Re: Nigerian Stock Exchange Market Pick Alerts by Zagee: 11:11pm On Mar 29 |
SonofElElyonRet:
So there's excess liquidity in Nigeria![](/faces/huh.png) Guess you mean they are still on their drive for cashless society As at last count 95trillion, but growth slowed MOM. Now, we hope majority are in productive ventures? |
Re: Nigerian Stock Exchange Market Pick Alerts by chillykelly86(m): 4:36am On Mar 30 |
Frangel: Sometimes, our policy makers come up with positions that look somehow. Why will the CBN discount retained earnings of banks as part of their capital? I can understand some other/statutory reserves, but not retained earnings. Retained earnings form part of the interest of shareholders, which has been left to help grow the banks faster. This policy would require total fresh injection of over N4trillion as capital (long-term) for the existing banks to retain their licences/status as at date. Does this recapitalisation drive guarantee attainment of the utopia of a US$1trillion-economy?
Some banks already have negative shareholders' fund. This policy does not take into cognisance such precarious position, but just wants the bank to add funds to its share capital/premium to achieve the new target, which might still leave the banks retain licence with negative s/holders fund. Some magic! I think CBN should do more on the supervisory and regulatory front. A lot of benchmarks exist, so the banks that want to play bigger, within the regulatory frameworks, should plan and implement strategies to meet higher capital demands, not this blanket approach to forcing every bank to be big.
As it stands, the least capital injection required by a member of the FUGAZ group is about N230billion (Zenith Bank). Unity Bank with a negative s/holders' fund of N190billion, requires just about N184billion new capital injection to retain its licence (will still have negative N6billion) based on this recapitalisation policy. The new policy needs rethinking through. Does not look well formulated. Retained earnings, at least, needs recognition as existing capital for the banks.
My opinion sha. I totally agree with you on this. They could still have set a higher recapitalization threshold but excluding retained earnings may lead to shortchanging existing shareholders. The retained earnings are shareholders' funds. Its just like someone waking up one day and saying your savings in a bank are not part of your net worth. |
Re: Nigerian Stock Exchange Market Pick Alerts by onegentleguy: 5:16am On Mar 30 |
Frangel: Sometimes, our policy makers come up with positions that look somehow. Why will the CBN discount retained earnings of banks as part of their capital? I can understand some other/statutory reserves, but not retained earnings. Retained earnings form part of the interest of shareholders, which has been left to help grow the banks faster. This policy would require total fresh injection of over N4trillion as capital (long-term) for the existing banks to retain their licences/status as at date. Does this recapitalisation drive guarantee attainment of the utopia of a US$1trillion-economy?
My opinion sha. chillykelly86:
I totally agree with you on this. They could still have set a higher recapitalization threshold but excluding retained earnings may lead to shortchanged existing shareholders. The retained earnings are shareholders' funds. Its just like someone waking up one day and saying your savings in a bank are not part of your net worth. Honestly, your concerns are valid! But look at it this way; If the component of RE (retained earnings) is included, the proportion of equity financing needed to boost the banks share capital to acceptable levels in line with current economic realities will be insufficient. Some class of share capital particularly RE, could imply incorporating certain fragments of "risky asset" that are deemed unsustainable. (ref: that from the recent spate of Fx revaluation gains) RE can be an indirect beneficiary of these sought of gains. While this takes nothing away from the RE position of shareholders (that's sacrosanct), it would in this instance, be better not to incorporate it. Again, by excluding these components, the CBN can seek to find the right balance on the "dislocation" between Naira asset pricing and the present economic reality. DBMs are key to finding that balance! These key points underscores the need for banks to raise enough funds. ...they really need to and like I once said, it's actually long overdue. To give this a bit of context; compare the Fx-N differential/PPP between the last time we had a banking sector recapitalization in 2006 (during the Soludo era) and now. ...a brief; 2006: Minimum cap requirement was N25B @ N130+/$... which is approx $193M. 2024: Proposed minimum cap requirement of N500B @ N1,300+/$ (a 9x multiple from 2006)... will be less $380M. So the actual raise in capital base will essentially be by a multiple of 2x (380/193) when infact our currency has depreciated by over 9x (i.e 1-1300/1300) within the same timeframe. Notice how I had only used N500B, the min cap requirement for DBMs with international spread (mainly the stronger banks) for this example. Now imagine if we zoom in on the smaller banks. This should put to bed the debate in some quarters on whether the proposed minimum capital is too big. But for anything, I think it's even a bit small. Now imagine if the CBN allows for the incorporation of other components aside paid-up capital and share premium. That would reduce the difference between what is required and what they have and imply little or no capital raise, when in reality, the banks actually need more funding... otherwise, the economy "might have to pay for it" sooner or later. There's a reason no Nigerian bank is among the top 10 largest banks in the African continent. So much for the self acclaimed "African giant"! As at 2023, the 10th on the list, South Africa's Investec Bank has a capital base of near $30B. Not sure if all the quoted banks in Nigeria can match that! Top on the list is also South Africa's Standard Bank (group) with a capital base of $172.9B. (South Africa dominates the list with no fewer than 5 banks in the top 10) Part of the reason for the unworthy cap base of Nigerian banks can be attributed to the many years of underpricing of banking equities. But then again, we know it's broadly a deliberate "set-up" so certain cooperate criminals in the financial services industry and their cronies can continue to thrive. Now banking coys are surging in price. Perhaps the wide gap between RV & MV could close as they embark on their journey to real price discovery but whether that will be sustained or if it's just another flash in the pan occasioned by the planned recap exercise will be a different kettle of fish. On a side note, I align with those who also see the recap policy as a strategic move by the CBN to continually tighten system liquidity (justified by the recent high rates in the FI market) and reduce Fx volatility by closing the gap btw capital flight and Fx inflow. Perhaps the Naira could strengthen a bit more from current level and hopefully find a balance around it... which should help with the long desired exchange rate clarity and spur confidence towards Naira assets. Overall, I think the policy spells good for the economy and by extension, the market. Aside banking coys, some select asset names will do well! CAVEAT: The entirety of this post is merely the view of the writer. ...no part of it should be inferred as an investment advice/guide. Due diligence still applies as always. It is well 11 Likes 1 Share |
Re: Nigerian Stock Exchange Market Pick Alerts by ositadima1(m): 6:53am On Mar 30 |
onegentleguy:
Honestly, your concerns are valid! But look at it this way; If the component of RE (retained earnings) is included, the proportion of equity financing needed to boost the banks share capital to appreciable levels in line with current economic realities will be insufficient.
Some class of share capital particularly RE, could imply the incorporation of certain fragments of "risky asset" that can sometimes be unsustainable. (ref: that from the recent spate of Fx revaluation gains) RE can be an indirect beneficiary of these sought of gains. While this takes nothing away from the RE position of shareholders (that's sacrosanct), it would in this instance, be better not to incorporate it.
Again, by excluding these components, the CBN can seek to find the right balance on the "dislocation" between Naira asset pricing and the present economic reality. DBMs are key to finding that balance! These key points underscores the need for banks to raise enough funds. ...they really need to and like I once said, it's actually long overdue.
To give this a bit of context; compare the Fx-N differential/PPP between the last time we had a banking sector recapitalization in 2006 (during the Soludo era) and now. ...a brief; 2006: Minimum cap requirement was N25B @ N130+/$... which is approx $193M. 2024: Proposed minimum cap requirement of N500B @ N1,300+/$ (a 9x multiple from 2006)... will be less $380M. So the actual raise in capital base will essentially be by a multiple of 2x (380/193) when infact our currency has depreciated by over 9x (i.e 1--130/1,300) within the same timeframe.
Notice how I had only used N500B, the min cap requirement for DBMs with international spread (mainly the stronger banks) for this example. Now imagine if we zoom in on the smaller banks. This should put to bed the debate in some quarters on whether the proposed minimum capital is too big. But for anything, I think it's even a bit too small. Now imagine if the CBN allows for the incorporation of other components aside paid-up capital and share premium. That would reduce the difference between what is required and what they have and imply less capital raise, when in reality, the banks actually need more... otherwise, the economy "might have to pay for it" sooner or later.
There's a reason no Nigerian bank is among the top 10 largest banks in the African continent. So much for the self acclaimed "African giant"! As at 2023, the 10th on the list, South Africa's Investec Bank has a capital base of near $30B. Not sure if all the quoted banks in Nigeria can match that! Top on the list is also South Africa's Standard Bank (group) with a capital base of $172.9B. (South Africa dominates the list with no fewer t than 5 in the top 10) Part of the reason for the unworthy cap base of Nigeria banks can be attributed to the many years of underpricing of banking equities. But then again, we know it's broadly a deliberate "set-up" so certain cooperate criminals in the financial services industry and their cronies can continue to thrive. Now banking coys are surging in price. Perhaps the wide gap between RV & MV will close on their journey to real price discovery but whether that will be sustained or if it's just another flash in the pan occasioned by the planned recap exercise would be a different kettle of fish.
On a side note, I align with those who also see the recap policy as a strategic move by the CBN to continually tighten system liquidity (justified by the recent high rates in the FI market) and reduce Naira volatility by closing the gap btw capital flight and Fx inflow. Perhaps the Naira could strengthen a bit more from current level and hopefully find a balance around it... which should help with the long awaited clarity in exchange rate and spur confidence towards Naira assets.
Overall, I think the policy spells good for the economy and by extension, the market. Aside banking coys, some select asset names will do well!
CAVEAT: The entirety of this post is merely the view of the writer. ...no part of t should be inferred as an investment advice/guide. Due diligence still applies as always.
It is well If Airtel Africa is buying back its own shares from retained earnings, why can't banks raise bonus issues and convert a portion of their retained earnings into paid-up capital and share premium capital? My understanding is that there were regulations on overall capitalization, but now the CBN is focused on paid-up capital and share premium capital. I do not perceive any reduction in capitalization; instead, it would be a restructuring by decreasing one account and increasing another. |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 6:59am On Mar 30 |
ttmax09: It's simple, they actually are trying to mop up excess money in circulation, and also trying to attract fresh inflow of USD into the economy. Using the recapitalization policy to achieve these goals is a mismatch, to me. Capital here is more long term than short/medium term. 2 Likes |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 7:10am On Mar 30 |
chillykelly86:
I totally agree with you on this. They could still have set a higher recapitalization threshold but excluding retained earnings may lead to shortchanged existing shareholders. The retained earnings are shareholders' funds. Its just like someone waking up one day and saying your savings in a bank are not part of your net worth. Exactly. Would the CBN allow the banks pay out most (if not all) of it's retained earnings (RE) to existing shareholders as dividends? This way, new investors would have their shares fairly ranked with existing. Mind you I have only pointed out RE ( which is distributable). Other reserves exist. |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 7:30am On Mar 30 |
onegentleguy:
Honestly, your concerns are valid! But look at it this way; If the component of RE (retained earnings) is included, the proportion of equity financing needed to boost the banks share capital to appreciable levels in line with current economic realities will be insufficient.
Some class of share capital particularly RE, could imply the incorporation of certain fragments of "risky asset" that can sometimes be unsustainable. (ref: that from the recent spate of Fx revaluation gains) RE can be an indirect beneficiary of these sought of gains. While this takes nothing away from the RE position of shareholders (that's sacrosanct), it would in this instance, be better not to incorporate it.
Again, by excluding these components, the CBN can seek to find the right balance on the "dislocation" between Naira asset pricing and the present economic reality. DBMs are key to finding that balance! These key points underscores the need for banks to raise enough funds. ...they really need to and like I once said, it's actually long overdue.
To give this a bit of context; compare the Fx-N differential/PPP between the last time we had a banking sector recapitalization in 2006 (during the Soludo era) and now. ...a brief; 2006: Minimum cap requirement was N25B @ N130+/$... which is approx $193M. 2024: Proposed minimum cap requirement of N500B @ N1,300+/$ (a 9x multiple from 2006)... will be less $380M. So the actual raise in capital base will essentially be by a multiple of 2x (380/193) when infact our currency has depreciated by over 9x (i.e 1--130/1,300) within the same timeframe.
Notice how I had only used N500B, the min cap requirement for DBMs with international spread (mainly the stronger banks) for this example. Now imagine if we zoom in on the smaller banks. This should put to bed the debate in some quarters on whether the proposed minimum capital is too big. But for anything, I think it's even a bit too small. Now imagine if the CBN allows for the incorporation of other components aside paid-up capital and share premium. That would reduce the difference between what is required and what they have and imply less capital raise, when in reality, the banks actually need more... otherwise, the economy "might have to pay for it" sooner or later.
There's a reason no Nigerian bank is among the top 10 largest banks in the African continent. So much for the self acclaimed "African giant"! As at 2023, the 10th on the list, South Africa's Investec Bank has a capital base of near $30B. Not sure if all the quoted banks in Nigeria can match that! Top on the list is also South Africa's Standard Bank (group) with a capital base of $172.9B. (South Africa dominates the list with no fewer t than 5 in the top 10) Part of the reason for the unworthy cap base of Nigeria banks can be attributed to the many years of underpricing of banking equities. But then again, we know it's broadly a deliberate "set-up" so certain cooperate criminals in the financial services industry and their cronies can continue to thrive. Now banking coys are surging in price. Perhaps the wide gap between RV & MV will close on their journey to real price discovery but whether that will be sustained or if it's just another flash in the pan occasioned by the planned recap exercise would be a different kettle of fish.
On a side note, I align with those who also see the recap policy as a strategic move by the CBN to continually tighten system liquidity (justified by the recent high rates in the FI market) and reduce Naira volatility by closing the gap btw capital flight and Fx inflow. Perhaps the Naira could strengthen a bit more from current level and hopefully find a balance around it... which should help with the long awaited clarity in exchange rate and spur confidence towards Naira assets.
Overall, I think the policy spells good for the economy and by extension, the market. Aside banking coys, some select asset names will do well!
CAVEAT: The entirety of this post is merely the view of the writer. ...no part of t should be inferred as an investment advice/guide. Due diligence still applies as always.
It is well I often wonder why we think we have to declare by fiat a very high minimum capital to be employed in our banks and this amount is referenced to the US$. If the Naira strengthens significantly, shouldn't there be a downward review? Generally, a business should inject capital to the extent of its strategic plans and capacity to employ same efficiently. After the last round of recapitalization by the banks, they had so much more than they had plans and capacity to efficiently deploy. What followed? Many were readily offering credit is diverse forms: 'Margin' facilities were practically hawked, NSE abracadabra, etc. A key problem with Nigeria's financial ecosystem (especially with banks) is effective regulations and supervision. Not these fire brigade one-measure-fits-all approach. 1 Like |
Re: Nigerian Stock Exchange Market Pick Alerts by ttmax09(m): 8:56am On Mar 30 |
[quote author=SonofElElyonRet post=129175520] So there's excess liquidity in Nigeria ![](/faces/huh.png) Guess you mean they are still on their drive for cashless societ/quote] The 22 trillion Naira in ways and means printed is still out there, they need to find a way to mop it up. |
Re: Nigerian Stock Exchange Market Pick Alerts by Bizibi(m): 9:05am On Mar 30 |
I know everyone is analysing on the recapitalization and the bank capital base but are Nigeria banks are among the best in the world ![](/faces/huh.png) Are they progressing in this age/advance era? Forget about the inflow of money they make on nse but in reality are banks in Nigeria making efforts to compete with the best. The emefiele naira policy kind of exposed certain things about banks in Nigeria. 3 Likes |
Re: Nigerian Stock Exchange Market Pick Alerts by onegentleguy: 9:45am On Mar 30 |
ositadima1:
If Airtel Africa is buying back its own shares from retained earnings, why can't banks raise bonus issues and convert a portion of their retained earnings into paid-up capital and share premium capital?
My understanding is that there were regulations on overall capitalization, but now the CBN is focused on paid-up capital and share premium capital. I do not perceive any reduction in capitalization; instead, it would be a restructuring by decreasing one account and increasing another. Not sure anyone has asserted that there'll be a reduction in capitalization. A reduction in share capital component would've been from the share premium A/c if a bonus issue were allowed as a mode of increasing their issued share capital. |
Re: Nigerian Stock Exchange Market Pick Alerts by onegentleguy: 9:57am On Mar 30 |
Frangel:
I often wonder why we think we have to declare by fiat a very high minimum capital to be employed in our banks and this amount is referenced to the US$. If the Naira strengthens significantly, shouldn't there be a downward review?
Generally, a business should inject capital to the extent of its strategic plans and capacity to employ same efficiently. After the last round of recapitalization by the banks, they had so much more than they had plans and capacity to efficiently deploy. What followed? Many were readily offering credit is diverse forms: 'Margin' facilities were practically hawked, NSE abracadabra, etc.
A key problem with Nigeria's financial ecosystem (especially with banks) is effective regulations and supervision. Not these fire brigade one-measure-fits-all approach. One straightforward answer to the part in bold would be because Nigeria's reserve is in dollars and historically, there's always a "strain" with managing it due to the persistently lopsided outflow-inflow imbalances occasioned by a largely unproductive import-driven economy. That means your Naira consistently comes under pressure and when it does, your banks will need to "close the gap" created by that pressure. Your statement with the 2nd paragraph is in order, but a bank is not just a business. ...it's capital/liquidity state is much more pivotal to an economy hence the need to, where necessary, take certain stringent steps which may even be unfamiliar ones. Pls note that am not taken sides with the CBN. ...I am not against the inclusion of RE as a mode of boosting issued share capital. Am only saying that I understand that the situation requires a bit of an unfamiliar approach to avoid certain fragments of assets that are deemed unsustainable and which the RE and a few other share capital component houses. Regards |
Re: Nigerian Stock Exchange Market Pick Alerts by ositadima1(m): 10:08am On Mar 30 |
onegentleguy:
Not sure anyone has asserted that there'll be a reduction in capitalization. A reduction in share capital component would've been from the share premium A/c if a bonus issue were allowed as a mode of increasing their issued share capital. Excuse me, but is your definition of security premium account different from the one I know, which is the excess amount received when a company issues new shares at a price higher than the face value? Also, in my understanding, retained earnings are mostly the excess money accumulated from past earnings. I don't see connection between the two accounts. In my opinion, if the CBN is insisting on not allowing the use of retained earnings (based on my understanding), then banks should better embark on legal action. You cannot dictate how earnings should be used; they can be used at the company's discretion, including to buy shares if they want. |
Re: Nigerian Stock Exchange Market Pick Alerts by Mpeace(m): 10:13am On Mar 30 |
Transcorp hotel of 97, paying dividend of only 20kobo. |
Re: Nigerian Stock Exchange Market Pick Alerts by onegentleguy: 10:43am On Mar 30 |
ositadima1:
Excuse me, but is your definition of security premium account different from the one I know, which is the excess amount received when a company issues new shares at a price higher than the face value? Also, in my understanding, retained earnings are mostly the excess money accumulated from past earnings. I don't see connection between the two accounts.
In my opinion, if the CBN is insisting on not allowing the use of retained earnings (based on my understanding), then banks should better embark on legal action. You cannot dictate how earnings should be used; they can be used at the company's discretion, including to buy shares if they want. The definition of share premium is in order but that's not the crux of the matter. The concern is on how a bonus issue relates to it and why it (bonuses) was also excluded by the apex bank. Bonuses (which is one way of increasing a coys issued/paid-up capital) can actually be paid from the share premium A/c. So a bonus issue would have brought about a reduction in the banks share premium even with an increase in paid-up capital. By implication, it (a bonus) supports one of the 2 approved/recognized capital components by the CBN but takes away from the other, hence a possible reason for its exclusion. On RE, your definition underscores the many points I highlighted in my 1st post. True, RE are excess accumulated earnings but any jack will agree that in recent times, a sizable proportion of those earnings can be deemed unsustainable (mainly arbitrage gains from Fx), and that may have also occasioned the need to exclude the RE component. Again, that unsustainability heightens when you consider the fact that a good % of these earnings were largely from non-traditional banking plays. Lots to say but I really don't have strength for long epistle. ![cool](https://www.nairaland.com/faces/cool.png) |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 11:07am On Mar 30 |
onegentleguy:
One straightforward answer to the part in bold would be because Nigeria's reserve is in dollars and historically, there's always a "strain" with managing it due to a persistently lopsided outflow-inflow imbalances occasioned by a largely unproductive import-driven economy. That means your Naira will consistently come under pressure!
Your statement with the 2nd paragraph is in order, but a bank is not just a business. ...it's capital/liquidity state is much more pivotal to an economy hence the need to, where necessary, take certain stringent steps which may even be unfamiliar ones.
Pls note am not taken sides with the CBN. ...I am not against the inclusion of RE as a mode of boosting issued share capital. Am only saying that I understand that the situation requires a bit of an unfamiliar approach to avoid certain fragments of assets that could be deemed unsustainable and which the RE and a few other share capital component houses.
Good points. But your answer in the first paragraph shouldn't be the burden of the banks. They have no control of the reserves, etc. More on the macro economic level. The bank are private enterprises, even though regulated. Regulations on single obligor, dividend distribution, etc already exist. This recap approach tends to place burdens on efficient banks and is unfavorable to existing investors. Imagine that Zenith with about N1.9trillion s/holders fund is burdened to look for fresh N230billion to inject. The dilutive effect alone? The policy has discounted the sacrifice and efforts over the years to build a successful business. But a Unity Bank, that should have lost its licence long ago, with negative N190billion position needs just fresh N184billion to retain licence (and continued protection). Is CBN encouraging/protecting failure? They should rather wake up and do more regulation. Allow the banks to grow to fit and do bigger-ticket transactions. Not capitalization by fiat. 5 Likes |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 11:12am On Mar 30 |
ositadima1:
Excuse me, but is your definition of security premium account different from the one I know, which is the excess amount received when a company issues new shares at a price higher than the face value? Also, in my understanding, retained earnings are mostly the excess money accumulated from past earnings. I don't see connection between the two accounts.
In my opinion, if the CBN is insisting on not allowing the use of retained earnings (based on my understanding), then banks should better embark on legal action. You cannot dictate how earnings should be used; they can be used at the company's discretion, including to buy shares if they want. Retained Earnings can be applied for bonus issues. Retained earnings are available for distribution to shareholders as dividends. Dividends can be paid by cash (cash dividend) or issue of additional shares (scrip dividend). Bonus shares are simply scrip dividend. |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 11:15am On Mar 30 |
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Re: Nigerian Stock Exchange Market Pick Alerts by onegentleguy: 11:31am On Mar 30 |
Frangel:
Good points. But your answer in the first paragraph shouldn't be the burden of the banks. They have no control of the reserves, etc. More on the macro economic level.
The bank are private enterprises, even though regulated. Regulations on single obligor, dividend distribution, etc already exist. This recap approach tends to place burdens on efficient banks and is unfavorable to existing investors.
Imagine that Zenith with about N1.9trillion s/holders fund is burdened to look for fresh N230billion to inject. The dilutive effect alone? The policy has discounted the sacrifice and efforts over the years to build a successful business. But a Unity Bank, that should have lost its licence long ago, with negative N190billion position needs just fresh N184billion to retain licence (and continued protection).
Is CBN encouraging/protecting failure? They should rather wake up and do more regulation. Allow the banks to grow to fit and do bigger-ticket transactions. Not capitalization by fiat. I was smiling reading this. ![grin](https://www.nairaland.com/faces/grin.png) Not for a lack of logic and reasonableness in your post, but because it would seem you've assumed the Nigerian state to be an ideal one. I understand you completely. But just know that this country can be a painfully funny place. This is why I call it a portfolio country... where one needs to consistently apply wisdom and discernment by looking to "bet for or against the system" to grow. Ideally, this should not have been the way to go but there are just too many structural deficiencies here, especially from the fiscal end. Nigeria is nothing but a portfolio country and it needs you to FOCUS more on your portfolio to benefit from her! We just need to seek to take advantage of the opportunities that this recap exercise would present/create. It is well 1 Like |
Re: Nigerian Stock Exchange Market Pick Alerts by onegentleguy: 11:38am On Mar 30 |
Frangel:
Bonus shares can be issued from retained earnings. Scrip dividend. I know. I had to highlight the share premium A/c as a would-be mode of increasing issued/paid-up capital via bonuses because of the exclusion of the RE component, before stating that the apex bank may have also excluded bonuses because it takes away from one of the 2 recognized share capital component (share premium) while adding to the other. (paid-up capital) It is well |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 11:48am On Mar 30 |
onegentleguy:
I was smiling reading this. ![grin](https://www.nairaland.com/faces/grin.png) Not for a lack of logic and reasonableness in your post, but because it would seem that you have assumed the Nigerian state to be an ideal one.
I understand you completely. But just know that this country can be a painfully funny place. This is why I call it a portfolio country... where one needs to consistently apply wisdom and discernment by looking to "bet for or against the system" to grow. Ideally, this should not have been the way to go but there are just too many structural deficiencies in the system especially from the fiscal end.
We just need to seek to take advantage of the opportunities that this recap exercise would create. Nigeria is nothing but a portfolio country and it needs you to FOCUS more on your portfolio to benefit from it!
It is well True. Looking out to maximize my benefit, anyways. 1 Like |
Re: Nigerian Stock Exchange Market Pick Alerts by Frangel: 11:50am On Mar 30 |
onegentleguy:
I know.
I had to highlight the share premium A/c as a would-be mode of increasing issued/paid-up capital via bonuses because of the exclusion of the RE component, before highlighting that the apex bank may have also excluded bonuses because it takes away from one of the 2 recognized share capital component (share premium) while adding to the other. (paid-up capital)
It is well Ok. 👍🏿 |
Re: Nigerian Stock Exchange Market Pick Alerts by KarlTom: 12:36pm On Mar 30 |
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Re: Nigerian Stock Exchange Market Pick Alerts by KarlTom: 12:51pm On Mar 30 |
![grin](https://www.nairaland.com/faces/grin.png) Mpeace: Transcorp hotel of 97, paying dividend of only 20kobo. |
Re: Nigerian Stock Exchange Market Pick Alerts by chipa: 12:52pm On Mar 30 |
onegentleguy:
I was smiling reading this. ![grin](https://www.nairaland.com/faces/grin.png) Not for a lack of logic and reasonableness in your post, but because it would seem that you have assumed the Nigerian state to be an ideal one.
I understand you completely. But just know that this country can be a painfully funny place. This is why I call it a portfolio country... where one needs to consistently apply wisdom and discernment by looking to "bet for or against the system" to grow. Ideally, this should not have been the way to go but there are just too many structural deficiencies here, especially from the fiscal end.
Nigeria is nothing but a portfolio country and it needs you to FOCUS more on your portfolio to benefit from it! We just need to seek to take advantage of the opportunities that this recap exerc[b][/b]ise would present/create.
[/color][color=#990000][color=#000099][/color]
0022965843[b][/b][/b][b][b][/b][0022965843][/b]0022965843
I have looked at your argument for and against the increase capital base vis a vis exclusion of shareholders fund. In my own assessment I think it would have been better to increase the threshold and allow but the share capital and retain fund be part of the capital base. However central bank know what they want to achieve, every other discussion is academic discuss.[url][/url] I believe the main reason for all of us to be in the stock market is to create or increase value. This recapitalization exercise present such opportunity. Shine your eyes and make your money.
It is well |
Re: Nigerian Stock Exchange Market Pick Alerts by Ginalex(f): 1:05pm On Mar 30 |
Mpeace: Transcorp hotel of 97, paying dividend of only 20kobo. Abysmal ![cry](https://www.nairaland.com/faces/cry.gif) |
Re: Nigerian Stock Exchange Market Pick Alerts by SonofElElyonRet: 1:54pm On Mar 30 |
Mpeace: Transcorp hotel of 97, paying dividend of only 20kobo. All hail Elumelu ! ![grin](https://www.nairaland.com/faces/grin.png) 1 Like |
Re: Nigerian Stock Exchange Market Pick Alerts by Boshins: 2:41pm On Mar 30 |
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Re: Nigerian Stock Exchange Market Pick Alerts by emmanuelewumi(m): 3:08pm On Mar 30 |
emmanuelewumi: Transcorp Hotel made EPS of 60k.
Return On Equity of 9%. Based on this it should be selling below its book value.
Transcorp Hotel currently has a PE of 162 based on its current price.
That should be the highest on NGX Transcorp Hotel. I wonder why we are surprised. If you have made good money from capital appreciation, you should have sold about 2 months ago and diversity your investment 2 Likes |
Re: Nigerian Stock Exchange Market Pick Alerts by emmanuelewumi(m): 3:31pm On Mar 30 |
emmanuelewumi:
Be careful. Transcorp hotel made a revenue of N31 billion in 2022, assuming Transcorp will make a revenue of N50 billion in 2023.
At a market capitalization of N1 Trillion, that is at a multiple of 20 compared to the revenue which is on the high side
Even BUA foods at the current price should have a market capitalization/ revenue of 10 which is high..
Price/Sale ratio of 3 and below is better depending on the industry the maximum should be 5.
At a Price/Sale ratio of 20 for Transcorp hotel, it will take 20 years for payback assuming all the revenue was used to buy the company. The current PE of Transcorp hotel should be more than 50.
Enjoy the ride but don't be caught unprepared.
It is advisable to invest with figures If you have made good profits from some stocks and it appears the figures are no longer making sense It is better to sell before dividend declaration and buyback at a cheaper price 2 Likes |
Re: Nigerian Stock Exchange Market Pick Alerts by unite4real: 3:52pm On Mar 30 |
emmanuelewumi:
If you have made good profits from some stocks and it appears the figures are no longer making sense
It is better to sell before dividend declaration and buyback at a cheaper price I cannot help but laugh how the mark down of Transcorp hotel will be like. Removing 20k from 9700k is insignificant. Unfortunately pushing the price back down is a tall mountain considering you need 100k units of which it appears the small players don't have. Transcorp hotel above N10 is not a good buy for me. So at N97, it's unthinkable 4 Likes |
Re: Nigerian Stock Exchange Market Pick Alerts by SonofElElyonRet: 4:05pm On Mar 30 |
unite4real:
I cannot help but laugh how the mark down of Transcorp hotel will be like. Removing 20k from 9700k is insignificant.
Unfortunately pushing the price back down is a tall mountain considering you need 100k units of which it appears the small players don't have. Transcorp hotel above N10 is not a good buy for me. So at N97, it's unthinkable Hope Tony does the same abracadabra with transpower.... I hold some... so far he's done it with the hotel and transcorp which by my own estimation is also over priced 1 Like |
Re: Nigerian Stock Exchange Market Pick Alerts by unite4real: 4:22pm On Mar 30 |
SonofElElyonRet:
Hope Tony does the same abracadabra with transpower.... I hold some... so far he's done it with the hotel and transcorp which by my own estimation is also over priced You only have to be skilled in knowing when to jump out else you get trapped and be coming out everyday to place your sell order and hopefully getting less than 3% of your holding getting filled. 1 Like |