walcolm:

@wanajo

i don't agree with you that share buy back is not allowed in nigeria. where did you get that from?

share buy back is a standard financing practise all over the world. the fact that it is not yet being used regularly by companies in nigeria does not mean it is not allowed or illegal, it's almost like saying having diffrent classes of shares in a company is  illegal

don't forget that the capital market in nigeria is still developing, GDR was not existing in nigeria until GTB blazed the trail. we don't trade shares futures and options etc yet in nigeria, so if somebody does it, will you say it is not allowed?

The last time I checked share buy back is illegal in Nigeria. I was surprised to see this but that is the case except there is a recent change.

Share buy back has a major impact on the price of a stock. The market usually will normally respond with an increase in price of the stock. It is a boost for shareholders in the long term simply because there are less mouths to feed.

walcolm:

@wanajo

i don't agree with you that share buy back is not allowed in nigeria. where did you get that from?

share buy back is a standard financing practise all over the world. the fact that it is not yet being used regularly by companies in nigeria does not mean it is not allowed or illegal, it's almost like saying having diffrent classes of shares in a company is illegal

don't forget that the capital market in nigeria is still developing, GDR was not existing in nigeria until GTB blazed the trail. we don't trade shares futures and options etc yet in nigeria, so if somebody does it, will you say it is not allowed?

See this article. There is no provision for share buy back in Nigeria and SEC or CAMA are not planning to change things anytime soon.

http://allafrica.com/stories/200710260355.html

@walcolm

See this article. There is no provision for share buy back in Nigeria and SEC or CAMA are not planning to change things anytime soon.

http://allafrica.com/stories/200710260355.html

pumping777:

@walcolm

See this article. There is no provision for share buy back in Nigeria and SEC or CAMA are not planning to change things anytime soon.

http://allafrica.com/stories/200710260355.html

Guess we posted at the same time. You don dey read my mind now!!!!!!!!!!!!

wanaj0:

And how do the company owe their owners? How does equity turn to debt? Teach me more about corporate finance.

I work in a firm that buys back its share every year. It is part of the necessary disclosures in the finnacial statement and it has nothing to do with financing.

Will try and search the SEC report where the Lagos Zonal officer said that share buy back is not in their books.

this is excellent. i'm happy the topic is something u're familiar with.

1. a company is a legal entity OWNED by x number of people (can you see where owing comes into the play)

but a company cannot own itself 100% so there must be some owners. if that company makes so much and pays off some of the owners, the value to the remaining owners increase (not anybody's fault, just the way the system). thats what shareholders value or wealth creation is about.

that way, owners or potential owners will be happy to put in more money anytime a company goes to ask for it, and that is what i meant by financing, a pro-active way of ensuring future sources of funding

@ pumping & wanaj0
readin the article right now

walcolm:

this is excellent. i'm happy the topic is something u're familiar with.

1. a company is a legal entity OWNED by x number of people (can you see where owing comes into the play)

but a company cannot own itself 100% so there must be some owners. if that company makes so much and pays off some of the owners, the value to the remaining owners increase (not anybody's fault, just the way the system). thats what shareholders value or wealth creation is about.

that way, owners or potential owners will be happy to put in more money anytime a company goes to ask for it, and that is what i meant by financing, a pro-active way of ensuring future sources of funding

@ pumping & wanaj0
readin the article right now

Sorry, you are confusing me here.

A company is OWNED by X number of shareholders. This is different from the company OWING people as you previously alluded to.

While there is benefit in share buy back, it has nothing to do with fannancing!

when an entity is owned by x number of people, then that entity owes those x number of people. this differs from when you own a piece of property, a company is seen under the law the same way a human being is seen.

Asset-liability=capital

the 'capital' part of the equation is what financing is about. so whatever a company does to ensure that capital is a financing function

@pumping & wanaj0
like i insinuated, share buyback is not provided for at all in the rule books when it was written probably because it is old and no longer robust not that there is a clause that says 'share buyback shall be illegal in the nigerian financial market'

RoughCut:

Forward EPS 70k and wait for it PE Ratio =13.8 which is well below the sector average.

WEMA has pulled the rabbit out of the bag which sets them up nicely for the PO/IPO(not sure which one is it now)

I beg from where you extract these Wema results?

pls any stockbroking firm around ikeja area.

Zenith's Hybrid Offer

It means Zenith will be diluted by about 3.9 Billion shares.

This means the projected adjusted PE is around 22 with EPS  of around 2 Naira based on current earnings.

Based on offer price we are looking at projected adjusted PE of 19 but of course I will expect a higher PAT with the injection of funds. I can't wait to see the prospectus to see the projections.

Zenith is attractive to me even on the floor.

pumping777:

I beg from where you extract these Wema results?

Wema gained 5% today! And the poster meant the 1Q was 2.9B while the same period last year was 1.7B. Means the forward EPS is N1.14k. Still waiting for independent confirmation (other than today's 5%) . If it's true, cloud 9!

pumping777:

Zenith's Hybrid Offer

It means Zenith will be diluted by about 3.9 Billion shares.

This means the projected adjusted PE is around 22 with EPS of around 2 Naira based on current earnings.

Based on offer price we are looking at projected adjusted PE of 19 but of course I will expect a higher PAT with the injection of funds. I can't wait to see the prospectus to see the projections.

Zenith is attractive to me even on the floor.

No way Zenith won't be oversubscribed, act "surprised at the confidence placed in the Zenith brand by the investing public", and then "yield to the pressure to let more people join the ownership ranks" before absorbing, say, N300B. I should be writing press releases for these people. They are becoming too predictable. Don't believe the 3.9B shares for a second.

easimoni:

No way Zenith won't be oversubscribed, act "surprised at the confidence placed in the Zenith brand by the investing public", and then "yield to the pressure to let more people join the ownership ranks" before absorbing, say, N300B. I should be writing press releases for these people. They are becoming too predictable. Don't believe the 3.9B shares for a second.

@easimoni,

Are you saying their shares will be oversubscribed again ? Honestly, with all these offers coming out at the same time can all of them be fully subscribed. Is the Nigerian Market that deep. Where on earth are people getting the humongous amount of money from.

The Nigerian maket is deep indeed, but I'm convinced a lot of 'dirty' money makes it's way into the capital market.

Read an article yesterday how a past governor invested N5 Billion in Afribank (thanks to the efcc, the money was returned to the state). There will certainly be other 'dirty' money that slips through.


As for me, I think Zenith is a good buy, but for short to mid-term investors, I'll play the secondary market instead. The lifting of suspension will co-incide with what is likely to be a bullish 1st quarter.

walcolm:

when an entity is owned by x number of people, then that entity owes those x number of people. this differs from when you own a piece of property, a company is seen under the law the same way a human being is seen.

Asset-liability=capital

the 'capital' part of the equation is what financing is about. so whatever a company does to ensure that capital is a financing function

@pumping & wanaj0
like i insinuated, share buyback is not provided for at all in the rule books when it was written probably because it is old and no longer robust not that there is a clause that says 'share buyback shall be illegal in the nigerian financial market'

Hope you know the difference between capital and debt!!!!!!!! Company is not in anyway owing the shareholders.

If something is not provided for in the rule book, then doing it is illegal!!!!!! That should be easy to understand.

yodiyokun:

@easimoni,

Are you saying their shares will be oversubscribed again ? Honestly, with all these offers coming out at the same time can all of them be fully subscribed. Is the Nigerian Market that deep. Where on earth are people getting the humongous amount of money from.

IBTC estimates there is 700B in leveraged (big grammar for borrowed money) funds in the NSE. As longs as banks are extending loans to people buying POs, the market will remain deep.

Someone needs to be flogged at WEMA, preferably the MD.  It is either they are just plain stupid or someone intended to drive down the price (by releasing the bad FYE 2005 & 2006 results) in order to buy the stock cheap and then reap profits once the interim results are released.  Why on earth did they not release this interim result with the audited accounts?

Anyway, for those of you folks that did not sell (Tmoni and co), get ready for the ride to the top 

easimoni:

IBTC estimates there is 700B in leveraged (big grammar for borrowed money) funds in the NSE. As longs as banks are extending loans to people buying POs, the market will remain deep.

You have money from margin facility and a lot of FDI. Most of the new offers are being taken up by foreign investors. Retail investors are not the one causing the oversubricption.

BAGCO super sack seems to be set for an IPO. Good for them but not so good for Flour Mills. BAGCO may actually be more profitable than Flour Mills. Price is 3.90. About 1.9B shares to be on sale. That should be one to watch out for.

Diamond seems to prefer a GDR instead of a PO. ACTIS just invested some funds there anyway.

easimoni:

Wema gained 5% today! And the poster meant the 1Q was 2.9B while the same period last year was 1.7B. Means the forward EPS is N1.14k. Still waiting for independent confirmation (other than today's 5%) . If it's true, cloud 9!

cheers easimoni and i'm actually in space high above cloud 9.-)

RoughCut:

cheers easimoni and i'm actually in space high above cloud 9.-)

Just keep your eyes open. They may go on Technical suspension soon.

@wanaj0

BAGCO is a subsidiary of Flour Mills.

wanaj0:

You have money from margin facility and a lot of FDI. Most of the new offers are being taken up by foreign investors. Retail investors are not the one causing the oversubricption.

BAGCO super sack seems to be set for an IPO. Good for them but not so good for Flour Mills. BAGCO may actually be more profitable than Flour Mills. Price is 3.90. About 1.9B shares to be on sale. That should be one to watch out for.

Diamond seems to prefer a GDR instead of a PO. ACTIS just invested some funds there anyway.

Wrong move for Diamond bank GDR is not the most attractive investment at the moment with the dollar at an all-time low. GTB floated a GDR many many months ago and apart from the fact those who bought the opening  GDR were short-changed they actually paid higher than those who bought when it was eventually floated on the London stock exchange and it hasnt helped the share price either  still almost at the same level now  as it was then!

wanaj0:

Just keep your eyes open. They may go on Technical suspension soon.

I think that's what they are psyching us up for i wont be caught out again!

Panadol:

@wanaj0

BAGCO is a subsidiary of Flour Mills.

Yes BAGCO is a subsidiary of Flour Mills. With the IPO, Flour Mills alone will not get ALL the profit. Being one of teh business with high profit margins in the stable of Flour Mills, this will affect them going forward.

RoughCut:

Wrong move for Diamond bank GDR is not the most attractive investment at the moment with the dollar at an all-time low. GTB floated a GDR many many months ago and apart from the fact those who bought the opening  GDR were short-changed they actually paid higher than those who bought when it was eventually floated on the London stock exchange and it hasnt helped the share price either  still almost at the same level now  as it was then!  

Diamond is interested in the funds. It may be 'cheaper' for them going that route. They may want to show international clout!

RoughCut:

I think that's what they are psyching us up for i wont be caught out again!

The game plan was pretty obvious. Just shine your eye. Like I always say, WEMA will do well!!!!!

Anybody watching Chellarams? You better join the party!!!! One of teh lowest PE's on the NSE. Just released an impressive result yesterday. Being planning PO for two years now so I expect that they will go for it next year. Quite attractive company but very illiquid.

hispy99:

Someone needs to be flogged at WEMA, preferably the MD. It is either they are just plain stupid or someone intended to drive down the price (by releasing the bad FYE 2005 & 2006 results) in order to buy the stock cheap and then reap profits once the interim results are released. Why on earth did they not release this interim result with the audited accounts?

Anyway, for those of you folks that did not sell (Tmoni and co), get ready for the ride to the top

Yeah the top is the logical way to go the bottom is getting crowded!

With a forward EPS of 1.14-1.16 is among the highest in the sector

Yup it's confirmed! FSDH report is in. Wema's 1Q is below

WEMA BANK PLC
3 months, June 2007
Turnover 9,287.00 5,698.00 62.99%
PBT 3,358.00 2,097.00 60.13%
Tax 503.75 419.51 20.08%
PAT 2,854.00 1,678.00 70.08%

wanaj0:

The game plan was pretty obvious. Just shine your eye. Like I always say, WEMA will do well!!!!!

Anybody watching Chellarams? You better join the party!!!! One of the lowest PE's on the NSE. Just released an impressive result yesterday. Being planning PO for two years now so I expect that they will go for it next year. Quite attractive company but very illiquid.

Saw Chellarams results yesterday, but like you said, it is illiquid.  Do you have an idea of shares outstanding?  I have about 120MM.

easimoni:

Yup it's confirmed! FSDH report is in. Wema's 1Q is below

WEMA BANK PLC
3 months, June 2007
Turnover 9,287.00 5,698.00 62.99%
PBT 3,358.00 2,097.00 60.13%
Tax 503.75 419.51 20.08%
PAT 2,854.00 1,678.00 70.08%

Bam. Now the knowledge of pending TS is the beginning of wisdom.

@hispy99 - For Chellarams I have 120.4 Million

Seriously,

Is Wema cheap now at 11 naira, based on this Q1 result? and with the impending offer on the horizon?

Anybody notice Transcorp broke it's N4.00 support for 2 days in a row?

Also notice the 9 months for ins coys are coming out? Good stuff!

Based on Q1 result Wema is definitely cheap.

if we bring in the mix of the PO could be a different story only if the stock goes on TS in the next few days.

But the real question is if you think Wema has already applied to go to the market, ? I believe the PO is possible again till at least January next year so they may not apply so early. If not, I don't see the price staying at 11 Naira.

If this stock does not go on TS, the price rise will be such that the offer from the PO may still be over 11 Naira.