ololufemi:
Looks like the times are about to get more interesting and some rides in certain markets will get very bumpy or be like bungee jumping.

Brace up, US Inflation rate of 9.1% will be bad for the Naira
https://nairametrics.com/2022/07/14/brace-up-us-inflation-rate-of-9-1-will-be-bad-for-the-naira/

Our elders and gurus on the platform, what are your views on the ongoing trend especially juxtaposing the performance of the equity markets or local bourse with the local fixed income markets and the international bond market?

RabbiDoracle:


In my opinion, this will not have effect on NSE except when the global depression hits the oil producers and cause oil prices to collapse.

Banks will breakout rapidly and catch many unawares.

As for US stocks and Indexes, they still have a long way to fall. Portfolios will be blown over there and people will understand that everything that rises so rapidly must fall later.

Commodities like oil still have further rise to make. And that will be aggressive. This fall in oil is a move to prepare for the next leg higher. My $220 forecast for Brent still stands.

At a point, dollar will have severe devaluation. Since Fed has continued to tighten and raise rates to make dollar stronger and weaken other EM currencies, China will continue to tighten supply to ensure that they don't get cheaper goods with their strong dollar. That way, the little goods avaible in the West will have severe price increases as we see now. Higher prices, higher energy cost, higher interest rates on the those with loans and squeeze on available income will soon lead to protest in the West as cost of living crisis bites.

Fed strengthens the dollar hoping that they get cheaper goods from producers and hoping that this attracts funds into the US, but the reverse could happen where instead an outflow of funds from the West and you get no goods at all from China (due to their frequent lockdowns). That way all the money printed will remain with the West with no one wanting it.

Many countries in EMs and FMs will feel the bite.... Sri Lanka, El Salvador, Ghana, Pakistan etc. Soon the developed ones (weaker ones in EU) will also start to crumble. And their's could be worst.

RabbiDoracle:


In my opinion, this will not have effect on NSE except when the global depression hits the oil producers and cause oil prices to collapse.

Banks will breakout rapidly and catch many unawares.

As for US stocks and Indexes, they still have a long way to fall. Portfolios will be blown over there and people will understand that everything that rises so rapidly must fall later.

Commodities like oil still have further rise to make. And that will be aggressive. This fall in oil is a move to prepare for the next leg higher. My $220 forecast for Brent still stands.

At a point, dollar will have severe devaluation. Since Fed has continued to tighten and raise rates to make dollar stronger and weaken other EM currencies, China will continue to tighten supply to ensure that they don't get cheaper goods with their strong dollar. That way, the little goods avaible in the West will have severe price increases as we see now. Higher prices, higher energy cost, higher interest rates on the those with loans and squeeze on available income will soon lead to protest in the West as cost of living crisis bites.

Fed strengthens the dollar hoping that they get cheaper goods from producers and hoping that this attracts funds into the US, but the reverse could happen where instead an outflow of funds from the West and you get no goods at all from China (due to their frequent lockdowns). That way all the money printed will remain with the West with no one wanting it.

Many countries in EMs and FMs will feel the bite.... Sri Lanka, El Salvador, Ghana, Pakistan etc. Soon the developed ones (weaker ones in EU) will also start to crumble. And their's could be worst.

RabbiDoracle:


In my opinion, this will not have effect on NSE except when the global depression hits the oil producers and cause oil prices to collapse.

Banks will breakout rapidly and catch many unawares.

As for US stocks and Indexes, they still have a long way to fall. Portfolios will be blown over there and people will understand that everything that rises so rapidly must fall later.

Commodities like oil still have further rise to make. And that will be aggressive. This fall in oil is a move to prepare for the next leg higher. My $220 forecast for Brent still stands.

At a point, dollar will have severe devaluation. Since Fed has continued to tighten and raise rates to make dollar stronger and weaken other EM currencies, China will continue to tighten supply to ensure that they don't get cheaper goods with their strong dollar. That way, the little goods avaible in the West will have severe price increases as we see now. Higher prices, higher energy cost, higher interest rates on the those with loans and squeeze on available income will soon lead to protest in the West as cost of living crisis bites.

Fed strengthens the dollar hoping that they get cheaper goods from producers and hoping that this attracts funds into the US, but the reverse could happen where instead an outflow of funds from the West and you get no goods at all from China (due to their frequent lockdowns). That way all the money printed will remain with the West with no one wanting it.

Many countries in EMs and FMs will feel the bite.... Sri Lanka, El Salvador, Ghana, Pakistan etc. Soon the developed ones (weaker ones in EU) will also start to crumble. And their's could be worst.

yMcy56:
AIRTEL: Sighted @N1,905........Up with N173.20...

GTCO: Sighted @21!!
From 20.40.......to 20.70.........now @21...
Is the dumper still coming? We wait and see.....

Ades1:



Hailing bros, I like reading your write up and thesis but it appears you have something against the USA.

While I agree with most of your take, I think devaluation of the $$ will help most Americans because this current tightening is dealing with Americans….. Keep up the good work

ZikkyChops:

Then, we have to be on the fence. Till all those events happen

onuku:
What is the best online stockbroking firms / registrars to use in Nigeria? I am not based in Nigeria.

Thank you.

RabbiDoracle:


In my opinion, this will not have effect on NSE except when the global depression hits the oil producers and cause oil prices to collapse.

Banks will breakout rapidly and catch many unawares.

As for US stocks and Indexes, they still have a long way to fall. Portfolios will be blown over there and people will understand that everything that rises so rapidly must fall later.

Commodities like oil still have further rise to make. And that will be aggressive. This fall in oil is a move to prepare for the next leg higher. My $220 forecast for Brent still stands.

At a point, dollar will have severe devaluation. Since Fed has continued to tighten and raise rates to make dollar stronger and weaken other EM currencies, China will continue to tighten supply to ensure that they don't get cheaper goods with their strong dollar. That way, the little goods avaible in the West will have severe price increases as we see now. Higher prices, higher energy cost, higher interest rates on the those with loans and squeeze on available income will soon lead to protest in the West as cost of living crisis bites.

Fed strengthens the dollar hoping that they get cheaper goods from producers and hoping that this attracts funds into the US, but the reverse could happen where instead an outflow of funds from the West and you get no goods at all from China (due to their frequent lockdowns). That way all the money printed will remain with the West with no one wanting it.

Many countries in EMs and FMs will feel the bite.... Sri Lanka, El Salvador, Ghana, Pakistan etc. Soon the developed ones (weaker ones in EU) will also start to crumble. And their's could be worst.

BabsO2:


Please what does banks will break out rapidly mean.

Is it their share prices will rise rapidly or fall rapidly.

Will this be only US banks & or other global banks in the Europe & Asia. How will it affect our banks in Nigeria.

RabbiDoracle:


I use "breakouts" for upward rising prices and use "breakdown" for downward movement of prices.

The banks I was referring to were NGX stocks.

For EMs (whether in Asia, ME or Africa) , I still expect a decent move in their stock prices before the global depression hits commodity producing EMs.

BabsO2:


Thanks for the clarification.
I pray the breakout comes good with no breakdown before it happens. Sold a 10+ year NGN bond I had on CSCS above the price i bought it as interest rates are now low compared to when I bought it and placed the proceeds into UBA with a view of getting just very slightly more income. Bought the UBA at N7.50 but can see it closed this week at N7.40 even though online demands daily far outstrip supply. Seems a lot of people want it but at lower prices. But few are selling. Perhaps only desperate sales brought the price down. And not that it really wants to breakdown.

ositadima1:


I would choose FCMB over UBA for a few reasons.

1. FCMB distributed 20% out of its earnings to shareholders (2022) for about 6.6% yield, while UBA distributed a whole 70% for 13.3% yield.

2. Since March, 2020 (pandemic) FCMB has grown by 100% (doubled) while UBA has done 50%

3. The OBV, on-balance volume indicator shows that UBA has had sell-offs here and there, even recently. FCMB shows slow but steady accumulation.

4. For year 2022, UBA is up 5.59%, dividend and price appreciation inclusive. FCMB is up 13.33%.

yok:
LET US HAVE A PEEP INTO THE JUNE 2022 EARNINGS PROSPECT!!!
Playing the market without guidance can be a dangerous game The current inflationary pressure is likely to impacted our expected earnings for the Nigerian equities. A good example was when I saw the current packaging for semolina from FLOUR MILLS, I saw that the paparazzi of the polythene packaging materials we are used to has been removed, therefore when our forecast for the June 2022 result 8s indication a falk in the region of 40% compared with the 2021 result, I was not surprised (let us see if the company will beat this forecast!).

To get our full earnings forecast, subscribe to our daily stock picks/tips for a promotional price of NGN3k per Month instead of the regular price of NGN6K per month. For details send "STOCK PICKS" to Whats�App @ +2348023054935

BabsO2:


1. Based on last year dividends FCMB distributed about 20% of earnings while UBA did 33% resulting in FCMB dividend yield of about 6.6 and 13.3 % respectively. Thus for dividend returns UBA is better.
2. EPS for FCMB and UBA has been up and down over the last 5 to 10 years but both are trending up, with UBA appearing more robust in trend. Perhaps because it's tier 1 bank while FCMB is a smaller bank.
3. Cannot comment much on this right away.
4. The relative more appreciation of FCMB you noted is not under-pinned by something enduring that i see. Hence will very likely not continue. Rather it makes UBA more attractive for entry right away.

My major consideration is current dividend yield. Based on current prices of UBA at about N7.50 and FCMB of N3.00 expected dividend yield are 13.3% and 6.7% respectively. That difference in dividend yield is Huge. Also I estimate UBA and FCMB earnings per share yield based on these same prices at the end of the year will be 42.6% and 34.9% respectively if earnings of N3.2 and N1.05 are delivered just like the last audited results. Hence UBA will give back more money immediate in dividends while growing ones underlying investments at a faster rate.

BabsO2:


Thanks for the clarification.
I pray the breakout comes good with no breakdown before it happens. Sold a 10+ year NGN bond I had on CSCS above the price i bought it as interest rates are now low compared to when I bought it and placed the proceeds into UBA with a view of getting just very slightly more income. Bought the UBA at N7.50 but can see it closed this week at N7.40 even though online demands daily far outstrip supply. Seems a lot of people want it but at lower prices. But few are selling. Perhaps only desperate sales brought the price down. And not that it really wants to breakdown.

ositadima1:


I would choose FCMB over UBA for a few reasons.

1. FCMB distributed 20% out of its earnings to shareholders (2022) for about 6.6% yield, while UBA distributed a whole 70% for 13.3% yield.

2. Since March, 2020 (pandemic) FCMB has grown by 100% (doubled) while UBA has done 50%

3. The OBV, on-balance volume indicator shows that UBA has had sell-offs here and there, even recently. FCMB shows slow but steady accumulation.

4. For year 2022, UBA is up 5.59%, dividend and price appreciation inclusive. FCMB is up 13.33%.

onegentleguy:




A pivotal line of disclosure...

Over 2 yrs ago (btw Q2-Q3, 2019), We highlighted the worries in the company UNILEVER Nig Plc.
Before that time, I gave an underperform/sell rating given the coys near N30 market price.

Fast forward to Q1, 2020 and things only worsened for the company with inherent risk consistently taken a bite from what should've been due to an investor.
See 2 amongst the last post I put out back then. (Note the lines therein)

Within that period, risk was clearly ahead of the combination of REWARD and price with the continually pressured MoS resulting in the jettisoning of the stock by value investors. ...and unsurprisingly, the coys equity peg underperforming both it's sector and NGX index in the last 2 yrs.

What has changed?

Many of the major risk drivers highlighted then have been dwarfed by the company's present stance. (diminishing effect in view) ...with improvement recorded accross several key revenue and earnings line (at least by a 72% margin as certain triggers from core top-down and bottom-up positive line combines to good effect)

The present UNILEVER...

• Accelerating RM and OIM amidst drive to recover initially lost mkt share.
This is already working for the company!

• Healthier working capital stand on the back of higher ITP (ref: >> ∆ inventory turnover) and better performing receivables.
There's been a 64.9% YoY jump in consumer spend... with Nigerians parting with over N108 Trillion in 2021 alone despite inflationary pressure.
In retrospect, "tough times can't really be that tough" as passthrough impact from cost reflective challenges is minimized by higher comparative prices amidst increased consumer appetite.
A coy like UNILEVER now appears well placed to wither the storm given her broadly inelastic product mix.
Again, the decision of the Nig gov't to reopen the border should by implication, also greatly improve this line.

• Expanded reach in distributorship chain amidst in-company restructuring.
Expect lower CBR (ref: CRP) and higher CCC to JPBM in 2022.

• Back to back improvement (QoQ in view) in AsQ, ROCE, EM, AER, CGPR and AsY following deficits/squeeze in the previous 5 quarters.

• Improved value accretive stand at present compared to most sector peers in view of the current low base effect. (ref: NCPS, EV/EBITDA, JPBM)
...I also highlighted this same line while comparing WAPCO @ N9 and later, INTEBREW @ <N5 to their respective sector peers. (P2P weighting in view)

I see a similar pattern to fellow P2P coy, PZ.
Recall that we also gave a sell/underperform recommendation on PZ @ over N15 sometime in 2019... forecasting that price could drop to N4+.
Well, it did... and we later issued an outperform/buy signal @ that N4+.
PZ is currently trading @ N13+ and could rise even further.

UNILEVER can well follow the same path. ...the probability that its price can rise from current level is now closer to 1 than zero. (aside it's FA, certain KEY technical indicators are beginning to gather momentum)

With UNILEVER, potential REWARD has accelerated by an approx 2.7x multiple ahead of surrounding volatility/risk in view of it's CMP.

Using an appropriate blend of valuation model that assumes a minot growth margin of 0.15x TTM (5% QoQ to YE, 2022) but also benchmarked to risk-discounted levels of 500bps above current surrounding peg, UNILEVER' FVE computes to N29.15
This, by the way, implies a very conservative approach. ...that FVE can expand by well over 46% if a similar growth margin from Q1 is reproduced in Q2, 2022.

Rating now upgraded to; Overweight/Outperform

IT'S TIME TO INVEST IN UNILEVER!
BUY... ACCUMULATE... HOLD!

CAVEAT: The need for due diligence should still take higher precedence ahead of this post.

RabbiDoracle:


In my opinion, this will not have effect on NSE except when the global depression hits the oil producers and cause oil prices to collapse.

Banks will breakout rapidly and catch many unawares.

As for US stocks and Indexes, they still have a long way to fall. Portfolios will be blown over there and people will understand that everything that rises so rapidly must fall later.

Commodities like oil still have further rise to make. And that will be aggressive. This fall in oil is a move to prepare for the next leg higher. My $220 forecast for Brent still stands.

At a point, dollar will have severe devaluation. Since Fed has continued to tighten and raise rates to make dollar stronger and weaken other EM currencies, China will continue to tighten supply to ensure that they don't get cheaper goods with their strong dollar. That way, the little goods avaible in the West will have severe price increases as we see now. Higher prices, higher energy cost, higher interest rates on the those with loans and squeeze on available income will soon lead to protest in the West as cost of living crisis bites.

Fed strengthens the dollar hoping that they get cheaper goods from producers and hoping that this attracts funds into the US, but the[b] reverse could happen where instead an outflow of funds from the West and you get no goods at all from China (due to their frequent lockdowns). That way all the money printed will remain with the West with no one wanting it.[/b]

Many countries in EMs and FMs will feel the bite.... Sri Lanka, El Salvador, Ghana, Pakistan etc. Soon the developed ones (weaker ones in EU) will also start to crumble. And their's could be worst.

onegentleguy:


You see the problem with that No 1 reason is that; it is like saying you'd prefer a company that gives you less after earning more (FCMB), than a company that gives you more after earning less. (UBA)

With reference to dividend YIELD (CGY in view), there are better ways to compare coys within the same sector.
A P2P comparison should always be a function of invested capital + equity pricing combined and not either line in isolation.

1st off, you are likely to get an approx 2.67% yield in the next 30-60 days investing in UBA (plausible 20k div in view) but zero yield investing in FCMB.
Now that makes the former better than the latter in the short/near term even without due consideration to fundamental value preposition.

Again as you rightly admitted, one is likely to make 6.7% more (difference in possible annual yield) investing in the "U" name ahead of the "F" assuming they decide to stake an equal amount of fund in UBA @ N7.5 and FCMB @ N3.

Of course, in both scenario, we are assuming that the other part of CGY (cap appreciation) is constant.

Your No 2 and 4 line is the more reason you should seek to align with a coy like UBA @ CMP ahead of FCMB.
As long as a coys fundamentals is healthy, VALUE is often better derived from a depressed equity position than otherwise.

With No 3, yes the chart of FCMB shows an accumulation, but that of UBA shows something even better (momentum ind in view) if one can do their homework well.

Bottomline: Both coys are good but there's a greater probability that an investor seeking higher yield will be better off aligning with UBA than FCMB at this time.
A portfolio % weighting of 70/30 with the former ahead of the latter should do just fine!

In the past, I've always said that I prefer ACCESS ahead of UBA. I still do. ...even in the near term.
But no doubt, UBA is better than FCMB.

If I were to rate banking names on a scale of value accretive stance AT PRESENT, it would be;
GTB>> ZENITH>> ACCESS>> UBA>> FIDELITY>> STANBIC>> FCMB>> FBNH>> WEMA>> STERLING>> JAIZ from LtR in descending order.
Note the phrase "at present"... so things could change in future.

Selah.

jideflash:
Investment securities FVOCI that eroded, could be related to the ban of banks from OMO Bills by cbn.