Stocks offer entry opportunity for value hunters

by Iheanyi Nwachukwu

May 24, 2018 | 12:45 am
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Nigerian stock market recorded N200billion value loss last week as fifty-four (54) stocks led by Japaul Oil Plc depreciated in price, higher than forty-nine (49) stocks that the lost their values in the preceding week.

Despite the decline in market breadth, analysts’ outlook for the stock market in the near-term remains largely positive.

Investors are expected to hunt for bargains as many stocks trading at relatively low levels offer attractive entry points for good deals.

Before now, the first-quarter (Q1) 2018 earnings season was largely positive as many companies reported improved margins which helped spur demand for stocks as fixed income yields environment remained low.

In the trading week to May 18, only 20 stocks advanced in price; lower than 35 in the preceding trading week. The value of listed equities which opened last week at N14.860trillion, decreased to N14.660 trillion as at trading week to May 18, 2018.

The Nigerian Stock Exchange (NSE) All-Share Index (ASI) which tracks the performance of the bourse depreciated by 1.34percent to close last week at 40,472.45points against 41,022.31 points on May 11, 2018.

As the market awaits further catalyst for growth, activity will equally be tied to first quarter (Q1) economic data, such as, the Q1 2018 GDP which grew by 1.95percent, driven by negative trade growth.

Top losers

Japaul Oil & Maritime Services Plc stock recorded the biggest weekly loss of 10kobo or 25percent, from week-open level of 40kobo to 30kobo.

Skye Bank Plc followed after its share price declined from 94kobo to 76kobo, representing a loss of 18kobo or 19.15percent; while Diamond Bank Plc lost 35kobo or 18.42percent as its share price decreased from N1.90 to N1.55 in the review trading week.

The weekly report of the Bourse shows other stocks that failed to impress investors. They include Cement Company of Northern Nigeria Plc (CCNN). CCNN lost N5 or 17.24percent last week, from N29 to N24. Also, Fidelity Bank Plc joined the list after its share price decreased by 37kobo or 14.68percent, from N2.52 to N2.15.

Veritas Kapital Assurance Plc share price decreased from week-open level of 42kobo to 36kobo at the close of the week, representing 6kobo or 14.29percent loss.

Equity Assurance Plc share price depreciated further from 29kobo to 25kobo, representing 4kobo loss of 13.79percent; followed by Okomu Oil Palm Plc which lost N11.60 or 12.89percent, from N90 to N78.40.

C&I Leasing Plc lost 22kobo or 12.87percent, from N1.71 to N1.49; while Niger Insurance Company Plc recorded dip, from 24kobo to 21kobo, down by 3kobo or 12.50percent.

Index movement

All other indices finished lower last week with the exception of the NSE Consumer Goods Index which appreciated by 0.03percent.

The NSE Corporate Governance Rating System (CGRS) Index decreased from 1,654.12 points to 1,620.71 points, representing a decline of 33.41points or 2.02percent.

NSE Premium Index decreased from 2,961.39 points to 2,920.40 points, down by 40.99 points or 1.38percent. The NSE-Main Board Index also decreased, from 1,814.94 points to 1,793.39 points, representing 21.55 points or 1.19percent decline.

NSE ASeM Index was unchanged at 958.52points. NSE 30 Index lost 28.72 points or 1.54percent, from 1,865.24 points to 1,836.52points. NSE Banking Index lost 14.79 points or 2.80percent, from 527.92 points to 513.13 points. NSE Insurance Index decreased from 145.56 points to 144.39 points, down by 1.17points or 0.80percent.

NSE Consumer Goods Index decreased from 974.72points to 975.01points, down by 0.29 points or 0.03percent. The NSE Oil/Gas Index lost 9.48 points or 2.64percent, from 359.55 points to 350.07 points.

NSE Lotus II Index declined by 36.68points or 1.36percent, from 2,691.76 points to 2,655.08 points. NSE Industrial Goods Index decreased by 28.59 points or 1.37percent, from 2,087.78 points to 2,059.19 points; while NSE Pension Index lost 46.67 points or 2.91percent, from 1,602.05 points to 1,555.38 points.

Analysts view

Bismarck J. Rewane, managing director/CEO, Financial Derivatives Company Limited said at LBS Executive Breakfast Meeting that investors remained lukewarm as the market appeared overpriced.

“NSE performance will be driven by economic developments – minimum wage review, increased oil revenue, higher output (positive GDP growth), improvements in leading economic indicators to improve investor sentiments, and downward drift in T-Bills rates to further bolster domestic transaction on the bourse”, Rewane noted.

Equity research analysts at Lagos-based Vetiva Capital said that “The decline in market activity has come amid cooling market sentiment and increased risk aversion after the initial January rally (market closed 16percent higher in January) and ahead of the 2019 elections”.

They noted that following an initial surge in market activity at the start of the year (January daily average: N8.9 billion), trading turnover has moderated in recent months, falling from a daily average of N6.9 billion in first-quarter (Q1) of 2018 to N5billion so far in May.

Vetiva equity analysts also stated that domestic investors have not provided the expected support in the market as implementation of Pension Commission (PenCom) multi-fund guidelines has stalled. “Given all this, we do not expect trading activity to pick up significantly in the near-term as investors continue to monitor political developments”, the analysts noted.

“In the meantime, we strongly advise investors to take a keen interest on firms’ fundamentals before taking an investment position. We equally advise on taking a medium-long term view of the market”, GTI researchers said in their May 1 note to investors.

Top gainers

Among the 20 top performers, Sovereign Trust Insurance Plc stock price increased most, from 20kobo to 26kobo, up by 6kobo or 30percent; Mutual Benefits Assurance Plc stock price also increased from 28kobo to 33kobo, up by 5kobo or 17.86percent.

NPF Microfinance Bank Plc stock price increased last week from N1.76 to N1.94, representing 18kobo or 10.23percent gain, while Fidson Healthcare Plc stock price moved up from N5.38 to N5.76, an increase of 38kobo or 7.06percent.

Beta Glass Plc stock price advanced from N83.20 to N87.35, up by N4.15 or 4.99percent; Continental Reinsurance Plc also went up by 7kobo or 4.90percent, from N1.43 to N1.50; UACN Property Development Company Plc gained, from N2.15 to N2.25, up by 10kobo or 4.65percent; and Prestige Assurance Company Plc stock price which increased from 46kobo to 48kobo, up by 2kobo or 4.35percent.

Also, CUTIX Plc stock price advanced last week from N3.05 to N3.15, an increase of 10kobo or 3.28percent; CAP Plc stock price rose from N38.90 to N40, an increase of N1.10 or 2.83percent.

Equity turnover

In the week under review, the stock market recorded total turnover of 1.457 billion shares worth N23.6billion in 19,674 deals in contrast to a total of 1.58billion shares valued at N25.9billion that exchanged hands the preceding week in 21,115 deals.

The Financial Services Industry (measured by volume) led last week activity chart with 1.223 billion shares valued at N16.8billion traded in 11,092 deals; thus contributing 83.98percent and 71.093percent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 76.430 million shares worth N5.188 billion in 3,425 deals; followed by Oil and Gas Industry with a turnover of 57.193 million shares worth N527.880 million in 2,237 deals.

Trading in the Top Three Equities namely –Zenith Bank International Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc (measured by volume) accounted for 491.649 million shares worth N14.159 billion in 3,265 deals, contributing 33.75percent and 59.83percent to the total equity turnover volume and value respectively.

Exchange Traded Products/Bonds

Also traded during the review week were 153,246 units of Exchange Traded Products (ETPs) valued at N4.009 million executed in 22 deals, compared with a total of 444,190 units valued at N2.514 million that was traded the preceding week in 11 deals. For Bonds, NSE report shows a total of 7,508 units of Federal Government Bond valued at N7.506 million were traded last week in 12 deals, compared with a total of 7,647 units valued at N8.047 million transacted the preceding week in 30 deals.

Iheanyi Nwachukwu

by Iheanyi Nwachukwu

May 24, 2018 | 12:45 am
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