24—Vanguard, MONDAY, MAY 13, 2019 FINANCIAL VANGUARD Analysts anticipate dim equity market outlook as investors lose N137bn •Tip insurance stocks to watch By Peter Egwuatu AS the equity market ended bearish last week resulting to investors losing over N137 billion in five trading days, analysts have predicted that the market outlook for this week is likely to dim, even as they cautioned investors to take advantage of the falling prices to boost their portfolios. They further tipped insurance stocks to be the stock to watch this week following their low trading prices. Analysts at Vetiva Capital Management in its market reaction said: “As the Nigerian Stock Exchange, NSE All Share Index, ASI continues to trade comfortably below 30,000 points, the outlook appears dim. However, we expect investors to take advantage of beaten down prices at week open but do not rule out the possibility of further sell-offs.” On the stock to watch, the analysts opined: “After losing earlier last week, Sovereign Insurance Plc gained 870 bases points, bps, Friday, to settle at N0.25 as investors took advantage of the price. The Insurance sector declined 322bps in the two opening sessions of the SHAREHOLDERS of Union Bank of Nigeria Plc have commended the debt recovery drive by its management as the bank’s Non Performing Loan, NPL ratio declined to 8.1 percent for the financial year ended December 31, 2018 from 20.8 percent in the corresponding period of 2017. While addressing shareholders at the 50th Annual General Meeting, AGM, Cyril Odu, Chairman, Union Bank, highlighted some major achievements of the bank in 2018 which included: strengthening retail and transaction banking offerings and the launch of the first Local Letter of Credit to support local trade; the launch of the inaugural N13.5 billion Bond issue and the adoption of the Robotic Process Automation (RPA) technology – the first Bank to do so in Nigeria. According to Odu; “We have positioned Union Bank to take advantage of the emerging opportunities in the economy and remain optimistic about the future of the Bank. We will execute our week after which we saw bargain hunting in the following sessions. The stock has gained 19 percent Year to Date, YtD, while the sector has shed 6 percent YtD. Other stocks include Nem Insurance and Prestige Assurance gaining 8.7 percent and 7.7 percent respectively.” Analysts at Cowry Asset Management in their reaction said: “In the new week, we expect the local equities market to close marginally in green territory amid By Nkiruka Nnorom FOLLOWING the protracted bearish run in the equities market, Prof. Uche Uwaleke, Head, Banking and Finance Department, Nasarawa State University, Keffi and a professor of Finance and Capital Market, has said that some macro-economic indicators and other external factors indicate that the days of bears are fast coming to an end. Uwaleke, who spoke as guest lecturer at the Capital Market Shareholders commend Union Bank’s debt recovery drive announcement of the reappointment of the CBN Governor by President Buhari and the readiness signalled by MTN to list on the local bourse, given the registration of its 20 billion shares with Securities and Exchange Commission, SEC. Hence, we feel investors would take advantage of the low share prices to maximize their returns. Meanwhile, analysis of trading last week showed that investors lost over N137 billion as market capitalisation which represents investors’ worth on the Exchange declined to N10.842 trillion from N10.979 trillion recorded penultimate week. Similarly, another stock market gauge, the ASI declined to 28,847.81 points from 29,212.00 points recorded penultimate week. Amid sustained profit taking, all of the five indices closed in negative territory: NSE Banking, NSE Insurance, NSE Consumer Goods, NSE Oil/Gas and NSE Industrial indices fell by 2.77 percent, 1.74 percent, 0.23 percent, 5.29 percent and 0.36 percent to 370.27 points, 118.63 points, 669.53 points, 264.90 points and 1,096.75 points respectively. Positive internal, external factors point to equity market rebound in Q3 — Prof Uwaleke By Peter Egwuatu 2019-2021 strategic objectives - Sweating our Assets, Digitizing our Bank, and Positioning for the Future - towards being Nigeria's most reliable and trusted banking partner. We will focus on embedding disciplined cost management as well as mining synergies across business segments and functions to improve the profitability of our business and deliver value to all our stakeholders – shareholders, customers, business partners' and employees.” By Nkiruka Nnorom SEPLAT Petroleum Development Company Plc, SEPLAT, has announced reduction in its finance cost by 38 percent to US$16 million in its first quarter 2019 (Q1'19) ended March 31, 2019, compared to US$26 million in Q1'18. The company explained that the reduction in finance cost was a positive impact of its 2018 debt refinancing and subsequent deleveraging. Its net profit for the Correspondent’s Association of Nigeria, CAMCAN, quarterly forum in Lagos, expressed optimism that the stock market would rebound in the third quarter. He said that swearing in of the newly elected president and early constitution of cabinet members, lowering Monetary Policy Rate (MPR) by the Monetary Policy Committee (MPC), increase in minimum wage, increase in oil price and continued stability in foreign exchange (FX) would impact market positively and aid the recovery. He listed other factors that will drive stock market reversal in third quarter to include, continued moderation in inflation, steady growth in Nigeria’s Gross Domestic Product (GDP), early signing and implementation of 2019 budget, improved growth in the non oil sector amongst others, adding that “all these projections are higher than what we saw in 2018” He said that the planned introduction of derivative instruments in the market by the Securities and Exchange Commission (SEC), which preparations have reached advanced stage at both SEC and the Nigerian Stock Exchange (NSE), would help investors both foreign and indigenous investors to hedge their investments. “The NSE is really waiting for SEC to finalise the rule for the derivatives to be introduced, it will give investors room to hedge risks”, Uwaleke said. He said that the CBN’s MPC triggered the market supportive move in March 2019 by bringing down MPR by 50bps, after 33 successive months, to 13.50 percent from 14 percent, adding that he sees prospects of further reduction in the MPR. “Lower MPR will free funds for investments or lending to firms for expansion, which will improve their earnings and deliver more value to investors. It has a way of attracting investors, opening the market and hedging risks”, he stated. Speaking on some external factors likely to drive market reversal in Q3 2019, Uwaleke listed, crude oil price, declining trend of yield in the US, which will likely bring about capital flow to emerging markets, easing US—China trade tension , and easing Brexit tension, among others. Seplat drives Q1 finance costs down by 38% period stood at US$33 million after adjusting for a tax credit of US$13 million. Revenue of US$160 million and gross profit of US$81 million represent a 51 percent gross profit margin, which remained unchanged year-on-year. Revenue, according to the company, reflects the lower oil production and oil price realisation of US$61.7/bbl (2018: US$65.78/bbl). Commenting on the results, Austin Avuru, Chief Executive Officer, Seplat, said: “Our operations have continued to perform in line with expectation, with the phasing of our 2019 work programme such that the production uplift will be felt throughout the second half of the year as we step up drilling activities to focus on capturing the numerous high margin and shortcycle cash return opportunities within our current portfolio. “The next phase of growth for our gas business is now gathering pace following FID for the ANOH project, with governments first tranche of equity investment received. We have continued to deleverage the balance sheet and self-fund investments into the existing portfolio from operational cash flow, while retaining the financial flexibility and available resources that will enable Seplat to capitalise on what we expect to be an increasingly busy pipeline of inorganic growth opportunities that fit our acquisition criteria.” JB rules out plans for rights issue as shareholders’ equity hits N35bn By Peter Egwuatu JULIUS Berger Nigeria (JB) Plc has explained to investors that there was no need to float a rights issue at the moment as the company's shareholders equity has risen to N35 billion. Speaking at the company's investor forum 2019 in Lagos, Engr. Dr. Lars Richter, Managing Director, Julius Berger, who was represented by the Finance Director, Martin Brack, said that 2018 was a very successful and pivotal year for Julius Berger, a business year filled with many positive developments and achievements. “In 2018, Julius Berger successfully overcame many of the tough challenges faced in the recent past and made marked progress across all aspects of its business, moving to greater profitability and success. We don’t think it is necessary to float a rights issue at this moment as our shareholders’ equity has risen by N35 billion.” Commenting on the 2018 financial year performance, he said: “The company's revenue increased by 37 percent to N194 billion from N141 billion in 2017. The Profit Before Tax increased by 173 percent to N10.1 billion in 2018 from N3.7 billion in 2017, while Profit After Tax also rose to N6.1 billion in 2018 from N2.5 billion in 2017. Similarly, he told investors that the Company recorded significant progress in its first quarter results, saying it posted revenue of N35.32 billion for the period ended March 2018 compared to N34.15 billion reported for the period ended March 2017. Speaking on the Lagos- Shagamu Expressway, which has seen delays and even work stoppage in the past, due to funding challenges, Richter said since the resumption of work, a steady pace of progress is now the reality. He said, “Considering that the Expressway is now financed via the Presidential Infrastructure Development Fund, we presume that we will be able to achieve an uninterrupted pace of work with the new funding structure
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