₦airaland Forum

ositadima1:
I have observed that an increase in the dividend payout ratio usually leads to a positive and significant movement in stock prices. So, estimating favourable fair value for stocks also requires a catalyst such as an increased dividend payout ratio. To justify my thinking, yields above 14% may occasionally appear, but they tend not to last long.

Consider UBA, which has an EPS of #4.8 and a payout ratio of below 20% at #0.9. It is almost clear why its price is not moving in tandem with its performance. After adjusting for risks, UBA should be valued at not less than #20, similar to ZENITHBANK and GTCO.

This undervaluation is not unique to UBA, as there are other stocks experiencing the same issue.

Waiting for a good increase in payout ratio before buying an undervalued stock may be a sound strategy while the fund is earning better returns else where. In the case of UBA, it appears that the stock will remain around its current value until the company raises its payout ratio.

What other stocks do you see as under valued ?

emmanuelewumi:
You are doing well, I have read all the books you listed except "the art of company valuation".


You can read up on Peter Lynch books

Beating the street

One up on Wall Street.



You can ask for explanations on what you have challenges with on NSEMPA.

One up on wall street looks good and its even available for free on the web in PDF
https://yourknowledgedigest.files./2020/04/one-up-on-wall-street.pdf

.

Access raising tier one capital through financial instruments. One needs to watch how this plays out. Is it a good approach or bad one ? Guess it depends on many factors. And principally, that should be how fast its customers deposit rise and how the additional deposits from create value. I think if it's African expansion program falters this additional tier 1 capital instruments will lead to a faster erosion of shareholder funds. Just like one trading with margin and the trades go bad.

https://doclib.ngxgroup.com/Financial_NewsDocs/38141_ACCESS_HOLDINGS_PLC-ANNOUNCEMENT_OF_US$300_MILLION_INVESTMENT_INTO_ACCESS_BANK_PLC_CORPORATE_ACTIONS_APRIL_2023.pdf

RabbiDoracle:
Question :

Fidelity bank announced last year that they will be doing Private placement.

Price of this PP was not announced. When are they going to announce?

Why are they doing PP? To raise funds? What is the funds for? To support Tier 1 Capital or for working capital or both?

We wait to see.

Thanks. This explains the high valuation of Fidelity. Him no even fear, wan try reach UBA and rub shoulder with it

BabsO2:
You may be lucky to get some of the left over offers at N8 of yesterday if the sellers don't quickly cancel their sell offer. And if brokers don't quickly corner any left over for a quick buy and sell game. About 860,000 units closed on offer at N8 yesterday.

Looks like market never open.

Market has opened with nothing sold at N8. Lowest price traded on opening was N8.3 with current price at N8.6 A wind of bids has come, currently doubling offers.

leparj:
Good one.
Diving in to get more UBA shares tomorrow.
Won't buy more than N8. sha.
If it rises tomorrow, will let it be and buy lower later.

You may be lucky to get some of the left over offers at N8 of yesterday if the sellers don't quickly cancel their sell offer. And if brokers don't quickly corner any left over for a quick buy and sell game. About 860,000 units closed on offer at N8 yesterday.

Looks like market never open.

robobo:
Oga Oracle

i have checked the Key Audit matters and i cant deduce anything untowards or should be of concern in it. it only mentioned the total loan size of UBA and the impairment figure which is available in the AFS and also the fact that the auditors tested the models and parameters used to arrive at the impairment figure, which is normal for statutory audits. yes i understand your concern that UBA impairment is quite low compared to peers (Zenith / ETI) but the concern here is the exposure to Ghana sovereign bond and not credit in itself. So if UBA is not as exposed to GoG as its peers it is normal that it would also be less impacted by the haircut arising from GoG bonds. or what do you think? would appreciate your further discussion on the issue

I was thinking perhaps UBA had less exposure to Ghana because, it maybe had more exposure to funding Transcorp and didn't have much to diversify into Ghana sovereign bonds as a result. NB: Just a thought, not based on any cross-checked information. But penciled down to find out more info

leparj:
What's the qualification and payment dates?

Qualification date 2 weeks time as per minimum regulation that 14th April. And Payment date 27th April. UBA no wan waste time like Zenith .

https://doclib.ngxgroup.com/Financial_NewsDocs/37991_UNITED_BANK_FOR_AFRICA_PLC-CORPORATE_ACTION_ANNOUCEMENT_CORPORATE_ACTIONS_MARCH_2023.pdf

UBA has landed with a fantastic result. Or am I seeing double. PE looks like slightly less than 2. Final Dividend move up slightly from N0.80 to N0.90 bringing total dividend to N1.1 The market will surely push it up to a new level!!. How far up ?

https://doclib.ngxgroup.com/Financial_NewsDocs/37990_UNITED_BANK_FOR_AFRICA_PLC-_QUARTER_5_-_FINANCIAL_STATEMENT_FOR_2022_FINANCIAL_STATEMENTS_MARCH_2023.pdf

beejay1:
It haff landed o

https://doclib.ngxgroup.com/Financial_NewsDocs/37945_TRANSNATIONAL_CORPORATION_PLC-_QUARTER_5_-_FINANCIAL_STATEMENT_FOR_2022_FINANCIAL_STATEMENTS_MARCH_2023.pdf

Deferred tax hit the bottom line. Dividend jacked up from 2 kobo to 5 kobo to console shareholders. Let's see how the market will react

Streetinvestor2:
This brokers na them be chairmen for monkey hunting, lol

Now Transcorp shot up to N1.5 today with a breeze of demand nearly x10 of offers. The brokers will recommend it perhaps as a buy when it reaches N2 or 3 Don't blame them, perhaps they need more confidence in the audited results perhaps over a 3 to 5 year period before they can recommend it as a BUY

Princkez:
Ucap dividend landed...

That's really fast and good of UCAP. Makes investing in stocks beautiful as it's one money that is working for one .

Unlike useless stocks/managers that destroy value/money.

Mfunkynation:
My 2023 Shares investment Pledge:
Every kobo I received from a particular STOCK as DIVIDENDS goes back to INCREASE my holding in the stock.
I don't know about you!

That is DRIP - Dividend Re-Investment Plan
I think Stanbic has such election possible for the Stanbic IBTC dividends

https://dailytrust.com/oil-production-rises-to-1-7m-bpd-fg/ This should be supportive to the economy and NSE
The Minister of Defence, Major General Bashir Magashi has said the onslaught launched against crude oil theft by the Nigerian Navy and other sister security agencies led to increased oil production of 1.7m bpd a step further from what was obtained in July 2022.

https://www.vanguardngr.com/2023/03/budget-2023-fears-as-oil-price-drops-3-to-73-87-per-barrel-2/ This counters any support from higher oil prices but good for the economy in that diesel & petrol prices will not be excessively high
There were fears, weekend, as the price of Nigeria’s premium oil grade, Bonny Light, dropped to $73.87 per barrel, from $76.37, recorded last week, indicating a fall of three per cent. The Federal Government had benchmarked the 2023 budget at $75 per barrel and 1.8 million barrels per day, bpd, including condensate, which Nigeria has the capacity to produce between 300,000 – 400,000 barrels per day, bpd.

To those looking for stock recommendations, different brokers issue theirs. IBTC Stockbrokers have three banks on their buy recommendation list with a bullish target price appreciation of 50%. Due diligence is required to follow these brokers as they could be unduly bullish or bearish sometimes. Now them no put Transcorp. Perhaps it's when the price reaches N2 or 3 that they will be bullish to recommend it

RabbiDoracle:
Attached are the Chinese indexes (Shangai, Shenzhen and Hong Kong). These don't look bullish.

From these current levels, these Chinese indexes need to drop at least 45% to attract rapid interest. And that is towards 2008 low.

Below is the expectation for China.
Quote:
Reopening to recovery: Goldman Sachs sees China stocks surging as much as 24% by end of 2023. “We believe the principal theme in the stock market will gradually shift from reopening to recovery,” Goldman Sachs said in a Monday note. As of Friday's close, the MSCI China index had lost about 8% since its Jan.20 Feb 2023
Unquote:
https://www.cnbc.com/2023/02/20/goldman-sachs-sees-china-stocks-surging-by-end-2023.html#:~:text=China%20Markets-,Reopening%20to%20recovery%3A%20Goldman%20Sachs%20sees%20China%20stocks%20surging%20as,24%25%20by%20end%20of%202023&text=%E2%80%9CWe%20believe%20the%20principal%20theme,about%208%25%20since%20its%20Jan.

China will not follow the US bubble burst in 2023 is the consensus of most analysts.

BabsO2:
My understanding is China will not join in having a market crash like the US in 2023.

If I find the basis for the expect non bearish run in China will revert. .

Here is one of the expectations for China

Reopening to recovery: Goldman Sachs sees China stocks surging as much as 24% by end of 2023. “We believe the principal theme in the stock market will gradually shift from reopening to recovery,” Goldman Sachs said in a Monday note. As of Friday's close, the MSCI China index had lost about 8% since its Jan.20 Feb 2023

https://www.cnbc.com/2023/02/20/goldman-sachs-sees-china-stocks-surging-by-end-2023.html#:~:text=China%20Markets-,Reopening%20to%20recovery%3A%20Goldman%20Sachs%20sees%20China%20stocks%20surging%20as,24%25%20by%20end%20of%202023&text=%E2%80%9CWe%20believe%20the%20principal%20theme,about%208%25%20since%20its%20Jan.

RabbiDoracle:
Attached are the Chinese indexes (Shangai, Shenzhen and Hong Kong). These don't look bullish.

From these current levels, these Chinese indexes need to drop at least 45% to attract rapid interest. And that is towards 2008 low.

My understanding is China will not join in having a market crash like the US in 2023.

If I find the basis for the expect non bearish run in China will revert. .

Agbalowomeri:
Elections have been successfully held and winners declared. Why should anyone think May 29 has uncertainties?

Comforting to see the number of likes here. I have added mine . It means that line of uncertainty is ruled out ! And my recent UBA buy basis is ok.

The remaining uncertainties are what the impact of currency shortages may have on Q1 & no surprises from Q4. As the NSE awaits a bull run while the US gets a bear run this year. China is already in a bull run.

Ire O.

RabbiDoracle:
Has there been any time in a bull market where in 2 weeks period four (4) international banks collapsed?

Has there been any time in a bull market where over 200 US banks are groaning under severe bond losses and are at the risk of bank run?

Has there been any time in a bull market where large US and European banks are having massive deposit runs? Credit suisse, UBS and now Deutsche Bank.

Has there been any time in the world where all financial leaders in US and EU and the leaders of these countries where jointly saying that their banks were strong? All at the same time yesterday evening.

These are red flags occurring in western financial institutions and we should not ignore them.

In case you have forgotten, we were all invested in the market when :

March 2008 - Bear Stearns collapsed
September 2008 - Lehmann Brothers collapsed.

And we were told all was OK in Africa. Up until March 2008, everything was fine in Nigeria and in Africa, I believe. Afterwards, the rest of the event was history.

When international banks start having issues, it usually cascades rapidly. It is usually the start of bigger things to come. Lending freezes, companies start to fall and second order effects starts to arise.

If foreign banks are having these losses, what about insurance and pension companies? What about hedgefunds, educational trust funds and other wealth managers? These are the second order effects that are yet to surface.

When a ship capsizes, it takes time for the bodies to float to the surface.

I think Naija's issue i.e. risk is currently more around politics than what is happening in the US. As a lot of the FPI's have repatriated their funds in 2020/2021. And because US assets are currently over priced while NSE stocks have relatively far lower PE's.

If May 29 doesn't sail through smoothly the NSE will most likely go down because investors don't like uncertainty. Apart from that it could drag businesses and the economy downwards and show up in NSE companies recording losses in year 2023. Hence justifying the market going down if a severe political turbulence occur.

As many or is it some have said if Q2 sails through smoothly the NSE will likely become bullish. Perhaps a weak bull due to the issues you noted in US and Europe. But this US/Europe issue is not impacting China drastically. Their GDP may drop from double digits of the last decade to about 6% as projected by them. Hence oil prices may remain at current levels or even go higher as less investments poured into ramping up production. And Nigeria has recovered slightly from the very low oil prod of 2022. This will support the NSE bull.

Also, if Q2 progresses smoothly politically in Naija, there is a likelihood the small net buy seen in 2022 from FPI's will become a bigger net buy as more FPI managers try to take positions in NSE in 2023. As Nigeria remains a growth area. The snag of devaluation will however make them cautious and not be too aggressive. For local investors an easy option open to mitigate devaluation is holding quality NSE stocks that may ride the inflation in Nigeria. At least mitigate it better than cash or Naira bonds.

The impact of the CBN Naira redesign will become clear next month when companies start releasing Q1 results. Not sure if it will impact banks negatively. But will likely have no impact on companies like Transcorp, Presco etc. If it impacts banks negatively. Bank share prices will start a race downwards and seem to align with what's happening in the US. But driven by entirely different issues.

YoungBuffet:
not now, after the dividend it will go down then move up again to around 8 to 8.20 then fall back to 6.60. This is my prediction on it.

Continuing the UBA chat - A low price only comes in a flash and doesn't often last more than a day or two. It is very difficult to plan to purchase based on such target as it involves thousands of hours of monitoring prices with idle cash on hand. This is a lot of opportunity cost with respect to time. Last year the lowest price achieved was N6.55 on 6th of October. And the average price that day was N6.75. and only N 23million worth of shares was sold. And this sale didn't last beyond that day.

Weighted average price for UBA in 2020/2021/2022 were N 7.07/7.90/7.72. Since a dividend of N1.0 total is due to any one who buys right now over the next six months (with 80kobo due over the next 40 days). Buying UBA for the long term is okay at current price and will be a waste of time waiting for N6.60 that may never show up.

Buffett Says Be A Long-Term Investor:
Summary
Are you really the long-term investor that you claim to be?
Buffett’s Berkshire has held Coca-Cola for ~35 years; how old is your longest-held stock?

I know some here are traders, jijoists

I think even in Nigeria there are a couple of stocks that are worth long term investment for capital appreciation and dividends income. What stocks qualify for this and how long is our long term here - Perhaps for the next 5 years is our long term with need for quarterly and annual review if the stock is healthy. I think as of now, a couple of Banks can be placed on this Long Term Investor list. What are the others ? Some can have a Hold instead of a buy rating. For example I see Transcorp as a weak buy (Weak because of low dividend payout), PRESCO is a hold. UBA is a buy etc. And I hear from this forum UCAP is a buy, but not a fan of UCAP .

leparj:
I bought UBA early this week @N8.20 even after the SVB news broke.
Will buy more soon.
I am a long term investor and don't allow the daily noise to disturb me.
Also checking stock prices everyday is really not necessary if u are in for the long term.
Stocks will fall and rise and rise and fall.
Planning to use most of my dividend this year to increase my UBA holding.

Bought the UBA today at N8 as it was standing still at my current buy price with more offers than bids. The market offers and bids just change directions like breeze . Waiting for their results and dividend declaration and what direction the market will drive the price. I can see some predicting N6. That can only happen if underlying earnings and EPS drops.

YoungBuffet:
one thing i know is las las they will print more dollars to rescue their financial sector

They have freed searching for oil in Alaska. They will not only print money but do all it takes to grow their real GDP by producing more in America and importing less every little thing they can produce or used to produce.

Agbalowomeri:
Is it buying season?

Is there a buying season?

Stocks are sold by a seller and bought by a a buyer every trading day once there is a seller and buyer.

GANDALF1:
All these hidden stones you guys are throwing around like cowards without calling names, always remember that you are not the smartest person in the market and that the market will eventually do its thing.

Trying to prove correctness on this exchange will only ensure you go broke in the long term.

Which one be hidden stones and calling names. Cool down small and follow the thread of reply and you will see clearly that there are no hidden stones or names.

YoungBuffet:
If u can hold just hold, global issues I believe are under control, to me UBA will follow normal way of coming down after dividend. It can still do 6.60-7

And it may not do so this year. Even sometimes when lows come, before one takes advantage no one is disposing again. There will be scarcity at such low prices. Gambling on a low bus stop doesn't pay off all zee time. Mr Market can change his mind without consulting anyone at anytime as events occur.

Their results should give more clarity if the buy/sell/hold moves are good or bad or fair .

ositadima1:
As I see it, there seems to be no explanation for UCAP's sudden 24% drop within a single month, especially since the month is not even over yet. While reviewing its audited results for 2022, I noticed that its earnings before tax had increased, followed by a significant tax expense of 3.5 billion, which I assume to be a one-time occurrence. Based on my simplistic valuation, I estimate its fair value to be approximately 16 naira.

I thought someone quoted they recorded some losses in comprehensive income that shaved some value off shareholder funds (perhaps due the Ghana debt issues). Hence some of the recorded increased earnings in 2022 may be at risk in 2023.

Can see a lot of bids for UCAP right now

YoungBuffet:
Be greedy when others are fearful and be fearful when others are greedyUBA fearful sold it to the greedy yesterday at 7.85.

Wanted to buy more just now at N8.00 only to see it has resisted staying on that spot and currently selling at N8.1. Bought last week Friday at N8.4 with an outstanding order from Thursday that I forgot to cancel before the SVB news came in plus some other negative sentiments. At the moment right now bids outstrip offers six times. Abeg make them release the results so that we can get a little more info on what's up.

This should be helpful to Transcorp small in the coming years. How small I don't know.

FG probes theft in $1.1bn oil well – Punch
The largest oil and gas field financing transaction of about $1.1bn – Oil Mining License 17, owned by billionaire business tycoon, Tony Elumelu, is currently under investigation following the uncovering of an illegal oil bunkering facility connected to it, The PUNCH has learnt. The PUNCH gathered that the investigation was necessitated after the Nigeria Security and Civil Defence Corps on Thursday, uncovered an illegal local refinery at Otamiri-Etche, Etche Local Government Area of Rivers State. The illegal refinery, The PUNCH gathered, steals crude from OML17 fields operated by Heirs Holding Oil and Gas Limited. In 2021, Heirs Holdings acquired 45 per cent of OML 17 from Shell Total and Eni. At the point of acquisition, the field located at the north Port Harcourt, produced just 27, 000 barrels per day, however, production rose to 40, 000 barrels per day seven months after acquisition. The PUNCH gathered that the NSCDC was able to burst.

https://punchng.com/fg-probes-theft-in-1-1bn-oil-well/

RabbiDoracle:
8th March Wednesday, US SEC calls Credit Suisse to delay result.

8th March Wednesday, Silvergate Bank announced voluntary liquidation.

10th March Friday, Silicon Valley Bank collapsed.

12th March Sunday, Signature Bank taken over by US banking regulators.

Something isn't right. There seems to be global scheming going on to douse the real thing.

I think a key issue is the US market needs some correction apart from any possible dollar over valuation issue. The article below estimates the amount of correction needed in the American market. While I think the Nigerian market direction will largely be determined by how security issues amongst other pressing issues are resolved in the coming months.


The American stock market currently appears to be overvalued by 32%. In other words, it would take a 24% drop to bring the market back to its long-run equilibrium level. At the last all-time high, on November 8, 2021, the market was 82.4% overvalued https://www.estimite.com/post/is-the-us-stock-market-overvalued/#:~:text=In%20other%20words%2C%20it%20would,the%20market%20was%2091.6%25%20overvalued.