Nairametrics| Here is my roundup and commentary of all the major company related news in Nigeria last week. This week we have news from NNPC, Arik, AMCON, Access Bank, Zenith Bank, Wakanow, Dangote etc. You can subscribe to Nairametrics Newsletter on the bottom of this post.


Week ended February 18th 2017

1. The controversy surrounding the takeover of Arik Air continued last week after the new management claimed it inherited “nearly an empty shell of a carrier” with only 10 out of the 28 aircraft in its fleet functional. KPMG was appointed to audit the company. Arik also suspended its Lagos-London and Lagos-Johannesburg routes. To fix the rot in the company, they say they will need another N10billion. Without which the airline will not be able to resume full and uninterrupted flight operations to its regular routes across the country and beyond. Are we talking another bailout here?
2. In another AMCON related news last week, the bad asset bank announced it had sold the fourth largest equity stake in Paints and Coatings Manufacturers Nigeria (PCMN) Plc to Bizfeat Ventures Limited. It transferred its 7.4 per cent equity stake in PCMN to Bizfeat Ventures through a negotiated cross deal at the Nigerian Stock Exchange (NSE), where PCMN is quoted. The block divestment involved transfer of a total of 58.66 million ordinary shares of 50 kobo each held by AMCON to Bizfeat Ventures at a negotiated price of N1.05 per share. The divestment price represents a premium of 61.54 per cent on PCMN’s market price of 65 kobo and five per cent above one-year highest price of N1. It appears this is a likely short to medium term strategy for AMCON as it tries to recover hundreds of billions of Naira likely lost in Nigerian companies it took over following the banking crises of 2011 and 2012.
3. It’s award season. Two brands from the stable of Chi Limited –Chivita and Hollandia, were named Best Brand Equity Awards 2016 in Nigeria. The award, which was recently organised by Kantar Millward Brown, a leading global research agency. Chivita and Hollandia were honoured for their Outstanding Brand Equity and market leadership in their respective categories. Chivita won the Best Brand Equity Award in the Juices and Soft Drinks Category, while Hollandia emerged winner of the Best Brand Equity Award in the Dairy category.
4. The Managing Director of Skyway Aviation Handling Company Limited (SAHCOL), Rizwan Kadri disclosed last week that the company helped export about 35 million metric tonnes of products in year 2016, compared to 35million tonnes in 2015, an increase of 12.9%. The company claimed they could lose about a N3.36 billion to the closure of the Abuja airport.
5. Nigerian based online travel company, Wakanow has announced plans to formally launch commercial operations in the UK as part of its efforts for global expansion and in a bid to consolidate its foray into Europe. The company recently launched DestinationsAfrica, a global booking platform that aggregates the best of African packaged holidays from over 23 African countries including Uganda, Rwanda, Senegal, Ivory Coast and Tanzania. Wakanow, also has operations in Ghana and Dubai. According to Industry sources, Wakanow (started in 2008) has cornered about 10% of Nigeria’s Travel and Tours market said to be worth about N100 billion as at 2015 11. FG To Save N15bn from 50% Air Travels Discount
6. Dana Air, signed a deal with The Federal Government last week offering 50% discount on official air travel tickets. The Government said the deal will save it about N15 billion annually. Dana also announced that it was partnering with Meridiana Fly, an Italian carrier, to deepen its operations in Nigerian and Ghana. In an interview, Dana Air spokesman, Kingsley Ezenwa, said the deal was driven by the introduction of a Boeing 767 – 300 aircraft and superior on – time performance rate. We are yet to see full details of the deal and do not know if it is just for this year alone.
7. Forte Oil listed its N9bn bond on FMDQ. The listing, which is the first corporate debt listing in 2017, and will be traded on the OTC exchange market. Forte Oil raised the bond successfully late last year and is part of a planned N50 billion bond issuance lined up by the company.
8. Dangote Group announced last week that it was planning to launch a rice mill. Dangote Group subsidiary Dangote Rice Ltd will launch a pilot project starting with 500 hectares of farmland by Gonroyo Dam, Nigeria’s second-largest dam, located in the northern state of Sokoto. The multi-million-dollar project will be expanded to cover a land area of 25,000 hectares across three sites in northern Nigeria by the end of the year. It’s Dangote and as usual, we expect to see the visible and invincible hand of the government in all of this.
9. Nigeria Breweries announced last week that it reviewed prices of its drinks thrice last year. They claimed it was because of the harsh economic conditions. The company also maintained that its outlook for 2017 is still negative. Nigeria Breweries, like Guinness have been experiencing softer sales of their premium brands as Nigerians now prefer cheaper alcohol.
10. NNPC announced last week that it had increased Petroleum Products Importation to ensure that the supply of Premium Motor Spirit (petrol), Automotive Gas Oil (diesel), and Dual Purpose Kerosene, remained ahead of demand. They claimed to have imported about six additional cargoes for a national petrol sufficiency of over 32 days; immediate importation of three additional AGO cargoes before the end of this month; and an order for 250 trucks per day loading of AGO and DPK from the three refineries in Port Harcourt, Kaduna and Warri. Each PMS cargo currently imported by the NNPC is about 37,000 tonnes. Sources reveal NNPC is the sole supplier of products in Nigeria today as most marketers have abandoned imports due forex issues. NNPC also reported a loss of N197 billion for the year ended December 2016. N152 billion of the losses was from its CHQ.
11. Last week, the NNPC also said it would convert the $144 million Premium Motor Spirit (PMS) or petrol foreign exchange (forex) intervention to Automative Gas Oil (AGO) or diesel. The it claimed is to obtain an AGO forex intervention to marketers as well as Depot and Petroleum Products Marketers Associations (DAPPMAN) from the Central Bank of Nigeria (CBN).
12. Newly listed MED-VIEW Airline announced plans to expand operations to other operations to Francophone countries within West Africa. The Managing Director Alhaji Muneer Bankole explained this in an interview in Lagos. Bankole said the airline would expand its operations to Dakar (Senegal), Conakry (Guinea) and Abidjan (Cote D’Ivoire) in the next two months, noting that the airline has already began Lomé (Togo) route. Bankole said that beginning from the next quarter of 2017, Med-View would begin the Lagos-Dubai route, which has been in pipeline for over two years while the Baltimore, Washington DC in United States is also on the card. These announcements are purely targeted at potential investors who they are targeting in their upcoming IPO.
13. Access Bank divested from Stanbic IBTC Pensions last week. Stanbic IBTC Pensions has a net asset of about N17.8 billion. Access Bank’s stake in the net assets is about N3.5 billion. ARM opined that the value of the sales could be as high as N7 billion. I wrote a recent analysis of 4 bank stocks including Access Bank. I’m projecting that the share price could hit N7.5 cum div.
14. In a related development, foreign investors, Allan Gray from South Africa informed Bloomberg last week that they had taken an increased position in Tier 1 banks, Access Bank and Zenith Bank. They claimed despite the capital controls imposed by the CBN they still to see “a lot of value in Nigerian banks.” According to them, despite the bad debts hanging over the sector, most banks, particularly tier 1 banks are likely to survive.
14. Still on banking related news, Fitch issued new ratings for about 10 Nigerian banks. According to Fitch, 4 of the banks, Zenith, GTB, Access Bank and Diamond Bank all saw their outlook revised to negative in line with Nigeria’s outlook which was similarly revised to negative (B+) last week.
15. United Capital released its 2016 full year results and as expected impressed investors by declaring mouthwatering dividends. The company reported a profit after tax of N2.7 billion representing a 176% increase compared to the year before. Dividend was also impressively 50 kobo per share representing a 42% increase compared to 35 kobo per share paid a year earlier.
16. UACN Properties Plc aka UPDC issued a profit warning to its shareholders and investors at large on Thursday. A profit warning in layman’s English refers to when companies inform investors that they are expecting to report poor earnings. Poor earnings could be a profit that is significantly lower than the year before or at worst an outright loss. According to the company’s press release it was expecting to report “materially lower earnings” in 2016 due to losses incurred in certain projects and “impairments of investment” in one of their “joint venture projects”. The company also blamed rising financial cost, foreign exchange losses and negative performance of the hotel asset as the reason. UPDC owns the Golden Tulip hotel in Festac. The company reported a pre-tax profit of N132 million in the first 9 months of 2016. It reported a loss of N110 million in the corresponding period in 2015.
17. Pharma-Deko Plc asked a Federal High Court in Lagos to wind-up Guinness Nigeria Plc over a debt of N175,699, 317.99 it claims it is being owed. It appears Pharmadeko entered a canning agreement with Guinness Nigeria Plc which the latter eventually breached. They did not provide reasons why the contract was breached. Upon breaching the contractual agreement, the matter went into arbitration and it was resolved that Guinness pays a sum of N175.6 million to Phamadeko. Pharmadeko is apparently now requesting that Guinness be liquidated because they are yet to receive the money. Interestingly, Guinness did not disclose this matter in its interim report for the period ended December 2016. Guinness shot back last week claiming the money was a drop in the bucket when compared to their revenue and net assets. Guinness has a market value of N91.7 billion.


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