Stock Market Tips For Nigerians

my question was on DSR man. see what u think

@omoba

on transcorp, i don talk am say dat one na Ndid herself dey control am  

but lets say for arguents sake it is one that obeys TA then it is set to go down. Hanging man after uptrend, not cool. interestingly though, the other indicators are quite positive u know, althugh the MACD nad the slow stochastic are beginning to show signs of leveling out

My brother - thank you o jare,  Oga pumping go soon commot koboko, take flog me - as i no dey hear word,  but because of bear, it is safer to stay with the fundals - on the next bull run, i go join well well.

@savvylanre

make i post the chart for u, i dey come, 2 minutes

i know, know sey you wan make i put chart too,  see me see wahala o. Na who talk sey make i open my mouth, i don enter trouble tonight o,

Topgun: Does it work for you that I post the charts that I'm interested in and you provide the commentary with your replies? I have Betaglass, Dunlop, Livestock, Ikeja Hotels (already posted earlier) and  ABC.

What sayest thou?

I saw that, lol

for red star?

u are correct. it is trending negative

Dat being the case. doesnt it mean it will take a few days to start seeing a positive reversal on other indicators inclusive?

Cheexy: Dem dey kampe o. I hope u don reserve my seat for your coy? I no gree nothin less

No doubt,  u go get controlling shares sef. Have a great weekend ahead

@aktopgun
I have asked a friend to buy the book. Thanks again

Off to bed

Off the hook!Savvy,Texas,hHendric,loma,guys. . . You made it easy for me.Thanks.

@Cheexy

No hard feelings

For those interested: Wed 13 February: The Independent


Why Some Banks May Reconstruct Their Shares


By Kingsley Ighomwenghian,Senior Correspondent

The year 2007 is several weeks gone by, but the echoes of the many events that made those 12 months pleasantly memorable, especially for the Nigerian economy and particularly the capital market, would continue to be subject of discussion at several forums for some time to come.

One of such was the spate of capital raising efforts undertaken by players in the nation’s banking industry, which yielded almost N1.5 trillion, most of which was to enable the banks compete favourably for space and size. So interesting was the scenario for most observers that most of the public offerings during the 12- month period were hugely over subscribed, resulting in returned moneys to several investors- both local and foreign. Such was the success level that there is the now popular thinking today that most of the banks may sooner than later have to engage in share reconstruction as their registers have become bogus. The argument for this remains unchanged, that it would enable improved management of the register of shareholders of these banks, apart from enhancing the earning capacity of the banks.

Many of the banks, including those that have reconstructed their shares may have to repeat the exercise. The registers became bogus after the directors of these banks, overwhelmed by the level of success of their offerings and their desire to keep most of the funds raked into their vaults. The volume of shares outstanding in the register of the banks is now so high that many of their shareholders, especially those who are now used to dividend and bonus shares may no longer get scrip issues under the present arrangement.

Analysts at Meristem Securities Limited, in a recent report to clients agree. The report noted: "We are of the opinion that a general share reconstruction scheme is inevitable and indeed imminent for banks in order to make their earnings more attractive to investors and maintain excellent share performance in the stock market."

As They Stand Today

First Bank

If there was a board that was surprised at the level of subscription, it was that of 114-year old First Bank, which undertook what was tagged: "Elephant Offer" for N100 billion through a combination of public subscription and right issue. At the end of the exercise, the bank, in a statement last December, said that "the rights issue, with proceeds of circa N65 billion, was over 140 per cent subscribed while the public offer, with proceeds of circa N400 billion, was over 750 per cent subscribed, making it the largest subscription in the Nigerian capital market history."

What the bank did not say is that the exercise increased its shares in issue to about 19.89 billion ordinary shares. This means that for First Bank to recommend a dividend of 100 kobo per shares, this year (assuming the new shareholders would share in the dividend payout at the end of its year ended March 31), must record a net profit in excess of N19 billion. According to the un-audited nine-month result released in January, profit after tax rose from N14.82 billion or 74.9 per cent to N25.92 billion, an indication that the bank is set to surpass its offer forecast for the 2007/2008 financial year.

This may be one factor that gives analysts at Sterling Capital the confidence to assure their clients that banking stocks, just like their cousins in the insurance sub-sector, "would remain the toast of investors in view of expected strong performance. Nigerian banks in particular are expanding rapidly in West Africa as well as Europe and America, while many are being listed on foreign stock exchanges. Hence in addition to the growing opportunities in the domestic market, performance will be boosted by foreign subsidiaries, coupled with the associated linkage and scale benefits. The insurance sector is now set for further capitalisation to strengthen its underwriting capacity and position it to play in the very lucrative energy and maritime sectors, which have hitherto been the exclusive preserve of foreign firms."

Oceanic Bank International

If that of First Bank is high, the Oceanic Bank is expected to have a swell time managing its register of 22.222 billion ordinary shares from a pre-offer figure of 11.642 billion units. The volume outstanding in the name of the bank rose to that extent also, at the end of its very successful offering almost a year ago, which significantly raised its capital base to an all high of N222.48 billion in contrast to N37.67 billion as at the preceding financial year.

The import of this is that the bank would need more than N22.222 billion net profit to pay a dividend per share of 100 kobo to shareholders, this may not be unconnected with the decision by the bank to exclude those who bought in during its last public offering from partaking of its 102 kobo per share dividend recommended at the end of its full year on September 30, 2007.

IBTC Chartered Bank

The bank, which last year became a subsidiary of South African giant Standard Bank, following the acquisition of 50.1 per cent, currently has 18.75 billion shares in issue.

Intercontinental Bank

The bank, the first to hit the $1 billion capital base mark, successfully raised its shareholders’ funds from N53.9 billion, following the conclusion of a very successful offer by way of rights and for subscription to the public to raise a net proceeds of N47.6 billion from the primary market is still been awaited. Helped by this huge success of its offer, the bank’s capital base rose to about N133.9 billion.

Zenith Bank

With about 11.58 billion shares in issue, the bank is currently in the market for fresh N130 billion through an offer of 1.763 billion ordinary shares of 50 kobo each for subscription at N38.90, in addition to 1.654 billion ordinary shares of 50 kobo each, offered to existing shareholders of the bank at N36.90 each. As if to indicate that the offer is over-subscribed, the bank some weeks ago held an extra-ordinary general meeting seeking shareholders’ nod for an increase in its authorized share capital. This is in a bid to allot some of the shares from the over-subscription. An additional five billion shares to its existing volume would raise its total to about 16 or 17 billion ordinary shares.

Ecobank Nigeria

This also the situation with Ecobank Nigeria, which three years ago did a share split, offering a new share for every one held by existing shareholders.

The bank, before now was the one with the biggest share outstanding, of over 21 billion shares in issue, before it was overtaken by Oceanic Bank.

The imperative for a reconstruction of the bank’s shares was emphasised some months ago by Sunny Nwosu, national co-coordinator, Independent Shareholders Association of Nigeria who argued: "The volume of shares in issue (of Ecobank Nigeria) is not good enough." A reconstruction, he believed, would enhance the earnings capacity of the shares and the directors’ capacity to offer better dividend regularly. The exercise, he told a gathering would also ensure better capital appreciation for shareholders as a result of growth in Ecobank Nigeria’s share price. The bank is currently in merger talks with Sterling Bank Plc and according to sources, both banks are making steady progress, aside from the fact that this, unlike the previous one is not regulatory induced.

Sterling Bank

Sterling Bank’s board may have agreed on the need to reconstruct its shares since, according to Mr. Babatunde Dabiri, immediate past managing director/chief executive, it is in line with the scheme of merger during the consolidation exercise.

He told shareholders during the annual general meeting last year that the reconstruction exercise will make the 21 billion ordinary shares outstanding in the name of the bank better managed. This, he said, would also ensure worthwhile returns on investment and for the bank to pay better dividend on its shares.

The reconstruction, Dabiri continued, is necessary at this time when Sterling Bank needs "to raise more money in order to remain competitive and survive" in an environment where competition is daily becoming fiercer.

As if to assure them further, he stressed: "If you want to strengthen the value of you shares, you have got to do certain things. A majority of the shares of the bank are held by (members of) the board, they will not destroy their bank. We are not crazy. It is in your interest that we do it (the share capital reconstruction exercise)."

Spring Bank

Immediately after the conclusion of its merger, the first major activities of the then directors of Spring Bank was an extra-ordinary general meeting in Lagos, which approved the bid to reconstruct its 42.11 billion units of post-merger shares. The meeting approved consolidation of the shares into 5.26 billion shares of N1.00 each. The shareholders further approved that the consolidated shares be subdivided into 10.52 ordinary shares of 50 kobo each and that the reconstructed shares be allotted in the ratio of one for every four held by them as at that date.

The reconstructed 10.52 ordinary shares of 50 kobo each were to be revalued in accordance with the ratio of reconstruction, subject to regulatory consents, and be listed on the Nigerian Stock Exchange.

Giving that the bank plans to raise fresh capital soon after the need to determine the level of its financial health now being undertaken by the Sulleyman Ndanusa-led management, the bank may need to soon reconstruct its shares to make them nimble. The bank is expected to intimate investors of the true position of things in the coming weeks, as auditors have concluded work on the books of the legacy banks and are now consolidating the group account. Ndanusa told hinted a fortnight ago that some of the legacy banks have before now no audited account as far as 2005.

In the long term, buying bank stocks seems the best option for bumper returns in the stock market. Pt no pot other sector is declaring the type of returns like the banks. Pt no pot other sector is expanding into many countries like the Nigerian banks. The operating environment is very much in their favor.

Right now, due to on on combination of factors, bank stocks are in low demand by investors seeking the 'quick buck'. In the long run however, some bank stocks will close this year in very high prices. We are getting close to seeing a N100+ bank stocks, especially if they reconstruct their shares. Some may not reconstruct but stop giving bonuses so as not to dilute thier earnings.

In conclusion, long timers should stay in bank stocks like 70%. This is my own submission.

@Savvy, you still dey regret selling your UBN? Why now?

People wey no dey sleep. Saw this disclaimer in the Guardian about Afroil and this link in the link: http://www.punchontheweb.com/Articl.aspx?theartic=Art200803211564076 today in the Punch about NSE denial of SEC actions against Capital Oil and Afroil.
Afroil Plc is alive and well

SIR: Our attention has been drawn to the write-up titled "Moribund companies as a source of worry for investors" with a rider "Senate committee halts recapitalisation exercise" on page 29 of Monday, March 17, 2008 edition of your newspaper. The said article carried the by-line of Gbenga Agbana, your Capital Market reporter.

In the article, Mr. Agbana mentioned our company, Afroil Plc as one of t he "Moribund Companies, which have enjoyed tremendous capital appreciation." Nothing can be farther from the truth than this as Afroil Plc, the first indigenous petroleum products marketing company to be quoted on the Nigerian Stock Exchange since 1990 has bounced back to life under a new management after its management crisis which made it to go under for restructuring.

It is of great concern that Mr. Agbana just relied on the record of what happened in the past to misinform the readers of your esteemed newspaper. In his attempt to blackmail Afroil Plc, he threw investigative journalism, which is a hallmark of a good journalist to the wind.

Mr. Agbana is advised to always come to our Corporate Headquarters to check for any information about the company before rushing to the press.

Yakubu Luke.
Group Head, Business and Corporate Relations,
Afroil Plc,
Lagos