BusinessDay 15 Feb 2018

Thursday 15 February 2018
C002D5556
BUSINESS DAY
Investor
Helping you to build wealth & make wise decisions
17
United Capital investment views
Bears out-stage the bulls…
…NSEASI sheds 3.4% w/w
The Nigerian bourse
closed the week
to 9th February
lower as bearish
sentiment drove the
market throughout the week.
Consequently, the market
closed all 5 trading days in
red, as the index declined 3.4
percent week-on-week (w/w)
to settle at 43,127.9 points whilst
dragging year-to-date (YtD)
return to 12.8 percent weekon-week
(w/w). Expectedly
market capitalisation shed
N542.6 billion to N15.5 trillion.
Performance across all
sectors was bearish, led by the
Industrial Goods (-4 percent)
index on account of sell offs
in DANGCEM (-4.1 percent)
and WAPCO (-3.7 percent).
The Financial Services (-3.9
percent) index followed closely
consequent on losses recorded
in GUARANTY (-2 percent),
FBNH (-13.3 percent) and
DIAMOND (-9.5 percent).
The Consumer Goods
(-2.9percent) index also trended
southwards as profit taking in
NB (-5.3percent) and NESTLE
(-5.9percent) dragged the index.
The Agriculture (-0.7percent)
and Oil & Gas (-0.6percent)
indexes also declined due to
price depreciation in PRESCO
(-1.4percent), LIVESTOCK
(-5.4percent) and MOBIL
(-7.6percent).
Investor sentiment
measured by market breadth
came under severe pressure
at 0.4x (formerly 0.2x in the
previous week) as 23 stocks
gained while 68 declined.
However, activity levels were
mixed as average volume
traded advanced 35.4 percent
w/w to 885.1mn units, while
average value traded declined
13.8percent w/w to end at
N4.8billion. Going into the new
week, we expect sentiments to
be guided by the outcome of the
Inflation data release in both
Nigeria and the U.S.
Money Market: OBB and
O/N sprints above 40percent
as liquidity contracts
Liquidity conditions were
tight all through the week to
9th February, as money market
rates hovered above 40percent
for most parts of the week, even
touching 53.1percent. This
was underpinned by debits
from OMO and wholesale FX
sales by the Apex bank, as well
as mandates by the CBN for
banks with balances at the SLF
window to fund their positions
or risk having their bills
rediscounted. Consequently,
banks bided less-aggressively
in OMO auctions, resulting
in spates of unsuccessful
placements.
By the end of the week,
inflows from OMO maturities
that summed up to N67.7bn
helped to ease liquidity
pressures. As such, rates
moderated, albeit significantly
higher w/w; OBB (up
31.7percent to 43.3percent)
and O/N (up 33.3percent to
45.5percent) w/w. In terms
of liquidity profile, a sizable
sum of N265.1 from OMO and
T-bills issuance is expected
to mature in the week ahead,
this should palliate liquidity
strains. Furthermore, the CBN
would be conducting its bimonthly
T-bills auction with
the intention of re-financing
N229.9billion.
Fixed Income Market:
Yields succumb to bearish
sentiments amid liquidity
strain
The week to 9th February
featured a heavily strained
system liquidity which brought
the fixed income bears out of
hibernation. Consequently,
yields rose by an average of
66bps in the T-bills space, to
close the week at 15.5percent
(91-day (up 135bps to
14.9percent), 182-day (up
71bps to 15.6percent) and
the 364-day (down 8bps to
16percent).
In the bonds space,
sentiment was equally bearish,
domestic currency appreciated
in the Investors and Exporters
FX window (I & E window)
to end at N360.3/$1, while
trading sideways in the parallel
market at N362/$1. In the oil
market, Brent crude recorded
its biggest weekly loss in 10
months, falling to $63.8 bpd
– its lowest level since Dec-
17. This sharp decline was
fueled by concerns around
resurgence in U.S. shale oil
output. The outlook of the naira
remains tied to the spate of
CBN’s intervention in the spot
and forward markets as well as
the better price discovery in the
I & E FX window.
The Nigerian bourse closed
the week to 9th February lower
as bearish sentiment drove the
market throughout the week.
Consequently, the market
closed all 5 trading days in
red, as the index declined
3.4percent w/w to settle at
43,127.9 points whilst dragging
YTD return to 12.8percent
w/w.
Performance across all
sectors was bearish, led by the
RSA fund price of PFAs as at February 9, 2018
S/N PFAs CURRENT PRICE
1 CrusaderSterling Pensions 3.8872
2 ARM Pension Mgrs. 3.7924
3 Premium Pensions 3.7763
4 Stanbic-IBTC Pensions 3.5982
5 Legacy PFA 3.4834
6 NLPC PFA 3.3130
7 PAL Pensions 3.3090
8 First Guarantee Pension 3.1859
9 Trustfund Pensions 3.1609
10 Leadway Pensure PFA 3.0495
11 SigmaVaughn Pensions 3.0401
12 AIICO Pension Managers 2.9264
13 APT Pensions 2.7526
14 Fidelity Pensions 2.6375
15 AXA Mansard 2.6049
16 FUG Pensions 2.5513
17 OAK Pensions 2.4593
18 Investment One Pension Mgrs. 2.3992
19 IEI Anchor Pension Managers 2.2479
20 Radix Pension 1.9649
21 NPF Pensions 1.4267
as players were constrained by
tighter liquidity. The bearish
theme was also fueled by
developments in the global
market (particularly in the
US), following the increased
probability of rate-hikes by the
Fed. Overall, average bonds
yield rose 47bps to end the
week at 13.8percent, driven
by profit-taking across the
sovereign yield curve.
Going into the new week,
we expect to see some reversals
to the sell-offs witnessed in the
past week. Furthermore, we
also expect sentiments to be
guided by the January inflation
data which is scheduled to
be released by the National
Bureau of Statistics on
Wednesday.
Currency Market: Naira
depreciates in the official
market
In the Foreign exchange
market, the naira depreciated
by 3bps in the official market
to close the week at N305.9/$1.
On the other hand, the
Industrial Goods (-4percent)
index on account of sell offs
in DANGCEM (-4.1percent)
and WAPCO (-3.7percent).
The Financial Services
(-3.9percent) index followed
closely consequent on losses
recorded in GUARANTY
(-2percent), FBNH
(-13.3percent) and DIAMOND
(-9.5percent).
The Consumer Goods
(-2.9percent) index also
trended southwards as profit
taking in NB (-5.3percent)
and NESTLE (-5.9percent)
dragged the index. Liquidity
conditions were tight all
through the week to 9th
February, as money market
rates hovered above 40percent
for most parts of the week, even
touching 53.1percent. This
was underpinned by debits
from OMO and wholesale
FX sales by the Apex bank, as
well as mandates by the CBN
for banks with balances at
the SLF window to fund their
positions or risk having their
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E-mail: iheanyi.nwachukwu@businessdayonline.com
Flour Mills: Rights issue closes next week
…analysts see upside potentials
IHEANYI NWACHUKWU
Flour Mills of Nigeria
Plc Rights Issue which
opened on Monday
January 15, 2018 will
close on Wednesday February
21, 2018. The Rights Issue is
being undertaken to enable
Flour Mills deleverage its
balance sheet, support working
capital needs, and position the
company to exploit valueaccretive
opportunities.
The shareholders of Flour
Mills Nigeria Plc who do not
wish to take up their Rights
should take a cue from the wide
upside potential in trading their
Rights to interested investors. It
is worth noting that the Rights is
offered at 17.18percent discount
to the stock’s current market
price of N32.60.
“Our most recent research
report values the company’s
stock at N38.89 and the
theoretical market price
of the stock after the Rights
is estimated at N30.58,” said
analysts at Lagos-based Cordros
From the ‘9th floor’
The company has
notified the Nigerian
Stock Exchange (NSE)
that the meeting of its
board of directors is scheduled
to hold on March 1, 2018 to
consider the audited financial
The board of directors
of Consolidated
Hallmark Insurance
Plc will meeting
in Lagos on Wednesday,
February 28, 2018 to consider
the company’s audited
financial statement for the year
ended December 31, 2017.
Accordingly, in compliance
with the Nigerian Stock
Dangote Cement Plc
has from February
12, 2018 entered
a closed trading
period until 24 hours after
the audited financial results
of the company for the period
Capital.
The analysts said in all
three cases above, the upside
potential on the Rights price
ranges between 13.27percent
and 44.04percent.
Flour Mills of Nigeria Plc
targets to raise about N40billion
from existing shareholders
by offering 1,476,142,418
Ordinary Shares of 50 kobo
each at N27 per share. The
ratio of provisional allotment
is 9 new Ordinary Shares for
every 16 Ordinary Shares of 50
kobo each held as at the close of
business on December 8, 2017.
Stanbic IBTC Capital Limited
is the lead issuing house to the
Rights Issue.
The unaudited financials
of Flour Mills of Nigeria Plc for
the nine months period ended
December 31, 2017 show the
group earned N427.5billion,
up from N389.9billion in the
same period of 2016. The
Group reported operating
profit of N44.19billion as against
N27.26billion in 2016.
The group profit before
Nestle Nigeria Plc
statements of the company
for the year ended December
31, 2017. The notification is in
line with the listing rules of the
Nigerian Stock Exchange.
During the closed period
(February 14, 2018 to March
taxation (PBT) increased
in the period under review
to N19.5billion against
N10.29billion in same period of
2016. In the nine-month period
to December 2017, the group’s
profit after taxation (PAT)
increased to N13.27billion from
a low of N7.4billion in nine
month period of 2016.
Flour Mills is currently the
largest integrated food business
listed on the Nigerian Stock
Exchange. It is the largest food
basket offering of any Nigerian
FMCG company- over 28
consumer products.
On completion of the
Rights Issue, if all shareholders
take up their rights in full,
the company’s paid-up
share capital should increase
to N2.05billion comprising
4,100,395,606 ordinary
shares of 50kobo each to be
beneficially held as follows:
Excelsior Shipping Company
Limited (2,139,586,427 units
or 52.18percent); and other
shareholders (1,960,809,179
units or 47.82percent).
Consolidated Hallmark Insurance Plc
Dangote Cement Plc
Exchange rules as amended,
the company has declared
that the closed period for
trading in its shares will
commence on Wednesday
February 14, 2018.
Hence, no director, persons
discharging managerial
responsibilities, employees
with sensitive information,
advisers and consultants
ended December 31, 2017
are released to the public
on or before February 28,
2018 after which the trading
period will be resumed. The
closed period is applicable
to the company’s directors,
2, 2018), no director, person
discharging managerial
responsibilities and adviser
of the company and their
connected persons is
permitted to deal in the
securities of the company.
of the company and their
connected persons is allowed
to directly or indirectly deal in
the securities of the company
until 24 hours after the release
of the audited financial
statement of the company
for the year ended December
31, 2017 to the Nigerian Stock
Exchange and the general
public.
senior managers and other
interested parties that
may at this time possess
sensitive information that
may materially affect the
price of the securities of the
company.