week. BETAGLAS, 7UP, INTBREW and NASCON all closed in the green zone, appreciating by 10.17 percent, 5.69 percent, 3.70 percent and 2.93 percent, respectively. VONO led the decliners in the sector, shedding 16.00 percent.
We also note a significant decline in the price of CADBURY, which pared by10.27 percent. DANGFLOUR (-6.67 percent), NNFM (-5.00 percent), GUINNESS (-2.63 percent), and PZ (-2.78 percent) were other tickers in the consumer good space that also traded below the waters for the week.
We do not foresee any trigger for the sector in the coming week, as earnings season draws to a close, though we still await the full-year scorecard of GUINNESS which was initially expected last month.
Oil & gas: OANDO jettisons industry negative sentiment
Sector-wide losses were experienced in the share prices save OANDO which returned 3.78 percent to close at NGN27.45 and SEPLAT and MOBIL that traded flat. CONOIL led the laggards list, returning -4.97 percent. MRS, ETERNA, FO and TOTAL followed in that order losing 4.33 percent, 2.36 percent, 0.95 percent and 0.56 percent.
From the technical stance, 14-day RSI indicated that MOBIL is tilting towards a fairly valued region, while MRS, TOTAL and OANDO are in the oversold region.
However, our fundamental valuation supports TOTAL and ETERNA, while FO, MRS and CONOIL remain overpriced.
Agriculture: OKOMUOIL drags sector WtD return
The sector closed the week on a negative note as it shed 2.59 percent to peg sector YtD return at -13.96 percent.
In line with technical indicators, which pointed to a possible price correction in coming weeks, OKOMUOIL shed 5.40 percent in the week to settle at NGN34.50. LIVESTOCK, on the other hand, gained 2.18 percent while PRESCO and other sector stocks remained flat.
In the absence of any major news to significantly drive trades, our expectations for the sector next week is muted. Our fair value estimates for OKOMUOIL, PRESCO and LIVESTOCK remain NGN32.40, NGN29.91 and NGN1.73, respectively.
Insurance: Rebounds to close positive
The insurance sector closed the week on a positive, inching up by 0.35 percent. The gainers’ chart was led by INTENEGINS which recorded price appreciation of 4.00 percent on the last day of trading. WAPIC also closed the week with 3.95 percent gain.
CONTINSURE witnessed moderate levels of position taking as its price appreciated by 2.04 percent. We are of the opinion that the counter is currently trading at its support level given the negative sentiments that greeted its H1:2014 result, and the divestment news of its major shareholder. Also contributing to the sector’s performance was CUSTODYINS which gained 1.60 percent W-o-W.
The sector’s laggards for the week were ROYALEX and CORNERST as their prices waned by 4.92 percent and 3.39 percent, respectively. ROYALEX price decline was due to profit taking given the rally it enjoyed following the release of its recent financial results.
We are still optimistic of further resurgence in CONTINSURE as we expect investors’ negative sentiments to subside before FY2014. From technical stance, we are moderately bullish on CUSTODYINS and MANSARD even though fundamental valuation suggests they are currently trading around their intrinsic value.
Healthcare: Sector sheds 0.02 percent
Trading activity was relatively calm as three stocks recorded price movements, although the sector index level declined marginally by 0.02 percent.
NEIMETH recorded the highest decline in price, shedding 13.33 percent. This might be related to profit taking following a significant +11.11percent return it posted in the preceding week. The sell-off on MAYBAKER persisted this week shedding 10.13 percent (vs. 2.74 percent in the previous week).
On the converse, EVANSMED rebounded from previous week’s decline advancing by 2.50 percent (vs. -6.98 percent the previous week). Other counters in the sector closed flat.
While we suggest that investors should take position in counters with sound fundamentals such as FIDSON, we also believe that some counters can deliver strong returns within a short holding period.
Services: A good week of trading for the sector
The sector witnessed a robust week of trading contrary to general negative mood in the market. Based on the MERISER index, the sector gained 3.56 percent WtD, driven mainly by TRANSCORP (+6.64 percent to NGN6.1) and REDSTAREX (+4.35 percent to NGN4.8). RT Briscoe took a breather from previous week’s loss as the ticker gained 1.16 percent to close at NGN0.87.
CAVERTON continued on a downtrend trend during the week as the stock shed 5.0 percent. AIRSERVICE, ABCTRANS and IKEJAHOTEL also declined by 3.24 percent, 2.86 percent and 1.28 percent, respectively.
