frankiriri:

Very good analysis.
However I want to take you up on certain issues.
1. First Bank did not make N60 last year because of its fundamentals. It was just investor frenzy and the Nigerian investor's misguided preference for bonus at all cost that caused the price to rise.
2. The impact of the proceeds of this public offer willonly reflect in the earnings of the company in the financial year ending march 2008 and you are using their figure for the financial year 2007. Thus you are not comparing like with like.
As I said earlier I can't state cartegorically on how good the deal is until I see the financials. But I do know that given the current state of the market where even redundant companies are being priced at handsome multiples I woul gladly settle for a First Bank.
In fact I would rather buy a First Bank at N33 than buy a NASCON at N12 or a NAHCO at N63 or a Transcorp at N9.71

I'm neither endorsing nor discouraging the purchase, I'm just provoking people's thoughts -- infact I might buy into it myself on further analysis, but this is just my back-of-the-envelope calculations. But then, let me address the issues you make in 2 above.

So then, let's assume that for the FY07, the bank makes a profit of N20.46bill (that is, double what they've made in the half year). And then in FY08 they again double that and make N40.92b (and this is being very optimistic). This will translate into an EPS of N3.03, which will be good because at a P/E of say 25 (which is about the same P/E a bank like Zenith is going for), this will bring the share price to about N76. The question I need to ask myself then is: Can first bank make that type of EPS in FY08 -- that's what I need to figure out. Perhaps when I read the prospectus and find out what plans they have, I'll be able to assess if those plans can increase (or at least sustain) their EPS.

Trust me on this one: The current state of the market is not going to last, and as usual, stocks will revert back to reasonable levels and investors who buy at unreasonable multiples will wind up biting their fingers wondering what the heck they were thinking. Infact that correction is already taking place. Also remember that the more institutional investors that come into the market, the less opportunities there will be for overly outpriced stocks, as they'll most likely do some serious analysis prior to buying and will only purchase reasonably priced stocks.

windywendy:

So then, let's assume that for the FY07, the bank makes a profit of N20.46bill (that is, double what they've made in the half year). And then in FY08 they again double that and make N40.92b (and this is being very optimistic). This will translate into an EPS of N3.03, which will be good because at a P/E of say 25 (which is about the same P/E a bank like Zenith is going for), this will bring the share price to about N76. The question I need to ask myself then is: Can first bank make that type of EPS in FY08 -- that's what I need to figure out. Perhaps when I read the prospectus and find out what plans they have, I'll be able to assess if those plans can increase (or at least sustain) their EPS.

Never say never. FBN's current capital base (in their books) can't  be up to N60b.  if they are able to earn 20 billion on N60billion that is a return of about 33%. If they succeed in raising their capital by N100billion  and we assume that they earn 25% on the new capital of N160billion  that will translate to N40billion.  So the question really is whether they woul be able to acheive the same level of return on the new capital raised and from the trend since the capitalistion started banks having been meeting and surpassing the expectations.

windywendy:

Trust me on this one: The current state of the market is not going to last, and as usual, stocks will revert back to reasonable levels and investors who buy at unreasonable multiples will wind up biting their fingers wondering what the heck they were thinking. Infact that correction is already taking place. Also remember that the more institutional investors that come into the market, the less opportunities there will be for overly outpriced stocks, as they'll most likely do some serious analysis prior to buying and will only purchase reasonably priced stocks.

I agree that the market corrections is due. However I don't agree that the mere presence of institutional investors will foster appropraite pricing. Some of these so called institutional investors were responsible for the over pricing in the first instance. The big brokers and all turned logic on its head in selling Transcorp to the public and now many of them can't justify their recommendations.

@Frank and windy wendy ,

  You both have made good points.Personally am going to buy into the fbn offer ,though i feel there are better options in the secondary market. iWhat do you guys think about Fidelity bank. I have been doing some trend watching and it has been on a steady rise in the last four months except for a few days when it paused,only to pick up again.Also whats your views on Eterna oil offer.

@wendy
Have you heard of the 'greater fools theory'most institutional investors/analyst buy a stock they beleive is overpriced because they believe that there is a 'greater fool' out there who will buy it at a higher price.
I am enlightened enough to know that bonus issues on its own does not make a stock better, however, in the light of the Nigerian mentality I give some consideration to a company's bonus history.

@Frank ,
   Have you read  'Trading For A Living' by Dr Alex Elder . You just wrote one of his many definition of price,that is, price is what the greater fool is willing to pay ! Indeed there is plenty of dumb money in the market, i guess we are here so we will be part of the group with smart money.

I think I like the sound of the book. I will check it out at Laterna 2moro.

@ Frank,
i am sure you will love it. if it doesnt bother you , i would like to speak with you, will give you a call if i can have your details.

@Wendy ,I

you too can have a look at the book , it offers great insights to trading and you will add more to your knowledge. i emailed you,hope you will have time

to check it .

hi guys
i just read in THIS DAY newspaper that ecobank merger with FBN has collapsed ;unity bank is now their preffered partner.I wonder how this will affect their stock prices.This could be an opprtunity to divest or invest .Please let sb in the house comment on the consequences of this merger.The link on this story is http://www.thisdayonline.com/nview.php?id=77677

barge:

@ Frank,
i am sure you will love it. if it doesnt bother you , i would like to speak with you, will give you a call if i can have your details.
 

My nos 018983359, 08038421775, 08023193640

umobile:

hi guys
i just read in THIS DAY newspaper that ecobank merger with FBN has collapsed ;unity bank is now their preffered partner.I wonder how this will affect their stock prices.This could be an opprtunity to divest or invest .Please let sb in the house comment on the consequences of this merger.The link on this story is http://www.thisdayonline.com/nview.php?id=77677

It wont affect the price of First Bank. However cant say the same for Ecobank.

The last 5 fianancials (PATs) are 17.83bN, 13.23bN, 11.48bN, 11.01bN,and 4.78bN. The prices have also known to be consistently stable, making it good for investors to buy in at any time (this is achieved by aways marking down for dividends). The FBN share rose to 72.76N last year, but thanks to the 1 for 1 bonus that marked it down to 36N (if not for that, u and i may have to buy this PO at 55N or something).

In terms of fundamentals, FBN is great. It's also well respected. We all know that, its wholly owned subsidiary, FBN Bank (UK) Limited, recently signed a USD42 million syndicated term loan facility with a consortium of banks led by Standard Bank Plc which was substantially oversubscribed by 68 percent from the initial USD25 million earlier planned for. It also with HSBC on a technical partnership which would allow the bank to participate in the management of the country’s foreign reserves (what most banks are now jostling for).

Anyways, these are my own little contributions. Let me leave the floor to the GURUs

Pls don't just buy any stock!. read this about Nig wire and cables Plc

AS the bulls continued its run in the equities sector of the Nigerian Stock Exchange, investors have been advised to watch how they invest in the company as it is now in liquidation.

Specifically, the Chairman Audit Committee of the company, Chief Aderemi Oyepeju told journalists that the company has been placed under receivership by Wema Bank and Union Bank for owing the banks about N200 million.

According to him, the company's share price has risen alongside other companies' prices this year, which is totally out of tune with what should be obtainable since the company is no longer producing and would not give any return on investment to its shareholders.

Quoted in engineering technology sub-sector on the Nigerian Stock Exchange, the company has not paid dividend since 2002 when it paid 15 kobo per shares, and the last bonus issue was done in 1998. Earnings per share as at yesterday stood at 10.10 while per earnings ratio stood at 48.50.

So far this year, the company's share price has risen from a low 70 kobo to N5.10 before it fell to N4.85. It closed on bid yesterday, and the last day business that was done on the stock was May 7, 2007 when 351,475 units changed hands.

Oyepeju who is also the Vice-Chairman of Ibadan zone shareholders association, covering all the states in the South West, noted that the Nigerian Stock Exchange would be informed about the development immediately to save investors from enormously putting their money in a moribund company.

Oyepeju said: "The company has been under lock and key since 12 months ago. Wema Bank and Union Bank have placed the company under receivership and there is now what is called caveat Emptor, buyers beware, on the company."

He continued: "The Managing Director said he has resigned. What we are doing is in the interest of investor and national interest."

On whether shareholders have informed the Stock Exchange and the Securities and Exchange Commission (SEC), about what is going on in the company, Oyepeju said: "We have not been able to reach the stock exchange but we will write to them to inform them.

"The share price is rising and the stock is suppose to be on suspension because of the state of the company. I wish the company should come to the capital market to raise funds to repay its loans and kick-start its operations.

@ Frankiriri and other gurus
Is there any need to continue holding onto my Ashakacem? Have you been able to hear anything on the grapevine about their 2006 FYE? I am of the mind to move the money onto something else. What do you think? This question is not only for the gurus, other members or in deed learners like myself are free to help me out. Thanks a bunch

frankiriri:

@wendy
Have you heard of the 'greater fools theory'most institutional investors/analyst buy a stock they beleive is overpriced because they believe that there is a 'greater fool' out there who will buy it at a higher price.
I am enlightened enough to know that bonus issues on its own does not make a stock better, however, in the light of the Nigerian mentality I give some consideration to a company's bonus history.

Very funny. So if this theory is really real, then share prices should always be overpriced because those who buy it overpriced will turn around and sell to someone else at a higher price, who'll then turn around and sell to someone else at an even higher price, and the pyramid goes on and on

Anyway back to first bank. Have you seen their prospectus? I'm curious to read through it. I'ld like to know what expansion plans they have, etc and how they intend to put the money they raise to use.

windywendy:

Very funny. So if this theory is really real, then share prices should always be overpriced because those who buy it overpriced will turn around and sell to someone else at a higher price, who'll then turn around and sell to someone else at an even higher price, and the pyramid goes on and on

Anyway back to first bank. Have you seen their prospectus? I'm curious to read through it. I'ld like to know what expansion plans they have, etc and how they intend to put the money they raise to use.

The theory is real. Its just an explanation of what happens when investors get over excited about the prospects of a stock. Take the cable and wire company some people must have bought those shares beleiving that in a market of high priced stocks it was too low not to be noticed by unwary investors and that person's guess is working. The stock is even on bid.

Riba_man:

@ Frankiriri and other gurus
Is there any need to continue holding onto my Ashakacem? Have you been able to hear anything on the grapevine about their 2006 FYE? I am of the mind to move the money onto something else. What do you think? This question is not only for the gurus, other members or in deed learners like myself are free to help me out. Thanks a bunch

It depends on your reason for buying it in the first place.

windywendy:


Anyway back to first bank. Have you seen their prospectus? I'm curious to read through it. I'ld like to know what expansion plans they have, etc and how they intend to put the money they raise to use.

The offer is opening on Monday. I will get a copy of the prospectus then and go through it.

I couldnt get the book 'trading for a living'. Does anyone know where I can get a copy

@ Frank,
i bought mine through my brother in the states.The price is 75dollars. Will call you to see if we could make some arrangement.I will call you before the weekend runs out . You can be sure its worth every cent .Cheers!

Here is an example of techincal analysis:
Dangote Sugar – Using Technical Analysis to establish temporary bottom

On April 25, 2007, I received an email from an investor who was worried that Dangote Sugar was on a downward spiral after purchasing the stock at N46.



Reviewing the trend charts for Dangote Sugar on April 25, 2007, I noticed that the stock was experiencing severe selling pressure. After attaining a 52 week high of N56 on April 19, 2007, the stock had four (4) consecutive days of losses through April 25, 2006.



Subsequently the stock had three (3) successive days of losses through April 30, 2007.



In an April 25, 2007 article, I stated that I wasn’t convinced that the selling had stopped because of the daily trading pattern. To illustrate, on April 25, 2007, the stock opened at N47.68, and closed at the same price today losing N2.50 from the previous day’s close. I further stated that I will be convinced that the stock has put in a short-term bottom, when the stock opens for the day, test a low price of the day, and snapped back to close at or almost at the intra-day high.



On May 2, 2007, the stock indicated a temporary halt to the sell off. The stock had an intra-day high of N45.19 and intra-day low of N41, but closed at N43 with a trading volume of 19.8 million shares. The close was only N0.04 removed from the previous day close of N43.04. The stock subsequently had three (3) consecutive days of gain closing at N47.70 on May 7, 2007 after experiencing an intra-day high of N48.30.



Again on May 8, 2007, the trading pattern indicated a stock having problems moving higher due to selling pressure. The stock had an intra-day high of N47.70 and an intra-day low of N45.32, but closed at the low of N45.32 on volume of 7.8 million shares.



The trading pattern indicates the resurgence of some sellers. The stock will definitely have an intra-day low below N45.32 (on May 9). Another unpleasant sign is that the stock is now trading below its 20 day SMA of N47.19 and its cumulative daily 20 day SMAs’ (See graph above).



Stock with strong relative strengths usually trades above their cumulative 20 day SMA’s or tend to bounce off of this trend line.



However, the stock has two (2) solid supports at N43 (i.e., a double bottom) and at N41, an intra-day low set on May 2, 2007. If both of these supports are violated, the stock will likely revisit the mid to upper thirties. Unfortunately, derivatives are not traded in the NSE, because I will be buying “puts” to protect my positions and profits at this point

Culled from Proshare

@Frank
Fair enough for all the technical intraday monitoring and moving averages stuff.
Where can one find real live data and historical price for the stcoks. I am not talking about the daily closing prices being sent to my mail box, (that doesn't show me the open and mid price).
I would like to analyse the stocks myself, i am not unfamiliar with stock analysis but info for Nigerian stcoks seems elusive.

[
quote]I am not talking about the daily closing prices being sent to my mail box, (that doesn't show me the open and mid price).
[quote][/quote]

@dollyp1cute
To get the detailed transactions, go to www.zenithbank.com
click on 'quick links'
scroll to 'stock market update'
when it opens, click on 'price list'

That contains the detailed info on the activities of the stock mmarket for a particular day. It is usually updated by 3pm daily

That contains the detailed info on the activities of the stock mmarket for a particular day. It is usually updated by 3pm daily

Thanks Sleek

the best way to monitor shares moving average (live, during trading) is by monitoring it on www.nigerianstockexchange.com. You can view the trading live, from 11:00hrs to 13:00hrs. During this time, you can have an idea of stocks that will gain/loose at the end of the trading session. It is live and direct from the trading floor.

From the NSE website, go to quoted comapanies, and search by company.

Hope this helps.

You guys doing good job. Thats nice of nija guys. pls somebody assist a novice. where can i get the run down list of companies END OF YEAR ACCOUNTING PERIODS stock

dollyp1cute:

@Frank
Fair enough for all the technical intraday monitoring and moving averages stuff.
Where can one find real live data and historical price for the stcoks. I am not talking about the daily closing prices being sent to my mail box, (that doesn't show me the open and mid price).
I would like to analyse the stocks myself, i am not unfamiliar with stock analysis but info for Nigerian stcoks seems elusive.

You have to build them yourself. You can get the daily price listing from Zenith securities web site. It lists the opening, and closing price and the highest and lowest price.

kanugab:

You guys doing good job. Thats nice of nija guys. please somebody assist a novice. where can i get the run down list of companies END OF YEAR ACCOUNTING PERIODS stock

If you are based in Nigeria, you can grab a copy of stockswatch weekly. The middle page called "stock tracking" page has an extensive list of all quoted stocks and their respective end of financial year.

@everyone,
Who has heard of cash craft public offer? I need more gist.

@windywendy
Any idea of what is happening to mutual benefit assurance shares? Have the investors that bought into the convertible bonds started redeeming their shares?

Cashraft Asset Management floats N2b unit trust fund

Cashcraft Asset Management Limited has floated a unit trust fund tagged cashcraft fund to enable investors maximise returns through an optimal combination of asset allocation and long-term capital appreciation.

Packaged by Greenwich Trust Limited as issuing house and NIDB Trustees Limited as trustees to the fund, the managers are offering two billion units of N1 each at 1 per share with an initial closing of 50 million units in the crashcraft fund.

The target investments of the fund according to the prospectus include equities of companies listed on the Nigerian Stock Exchange, real estate, fixed income debt instruments and money market instruments.

The target investors of the fund, by the prospectus, are small, medium and high networth individuals and institutional investors (public and Private), it opens on May 21 2007 and closes on June 18, 2007.

Already, 10 per cent of the offer has been preferentially allotted to Cashcraft Asset Management Limited in compliance with the current regulations of the Securities and Exchange Commission (SEC), mandating promoters of unit trust schemes in the country to subscribe to a maximum of 10 per cent of the initial issued unit of such schemes.

The Cashcraft Fund, which is constituted under a trust deed, is a balanced fund comprising, equity, money market instruments under a trust deed, is a balanced fund that affords superior returns from a balanced asset allocation strategy.

As an open ended fund, subscriptions can be made during the offer at the offer price and investors are free to subscribe to its units after the Initial Public offering through Cashcraft Asset Management Limited or any agent duly appointed by the fund manager.

In accordance with the position of the Trust Deed, the fund manager will issue additional units of the fund to subscribers on demand after this offer of units has been fully subscribed, subject to the approval and registration of the additional units by the commission. - Guardian

----from Proshare

Cashcraft knows their stuff and will do well but I still prefare common stocks to managed funds. Am only speaking my mind.

Hi all, pls I would like to know how much Zenith securities charges on their equity account?. (e.g BGL charges 1% on total acct worth)

Also, I am yet to know the best means of transferring money to nija from outside the country. Western Union is not it at all. I once tried bank transfer too, but the guys at the receiving end ripped me off by converting at a ridiculously low rate. Can someone pls share his/her experience on how best to transfer money into stock acct in nija

[tr]Re: Stock Market Tips For Nigerians
« #841 on: May 09, 2007, 02:25 AM » 

--------------------------------------------------------------------------------
hi guys
    i just read in THIS DAY newspaper that ecobank merger with FBN has collapsed ;unity bank is now their preffered partner.I wonder how this will affect their stock prices.This could be an opprtunity to divest or invest .Please let sb in the house comment on the consequences of this merger.The link on this story is http://www.thisdayonline.com/nview.php?id=77677 [/tr]


You've got your Ecobanks mixed up! First Bank was going to merge with the group holding company (Ecobank Transnational Inc), while Unity's merging with Ecobank Nigeria plc.

Some great stuff here, guys; keep the good ideas flowing.

@pamit,

why dont u try getting to zenith bank uk,
they might sth to offer on sending money back to nigeria and
it would be better as i presume u use their stockbroking unit which makes integration easier,
just get across and see what happens,