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Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by jossy26: 10:09pm On Apr 12, 2013
Very lovely analysis Ugo, am still waiting for your take on Japaul Plc, but you need to reduce the usage of jargons, a lot of people, moi inclusive doesn't have such background to fully understand net asset, operating reserves, gross this, gross that. Use simple tenses bro. Great Job so far
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by 9free(m): 11:52pm On Apr 12, 2013
jossy26: Very lovely analysis Ugo, am still waiting for your take on Japaul Plc, but you need to reduce the usage of jargons, a lot of people, moi inclusive doesn't have such background to fully understand net asset, operating reserves, gross this, gross that. Use simple tenses bro. Great Job so far
Guy visit www.investopedia.com and learn how to calculate, and read meanings into those jargons. They tell you the hidden story of the management day to day running of the companies you intend to buy their shares. Bros, without knowing those valuation jargons, you can be liken to a blind folded ''Fisher man'' in the middle of the ocean filled with sharks without his boat trying to catch a croaker.

1 Like

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:43am On Apr 13, 2013
Josh121: Please i need your analysis on Oando , and transcorp , also Unitybank

As mentioned their results are not yet out. But here is a review of Oando's Q3 I wrote a few months ago.

OANDO, THINNER WITH MARGINGS STRONGER WITH EARNINGS


Oando Plc released its 9months 2012 unaudited accounts with revenue jumping 24% to N487b when compared to the same period last year. The company posted a Gross profit of N50b as direct cost gulped almost N90 of every N100 of revenue it made. Operating profit increased marginally by 9% to N25b when compared to the sale period last year. However, this was just 5.1% of revenue as against the 5.8% posted last year. The drop in margins doesn’t start or end there. Gross Profit margins was 10% compared to 11% same period last year and profit margin dropped even further to 1.9% from the 2.2% posted same period last year.

Oando Plc, continues to invest heavily in plant and machinery this year, sinking in over N17b in pp&e alone. The company is leveraging on its huge assets of N486b to borrow funds which it has used to finance it operations as well as investments. With long term debt and overdrafts of almost N260b it will need more than 43 times its current operating cash flow to repay its debt without having to refinance or source for additional equity. That is wishful thinking in the current clime as a combination of new equity and net increase in receivables remain the only logical option. Its not as if this is an immediate threat to its operations as banks will remain happy to lend to the local oil giant especially with turnovers set to hit N500b this year.

For shareholders, margins maybe thin and interest payments as a percentage of operating income twice more than comfort levels but returns on equity is where you’d expect at least for now. At almost 9%, it still is below inflation rate but far exceeds what was earned in the whole of 2012. Earnings per share for the first 9months is about N4.4, more than double the N1.62 for 12 months last year. Its share value has lost almost 62% in 12 months trading at N11 currently. The market suggest it is rising again
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:51am On Apr 13, 2013
Also this was a flash back review for Skye Bank 2012 H1 results.


Skye Bank released its Q2 earnings and gladly did not disappoint. The bank kept up with impressive results recently released by Diamond Bank, UBA growing is Gross Revenue by 22% to N59.66b. The Bank also managed to increase its Interest Income by 26%, from N38b to N47.88b. However, total operating income only grew by a paltry 0.92% from N32.8b to N33.11b.

The Banks Profit After Tax at the end of the period was N8.19b a 39% increase from the N5.86b earned in the same period last year.





Bottom Line

The Banks seemingly impressive profits after tax when compared to the same period last year, boils down to cost cutting. The Bank was able to save over N2b in operating expenses over the N25b spent in the previous year. This is commendable as most banks have realized the need to drill down on cost amidst a highly inflationary economy and strife competition. The Banks profits may even had been better, had they been able to lower interest expense, which increased 59% to N24.75b. This resulted in an Gross Interest Income Margin of 48%, lower than the 57.8% margin obtained in the prior period. However, we bank profits not margins so a N23m net interest income, 2% over the prior year is welcomed. The bank has basically remained profitable via a combination of growth in revenue and a mix efficiency in operations.

On the balance sheet side, it does seem the banks is stretched in terms of loan to customer deposits. The Bank has lent out about 81% of its total deposits. Its Loans is also more than 5 times its Net Assets, still acceptable by CBN standards. However, the banks needs to increase its deposit base to about N1tr if it is to remain very competitive amongst its peers.

Share Price

According to the Meristem Research below, the Bank currently has a Price Earnings Ratio of 5.4X, making it relatively cheap. Its market price of N3.07 (as at time of this report) is 38.9% of the Book Value Pershare, meaning that the market price is way less than the Book Value. These are indicators of a cheap stock by any standards.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by comely77(m): 9:50am On Apr 13, 2013
Can we have analysis for FIRST BANK pls!!!
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by shigidi(m): 11:56am On Apr 13, 2013
ugodre: Also this was a flash back review for Skye Bank 2012





. Its Loans is also more than 5 times its Net Assets, still acceptable by CBN standards. However, the banks needs to increase its deposit base to about N1tr if it is to remain very competitive amongst its peers.



Going by the analysis of.diamomd bank and sterling. Doesnt this make skye high risk as well? Assets as a percentage of loans is 20%
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 12:55pm On Apr 13, 2013
shigidi:

Going by the analysis of.diamomd bank and sterling. Doesnt this make skye high risk as well? Assets as a percentage of loans is 20%

It does seem so too. They have to either shore up capital or reduce lending. Lets see what their full year report reveals
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by manie(m): 1:33pm On Apr 13, 2013
ugodre: I wrote this article on my blog about a year ago and is a prelude to my next review of Tantalizers Plc.

IS IT TIME TO DUMP MY INVESTMENT IN FAST FOOD COMPANIES?

In almost every street corner in Lagos and major cities in Nigeria, there is fast food restaurant. From Mr Biggs to Sweet Sensation to KFC to Chicken Republic etc they are everywhere. Just walk into any of them at peak periods between 12noon to 2pm and you may not get a sit. Go back a few hours later at 8pm and you may not get food to eat because the shelves are empty. Certainly, this guys are getting a lot of patronage which ultimately result to cash. But does this cash transcend to Profit??

The only way one can know if these guys make profit for their shareholders is to look at their financial statements. Unfortunately, only a handful of them are quoted companies making it difficult to analyse them in their entirety. The quoted ones should however serve as a guide as to whether they are making money or not at least theoretically. Like a opined in an earlier blog post, the food business in Nigeria is highly competitive as the barrier to new entrants is quite low. The Fastfood business also face this same problem.

A look at Tantalizers Annual Report for 2008-2011 reveal a startling idea of just how unprofitable these businesses are. Tantalizers for example have made revenues of not less that N4.5b over the years. However, most of it is eaten up by huge cost of sales and admin expenses both taking an average 54% and 45% from revenue respectively . This leave’s the company with little or no operational profit before interest and tax making the business model a cyclical drag on profits. Bigtreat also share a similar trait with an even worse result. In 2009, cost of sale of N2.5b took a huge chunk out of their Revenue of N4.2b with operation cost and interest eating up the rest, leaving a loss position of N441m. Even UAC the owners of Mr Biggs show very low profit margins. Their 2010 revenue of N34b only yielded profit before tax of about N2b (less than 10%).

Could it just be competition ripping into their profits or is just the inability of their management to reign down on cost? Tantalizers for example have a staff strength of over 2000 with salaries and wages taken up about N693m and N648m for 2009 and 2010 respectively. Another cause may also be the huge depreciation cost that these companies incur year after year. With some of them owning Fixed Assets with book values of over N6b its not inconceivable to understand why their depreciation cost can go as high as N400m every year alone, a whopping 10% of their revenue. Thats probably why interest on loans isn’t so much of an issue as these cost are only accounting profit so do not represent cash payments. A look at their operating cashflows buttresses just that. Tantalizers in 2010 had Operating Cashflows of N654m alone in that year. However, it purchased fixed assets of over N700m in that same year. As such they will have to write off huge depreciation cost year after year from their profits before paying dividends.

Ironically, the little money these fast food companies make come mostly from business not directly associated with the selling food. For example, Big Treat made N34m from rental of its properties in 2008 and another N16m from other sources. UAC made a profit of N4b on its Real Estate business in 2010 alone. Tantalizers, the only one of them with a currently released financials has mostly relied on other income to remain profitable. it made N159m and N140m in 2009 and 2010 respectively on other income with rent making up N130m and N114m of that revenue in 2009 and 2010 respectively. 2011 is also not any difference as they made N113m in other income.

This sadly, doesn’t offer comfort to any serious shareholder as increased returns on shareholders funds is no more than a pipe dream. Tantalizers have in the last couple of years declared a paltry 2kobo only on a nominal share price of 50kobo only, a meagre 4% compared to other sectors that yield over 100% of nominal price. Would I hold on to the shares if I had one? My answer surely is anything but in the affirmative as I do not see any trend suggesting a concrete plan to reduce cost.

UACN is a conglomerate, you need to get and analyse the annual report of UACN to get the contribution of of UAC Foods to UACN bottomline. Grand cereals, another subsidiary of UACN contributed more to UACN bottom-line than the real estate subsidiary.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by Nobody: 6:52pm On Apr 13, 2013
Good job bro
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 10:35am On Apr 14, 2013
manie:

UACN is a conglomerate, you need to get and analyse the annual report of UACN to get the contribution of of UAC Foods to UACN bottomline. Grand cereals, another subsidiary of UACN contributed more to UACN bottom-line than the real estate subsidiary.

Good observation. But also note that UAC Restaurants hasn't done so well and saw a 65% drop in Revs at the end of H1 2012. In fact, they have successfully spun off that arm of their business putting it in line for a potential sale. That is the same business model the likes of Tantalizers, Big Treat etc operate. As per UAC foods it is still doing well but facing shrinking margins. Their Tiger Brand affiliation may well be a turning point for them. Cheers
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by MacLovington(m): 11:40pm On Apr 14, 2013
Ugo abeg give us Union Bank analysis.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ologunduduabra(m): 9:35am On Apr 15, 2013
Nice analysis
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:18pm On Apr 15, 2013
This post was earlier written on my blog in February. I think its a prelude to their Annual results which I hope should be announced this month or early next month.

ACADEMY PRESS – NO PRESSURE TO DELIVER

Imagine owning a business that earns you a profit of N40,000 for every N1million it generates in revenue, meaning the remaining N960,000 is spent on direct cost and other expenses. Not worth your time right?? Wrong!! Time don’t matter to some as has been the case for Academy Press over the last 5 years. The company recently released its third quarter to December 2012 unaudited results with revenues increasing a meagre 1.3% to N1.55b when compared to the same period last year. Operating profit however also remained flat at N119million whilst pre-tax profits dropped 41% to N21million.

Directors at the company are quick to blame the harsh economic environment as a reason for the poor results even as they also blamed the violence in the North as contained in the Chairman’s statement at last financial year’s annual report. In that same report they also highlighted the need for the Government to ensure Universal Basic Education Contracts for supply of books are given to books printed in Nigeria. These narratives are not uncommon and is surely not enough excuse for some poor operational results. A thin profit margin of less than 2% indicates operational expenses are high gulping 86% of Gross Profit in the first 9months.

The company will lay claim to its 11% drop in cost of sales as a sign of reigning down on cost even though a review of how it measures its closing stake may throw more light to their claims. “Goods in transit” and “Paper” make up over 71% of Inventory in 2012 and 65% a year earlier.

The shareholders may not be too bothered anyway? Not when 18 of them own over 65% of the outstanding shares. A board with an average age of over 50 (by my estimates) surely can’t be lured into taking a risk that might result in some dilution of ownership; a recipe for intrusion and pressure to adopt a more aggressive approach to increasing margins. Currently, the company seem satisfied with a 40/60 debt equity ratio with the inexpensive bank of industry loans making up about half of the loans. As far as they’re concerned their Net Assets of N764m is currently valued at about N1.4b and possibly rising. Is it your money??

Their share price was about N1.64 back in October and rose to over N4 a month later before crashing to about N1.62 at the end of the year. The volatility in its share price remains as it has now risen to N2.82 as at the time of writing this blog. You just can’t bet on this can you? Its free cashflow per share of 79kobo makes its current share price seemingly expensive. Equate that to its last year dividend per share of 7kobo and current market price of N2.82 and you get a yield of 2.4%.

NOTE: Share price was N1.85 today (April 15, 2013)

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:25pm On Apr 15, 2013
This was written in February as well and expect its audited accounts this month as well

RED STAR EXPRESS – DELIVERING RETURNS TO INVESTORS

Red Star Express Plc is a leading logistics and delivery firm who recently appeared on the news when they acquired an airside facility at the international airport in Lagos. The moves help them cut back on the time wasted in clearing their goods from the airport. ?The company released its 9months to Dec 2012 unaudited results with revenue rising modestly by 6.88% to N3.8b when compared to the same period last year. Pre-tax profits remained flat only increasing 1% to N361m compared to same period prior financial year.

Red Star is a tightly held company with Dr Koguna (Chairman) and the company named after him owning about 31% of the company. In fact, 56 people own a total 72% of the company’s nearly 590m outstanding shares as at the last financial year. Despite this, the company appears very well run having posted consistent profits and dividend payout over the years. Last financial year it posted revenue of about N5billion up 19% from the prior year and CAGR of about 10% over 5 years. Much of its revenue are derived from its courier business making up 68% of revenue last year alone.

Typically, businesses like this are the bellwether for predicting economic growth in the west, as the performance of delivery businesses is an indication of how economic activities are performing in terms of the sale of goods and services. It’s not so in Nigeria, the room for growth in delivery business is hinged on huge infrastructural development such as roads, safer airspace etc.

Between the end of the end of the last financial year and date of the post their share price has risen over 39% to N3.40. Current P.E Ratio based on its trailing Eps of 55kobo is 6x, a cheap stock if you ask me. The company has no long term or even short term debt to any financial institution, has a strong working capital of N1billion and about N600m in cash as at the end of the quarter ended Dec 2012. The company currently relies on its assets to drive returns as margins are thin at 9%, however, shareholders can’t complain much with 9 months returns on equity at 15%. Surely, the balance sheet shows the company is well placed to expand its business efficiently if it can just borrow below its impressive returns on asset of 11%. Its cautious and organic approach to growth is understandable and surely will evolve to a more aggressive one in future. Just as customers want their goods delivered not only safely but quickly, investors look forward to a sustainable double digit growth in revenue every quarter rather than depend on the fourth quarter to boost revenue.


The share price was N3.80 as at today (15/4/2013). I still think this stock is cheap on the back of the 9months result.

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:37pm On Apr 15, 2013
This was earlier written in January...then its share price was N22.71, today (15/4/2013) its N21.25 and I believe the market is waiting for its 2012 Audited accounts to swoop. Despite its relatively good fundamentals the current price is not a bargain price considering its high P.E and PB ratios.

INTERNATIONAL BREWERIES – DRINK UP, OUR SHARES IS STILL RISING

Take a sit, relax and here…. have a cold beer. Except that it is not one of your regulars. This one is called Castle Beer and by the way they have Castle Milk Stout if you care. The Nigerian Beer market is set for a massive competition and boy haven’t we been over due. A market currently dominated by the likes of Nigerian Breweries (Heineken) and Guinness (Diageo) with 64% and 33% market share respectively makes the grand entry of SAB Miller simple a no brainer.

SAB Miller, the worlds second largest Brewer second only to AminBev (owners of Corona, Stellar, Budweiser) and their entry into Nigeria is whether they admit it or not is a defensive tactic designed to protect their territory from the seeming expansion of the likes of Heineken and Diageo. Nigeria is Africa’s second largest beer market (South Africa is first) and is estimated to be growing at about 6% per annum. Nigeria’s Per capita consumption of beer is also estimated at about 10liters per year compared to South Africa’s 60 liters according to SAB Miller website.

For a hawkish investor, information like this is treasure map and more often that not leads to where the money is. SAB Miller has invested in about 4 breweries in Nigeria but only one is notably quoted on the Nigerian Stock Exchange. International Breweries Plc have been in the Nigeria market for years but without much growth to bottom line. That trend seems to have reversed with the acquisition by SAB Miller last year. In fact if you had invested N1m in SAB Miller by August last year, when they opened the brewery in Onitsha, that money would be worth N3.2m today, a whopping 323% increase in value.

Whilst market sentiments and the bullish nature of the Stock Exchange may have had a part to play in this, the company fundamentals currently does a lot to sustain the rally. Revenue jumped 31.3% year on year at the end of their 3rd quarter 2012. Operating profit on the other hand increased a whopping 130% year on year despite a surge in operating expenses. Much of their efficiency was their ability to maintain a modest 7% increase in cost of sale despite a triple digit increase in revenue. Debt is also very low as finance cost remain below 4% of Operating profit. Operating cashflows are equally strong at over N3billion and Net Assets more than doubling in just 9 months.

A healthy balance sheet, if nothing is what SAB Miller may have provided as well even as the company continues to project growth in revenue. They forecasted an additional N6b to top line revenue for the period between October and March 2013. Though not the kind of rapid growth that is inline with its bullish stock price, still it is in line with current trends.

Not all beer tastes nice and certainly the figures in their financial statement are not without apprehension. They still retain a negative working capital of about N3b following their Q3 unaudited results as trade payables soared 400% to N14b in just 9 months. The accounting impact of their huge investment in plant and machinery ay take its toll in the coming years they begin to write down cost of wear and tear on their assets. For now though, relax and enjoy the moment and remember as you sip, put your money where your mouth.

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:43pm On Apr 15, 2013
This was my review of Guinness Nig Plc back in February. Share price has crashed to N260 today (15/4/2013) since then. N200 anyone??

REVIEW: GUINNESS NIGERIA PLC RESULTS SHOW SHRINKING MARGINS

There have been so many quotes about greatness in the past but none as short and precise of that of a French Mathematician in the 17th Century who aptly believes “Mans greatness lies in the power of his thought”. What he however didn’t mention was that greatness even wen achieved is not static, and must always adapt to changes in environment and off course competition. Guinness Nigeria Plc a company that associates its brand with Greatness knows that much and admitted in its half year earnings report that results “inflationary pressures” and “high interest rates” have all but ensured that “bottom line growth” is “suppressed”. Currently as was reported months ago in a blog post, their earnings report currently falls short of the greatness that it espouses.

Competition is rife and the Nigerian beer market is flooded by brands which for the first time we can say are of good quality. One way to also fight competition and maintain market share is to flood the market with products that cuts across market segments. A ?model companies with years of dominance and high margins love to hate but yet adopt. Its no wonder Guinness introduced Snapp a product that lovers of Smirnoff Ice, Gordon Sparks and ever Malta Guinness will also like. That’s a move not borne out of an attempt to give customers variety but to stave off competition from similar products that on the contrary rank as premier for lesser known competitors.

Moves like this cut hard on margins and its no wonder Gross Profit Margins for 6 months to December 2012 to shrunk 2.9% when compared to the same period last year. Operational Profit margin also shrunk comparatively by 8.13% due to increase in Advert & Promotional Cost as well as Admin expenses. Despite all of this Guinness Nigeria Plc is still one of the best performers on the Nigerian Stock Exchange and still consistently report profits. A return on equity of 16.2% for the first half of the year is still very much impressive. Cash flow from operations N16billion very much covers its loans repayments of N4b and investments on capex of N9billion.

For dividend seekers, the current share price of about N297 provides a 2.6% yield, a return that should only please the most risk averse investors you can ever think off. As per capital appreciation there is a different but nonetheless expected feel. Share price has risen 35% over the last one year even though at 24% it fell below the NSEASI of about 35% as at December 2012. A pricey N297 per share provides a P.E ratio of 33x . With growth slowing and equally good stocks like GTB & Zenith trading at P.E’s of 12X and 10X respectively, then you wonder what is great about buying this stock for 33 times its trailing earnings.

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by johnnykuku: 5:45pm On Apr 15, 2013
 think this company need serious change in management
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:57pm On Apr 15, 2013
johnnykuku:
 think this company need serious change in management

which company?
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by johnnykuku: 10:22pm On Apr 15, 2013
ugodre:

which company?
Academy press plc
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by Nobody: 7:41am On Apr 16, 2013
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 12:24pm On Apr 16, 2013
mercylicious: Fidelity bank result is out.
http://www.nse.com.ng/Financial_NewsDocs/2334_FIDELITY_BANK_PLC_FINANCIAL_STATEMENTS_APRIL_2013.pdf

Plz review.

Yeah I've seen it. I'm currently reviewing it.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by manie(m): 3:19pm On Apr 16, 2013
ugodre: This was written in February as well and expect its audited accounts this month as well

RED STAR EXPRESS – DELIVERING RETURNS TO INVESTORS

Red Star Express Plc is a leading logistics and delivery firm who recently appeared on the news when they acquired an airside facility at the international airport in Lagos. The moves help them cut back on the time wasted in clearing their goods from the airport. ?The company released its 9months to Dec 2012 unaudited results with revenue rising modestly by 6.88% to N3.8b when compared to the same period last year. Pre-tax profits remained flat only increasing 1% to N361m compared to same period prior financial year.

Red Star is a tightly held company with Dr Koguna (Chairman) and the company named after him owning about 31% of the company. In fact, 56 people own a total 72% of the company’s nearly 590m outstanding shares as at the last financial year. Despite this, the company appears very well run having posted consistent profits and dividend payout over the years. Last financial year it posted revenue of about N5billion up 19% from the prior year and CAGR of about 10% over 5 years. Much of its revenue are derived from its courier business making up 68% of revenue last year alone.

Typically, businesses like this are the bellwether for predicting economic growth in the west, as the performance of delivery businesses is an indication of how economic activities are performing in terms of the sale of goods and services. It’s not so in Nigeria, the room for growth in delivery business is hinged on huge infrastructural development such as roads, safer airspace etc.

Between the end of the end of the last financial year and date of the post their share price has risen over 39% to N3.40. Current P.E Ratio based on its trailing Eps of 55kobo is 6x, a cheap stock if you ask me. The company has no long term or even short term debt to any financial institution, has a strong working capital of N1billion and about N600m in cash as at the end of the quarter ended Dec 2012. The company currently relies on its assets to drive returns as margins are thin at 9%, however, shareholders can’t complain much with 9 months returns on equity at 15%. Surely, the balance sheet shows the company is well placed to expand its business efficiently if it can just borrow below its impressive returns on asset of 11%. Its cautious and organic approach to growth is understandable and surely will evolve to a more aggressive one in future. Just as customers want their goods delivered not only safely but quickly, investors look forward to a sustainable double digit growth in revenue every quarter rather than depend on the fourth quarter to boost revenue.


The share price was N3.80 as at today (15/4/2013). I still think this stock is cheap on the back of the 9months result.


Dr Koguna is one of the straight forward corporate managers in Nigeria, we saw what happened to CAP Plc when he was the Chairman of the company.

2 Likes

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by Aks(m): 8:46am On Apr 17, 2013
Hi Manie,

I salute your great work. Kindly analyse Fidelity bank result and projections
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by Aseye(m): 9:48am On Apr 17, 2013
ugodre:

Bloomberg is the best. See link http://www.bloomberg.com/quote/FBNH:NL Once youre there just go to the search bar and type any stock you wish

thanks, i appreciate
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by manie(m): 10:50am On Apr 17, 2013
Aks: Hi Manie,

I salute your great work. Kindly analyse Fidelity bank result and projections

Sorry Ugodre is the in-house analyst.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 2:39pm On Apr 17, 2013
FIDELITY BANK PLC POST PAT OF N18.2BILLION- SOUND INVESTING?

Fidelity Bank Plc is currently the 6th biggest bank in Nigeria and is probably N60billion - N80billion short of 5th in terms of Net Assets. The Bank released its 2012 Audited Financial Statements with Net Interest Income jumping 20% to N36.8billion. The banks also made an additional N40.4billion in commissions and other income, making up more than half of the the total operating income of N72.6billion. Pre-tax profit also rose to N21.8billion (2011: N161million) after a 2011 that saw loan losses wipe out over 33% of Operating Income.



Result overview

Fidelity Bank's annual report is not yet out however one can rely on their 9 months earnings report break down where their strength lies. Like most banks this clime, the bank's net income has mostly relied on risk free high interest yielding government securities. The bank also increased lending 23.7% during the year to N345.5billion, representing half about half its total deposit base. Corporate lending takes up 74% of its total loans. The bank claims its non-performing loan levels currently stands at 6% down from 13% the prior year. But that is not surprising, most banks this year are expected to claim a better loan loss ratio despite lending more.

How does one now predict where the risks lies and when it may crystallize? The bank has a well balanced loan portfolio lending to almost every sector of the economy. As at September 2012, Manufacturing had the highest with 24% followed closely by the transport& telecoms sector at 22%. You may be wondering why they merged up both telecoms and transport? I am wondering too!! A more pertinent question may well be how the two(three?) sectors perform in the coming years. After all, banks don't operate in a parallel market. When the wider economy starts to tank expect banks to follow suit two to three years after. Thus, if investments in manufacturing and the transport sectors don't grow as expected the bank is bound to suffer as well. The telecom sector one might argue has been struggling to reman profitable amidst stiff competition. We all know the problems with manufacturing.

Measuring the bank efficiency levels is somewhat tricky considering the distort created by the disparity in loan losses in the comparative years. So, if we are to eliminate loan losses, it will appear the bank's cost cutting measures had improved by about 9%. Earnings per share following IFRS has improved from a dismal 9kobo (2011) to 63kobo per share (2012).



Worth Investing?

The Banker Magazine named Fidelity Bank the "Soundest Bank in Nigeria" (whatever the heck that means). Their share price is currently N2.99 down from its year high of N3.47 back in February. Using its year high price of N3.47 will produce a price earnings ratio of 5.5X. The current marked value is also just 53% its Book value, a huge discount of a price. Mind you, even at this price their share price has grown 119% in the past one year.

Banks operate in a cyclical market where there are constant boom and bust cycles making it difficult to hold for long. However, if there was such a time it was worth investing in Fidelity bank then it probably is now.



Fidelity Bank Plc 2012 Audited Accounts was first posted on the website of the NSE

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by shigidi(m): 3:17pm On Apr 17, 2013
Great job ugodre, awaiting Skye analysis.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 3:25pm On Apr 17, 2013
This was my review of Dangote Sugar sometime last year after they released their 9months earnings. They have just released 2012 full year results which I am currently reviewing. Why don't you wet your investment appetite with this while the review comes up soon.

STILL SWEET – DANGOTE SUGAR 2012 9 MONTHS EARNINGS REVIEW

Dangote Sugar released its 9months 2012 unaudited accounts growing revenue by 2% to N81b compared to the same period last year. The growth rate is down from the 10% posted in the first six months of this year, indicative of a slow down in demand in the second half of this year. However, Gross profit margin rose 51% to N15.5b as direct cost (cost of sale) gulped nearly 80% of turnover. The cost of sale N65b is down 5% from same period last year even as inventories dropped by more than half to N8.8b from the N19b it held same period last year. This is bound to reflect positively on cost.

Operational Profit also increased to N11.2b representing an 82% rise over last years figure. Pre-tax profits was N12b helped by interest income of another N796m for the period. Dangote Sugar is known to borrow less from banks as it relies heavily on cash from its parent company to fund its operations a model that is not immune to its own frailties. However, with net cash flows from operations of N15b, the company is in a sound financial footing with enough liquidity to compete. Investments increased three folds to N2b, still it is just 13% of operating cash flows.

Earnings per share was for the period was 68kobo 85% higher than the 37kobo posted same period last year and 47% higher than the 46kobo it earned the whole of last year. It’s early times as the last three months of the year is usually known for exceptional and extraordinary items which can make or mar a companies full year earnings. But with pre-tax profits in excess of N12b there is enough comfort for shareholders to remain optimistic. Share price has remained steady at N5.3 currently down from its year high of N6.75 in October. Nevertheless, this still represents a sweet price earnings of 7.79x and even sweeter at 5.82x when annualized. My taste buds must be buzzing.
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by Aks(m): 4:26pm On Apr 17, 2013
Thank u Ugodre
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by mayoroflag(m): 5:14pm On Apr 17, 2013
Guy

You are working... I salute o!!!!!!!!!!! wink
Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by ugodre(m): 5:22pm On Apr 17, 2013
DANGOTE SUGAR POST N10.8BILLION PAT...BUYING OPPORTUNITY?

Dangote Sugar is one of the most profitable arm of the huge conglomerate owned largely by Africa's richest man. The company released its 2012 audited accounts posting a revenue of N106.8billion. Operational profit at the end of the period rose 49.5% to N16.3billion (2011: N10.9billion) helping increase post-tax profit to N10.8billion at the end of the year or an earnings per share of about 90kobo per share (2011: 62kobo).

Result overview

This is one of those result that fails to deliver organic growth but yet increased profitability by almost 50%. How was this possible? Despite delivering flat revenue growth the company managed to cut down cost of sale by nearly N8billion resulting in a 55% boost in gross profit. The more than 100% rise in SG&A could be attributed to the high cost of doing business, a common peculiarity with manufacturing companies. But that is more of a worry rather than excuse considering that this rise is the highest in the last 4 years of operations. Before now S,G & A was highest in 2009 at N4billion. To get a grip of what this means is to imagine the impact of revenues remaining flat in the next couple of years and expenses rising at this trajectory.

Naysayers to my worry will probably look to the wider economic outlook for the industry to allay my concerns. The GEJ government last year boosted the local sugar industry when it announced it will remove import duties on machinery and spare parts used for sugar processing. A tax holiday was also announced as part of the incentives just including a higher tariff for importers of Raw Sugar. A recent article on Financial Times also suggest that by 2020 Sub Saharan Africa will rely less on imports of Sugar and become a net exporter of the commodity. Nigeria consumes about 1.4million metric tons of sugar per year and produces about 1million metric tons. What this all means is that the prospect for growth is there for Dangote and in typical fashion, with the help of the government.

Buying opportunity?

Dangote Sugar share price ironically dropped 4.6% today to N8.3 per share. The share price as risen nearly 150% year on year and at todays has a price multiple to earnings of 9.2x. It is proposing a dividend per share of 50kobo, representing 56% of current year's earning and a current yield of 6%. The company still has a revenue reserve in excess of N20billion and a cash pile of about N25billion at the end of the period making its related party loans innocuous. I wouldn't miss this buying opportunity if I have the cash.

Some might wonder if the current price is a bargain? That depends on your metric and what you are looking for. An ROE of 25.3% look impressive to me and justified by an equally good ROA of 21%. The company also has no debt rendering the high price to book ratio (2.5x) unnerving. Surely, all this attributes may not classify the share price as cheap but it certainly isn't expensive.



Dangote Sugar 2012 Annual Report was posted on the website of the NSE

Re: Analysis Of Results Of Companies On The Nigerian Stock Exchange by 9free(m): 6:20pm On Apr 17, 2013
ugodre:
DANGOTE SUGAR POST N10.8BILLION PAT...BUYING OPPORTUNITY?

Dangote Sugar is one of the most profitable arm of the huge conglomerate owned largely by Africa's richest man. The company released its 2012 audited accounts posting a revenue of N106.8billion. Operational profit at the end of the period rose 49.5% to N16.3billion (2011: N10.9billion) helping increase post-tax profit to N10.8billion at the end of the year or an earnings per share of about 90kobo per share (2011: 62kobo).

Result overview

This is one of those result that fails to deliver organic growth but yet increased profitability by almost 50%. How was this possible? Despite delivering flat revenue growth the company managed to cut down cost of sale by nearly N8billion resulting in a 55% boost in gross profit. The more than 100% rise in SG&A could be attributed to the high cost of doing business, a common peculiarity with manufacturing companies. But that is more of a worry rather than excuse considering that this rise is the highest in the last 4 years of operations. Before now S,G & A was highest in 2009 at N4billion. To get a grip of what this means is to imagine the impact of revenues remaining flat in the next couple of years and expenses rising at this trajectory.

Naysayers to my worry will probably look to the wider economic outlook for the industry to allay my concerns. The GEJ government last year boosted the local sugar industry when it announced it will remove import duties on machinery and spare parts used for sugar processing. A tax holiday was also announced as part of the incentives just including a higher tariff for importers of Raw Sugar. A recent article on Financial Times also suggest that by 2020 Sub Saharan Africa will rely less on imports of Sugar and become a net exporter of the commodity. Nigeria consumes about 1.4million metric tons of sugar per year and produces about 1million metric tons. What this all means is that the prospect for growth is there for Dangote and in typical fashion, with the help of the government.

Buying opportunity?

Dangote Sugar share price ironically dropped 4.6% today to N8.3 per share. The share price as risen nearly 150% year on year and at todays has a price multiple to earnings of 9.2x. It is proposing a dividend per share of 50kobo, representing 56% of current year's earning and a current yield of 6%. The company still has a revenue reserve in excess of N20billion and a cash pile of about N25billion at the end of the period making its related party loans innocuous. I wouldn't miss this buying opportunity if I have the cash.

Some might wonder if the current price is a bargain? That depends on your metric and what you are looking for. An ROE of 25.3% look impressive to me and justified by an equally good ROA of 21%. The company also has no debt rendering the high price to book ratio (2.5x) unnerving. Surely, all this attributes may not classify the share price as cheap but it certainly isn't expensive.



Dangote Sugar 2012 Annual Report was posted on the website of the NSE
If only Mr. Market will help me beat down the price to 3.50k again.....
Ireally enjoyed the last ride

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