₦airaland Forum

BTW, did y'all catch the news about Afribank being placed on technical suspension for a PO at N25. Didn't the stock just come off suspension about a month ago? I don't understand this market o! Anyway, make we see prospectus.

crazyT:
@ Temmie, Easimoni and wanajo



If I understand you guys right, Insurance stocks are good to buy? I am having lots of Lasaco stocks and I am contemplating to drop the stocks because it's like YO-YO going up and down everyday but i just saw their year ended result and i am like, Maybe i should just hold on,

What do you guys think

Man, did u see Lasaco's interim results? If you believe the N560M PAT for 6 months, Lasaco's full year will give you an EPS of ~N1. This is a N15 stock. DO NOT SELL. DO NOT SELL. DO NOT SELL. DO NOT SELL. DO NOT SELL.

You get the drift

@ All,
I think we've done a good job of ignoring the 500 Ib elephant in the room; Insurance Stocks. I can't find enough data (frankly, I wasn't keeping track, too busy with banks) to enable me make an informed decision. Too many have done Public and Private offers and I fear buying a company with a forward PE of say 8 only to find that they'll list X many shares and the forward PE will now be 25. The picture is fuzzy to say the least.

But can we ignore the following recent results?

Company Period PAT% Incr.
Lasaco 6 mos 1200
Crusader 6 mos 308
Int Energy 6 mos 1300
Equity Assur 6 mos 3100
NEM 6 mos 350
Cornerstone 6 mos 310

True, a few like GNI have not done well, but look at those numbers. Are we not missing another banking boom? Insurance stocks are clearly the stocks to make us rich in 2007.

Personally, I need the prospectus of each company that did a PO to judge how many additional shares were to be listed, if they haven't been listed already.

The results for Mutual Benefit have not been released. If they follow the trend above, the PE could drop dramatically from the current 31. NSE says they have 5.91B shares. Does this include the proceeds of last year's PO or are there additional shares about to drop?

Pity no one website has all this info readily available. Any help out there?

@ Wanaj0,
where have u been? Just sold my BETA Glass . Should have sold when u said so.

Thanks for the gist on Oando. Will give it some thought. Didn't know about the EI (you don't see that on a one-line summary).

Flour Mills. it shocked me that the FY result didn't get any response from the market. I agree it's cheap.

C&I; it seems no one can get it now. I'll try when the demand subsides.

@ All,

IBTC's latest Stock Select is out. Note; only 6 banks are short-term "BUYs". Temmie10, Oando is also a "BUY", long and short-term.

@ Shigidi,
KnowAll answered your question on the Insurance sector well. Na real Kalokalo at the moment. So many companies, who did PO, IPO, private placement? How many shares did they sell? What were the profit projections? Clearly, Crusader and AIICO have shown good results and seem to be safe bets. Can't speak about others.

TO your 1st questions, PEs change all the time. When I started investing in Dec 04, PE's for banks ranged from 6-11. Yes, you read it right. Who is to say they won't return there some day? Doesn't seem likely with the buzz around the NSE at the moment but it's ultimately inevitable. Buy the company that has a good mix of low current PE and high growth and you'll be best protected against a bear market.

@ Temmie10, per your previous post on Crusader, see why I just KNOW the market is (to some degree) fixed? Some people started buying up before the results were published. NSE needs to step in and start punishing these inside traders. Thing is peeps in the NSE prob participate in insider deals.

@ Temmie10,

Oando has 572 M shares as you stated. However, as part of the restructuring, they'll list an additional 200 M shares later this year. Multiply the current PE (12.3) by 1.35 to get the full picture (16.5). Still not bad for a 50% growth rate. Def better than my beloved GTB.

otokx:
The truth must be told that its an effort in futility if our industries are not revamped.

True, but we must all do our own parts. Soludo is doing his own. Over to us, PHCN and others.

obi2obi:
One definite bonus of this is the portability effect of redenomination. The portability of the redenominated naira will make it more convenient to carry large sums of money on a person rather than in ghana must go bags. The time wasted in the counting of large sums of money and the risk involved in carrying large sums of money in nylon bags, or bulging pockets will be reduced drastically with the redenomination. It could also facilitate the introduction of of the use of vendor machines and car parking meters as well as the re-introduction of the use of coins for smaller units of money.

Could not have been better said! If we want to see vending machines and other things paid for in coins, this is the way forward. I'd also like to be able to talk to people from other cultures about pay/prices and the like without having to think if I missed a few zeroes when dividing N6, 500, 000 by N128 to get USD

Is there a Soludo fan club anywhere? I'd like to join.

[quote author=Atam-Man link=topic=31554.msg1392169#msg1392169 date=1187121194]@Frankiriri
I am rather worried about the re-denomination of the Naira. What does it spell for us? Is it going to be good for the general populace or is it another gimmick to help those in who have cornered the Nation's wealth?[/quote]The article in question can be located here.

http://www.businessdayonline.com/?c=45&a=15436

I'm not qualified to comment! Oya, over to you bankers, economists and CFAs.

And maybe it should be a new topic.

afroil:
@easimoni,
please and please pardon me o,i beg,i was refering to Temmie10 and nt u o please.

I was about to "unleash"!

Iwerebor:
You have to analyze everything like they are a lab specimen?
come on buddy, just buy and don't miss an up portunity when you see a hair growing in the wrong place.

I know I'm pedantic. I'm an engineer.  

But remember Warren Buffet's 1st rule? Never lose money. Just covering all my bases.

Anyone see this article in Business Day?

The value of publicly quoted Nigerian banks is insignificant when compared with their peer from other African countries, a study by African Investor (Ai) has shown.
GODFREY OBIOMA
In the study involving 40 companies from the continent, the UK–based magazine used price, price earning ratio, market capitalisation , daily traded volume and shares in issue to assess the companies. Among the banks, Standard Bank of South Africa was the most capitalised at $18.52billion (N2.352trillion) with a price of $13.80 (N1,752.6) per share . Attijariwafa Bank of Morocco has market capitalisation of $7.30 billion (N927.1billion), trading at $364.36 (N46,273.72) per share . Banque Marocaine du Commerce also of Morocco is market capitalised at $5.43billion (689.61billion) with closing price of $342.53 (N43,501.31) per share while Egyptian Financial Group has market capitalisation of $3.05 billion (N381billion) at the price of $7.88 (N1000.76) per share.

Six major Nigerian banks, on the other hand failed to measure up to the banks from South Africa, Egypt and Morocco in terms of share valuation and market capitalisation. For example, Zenith Bank which is the highest priced bank stock at $0.52 (N66) per share, according to African Investor, has market capitalisation of $3.13 billion (N397.51). First Bank, trading at $0.45 (N57.15) per share is capitalized at $4.66 billion (N591.82), UBA is valued at $0.44 (N55.88) per share with market capitalisation of $3.1billion (N396billion). With market capitalisation of $2.13billion (N270.51billion) GT Bank is worth $0.27 (N34.29) per share as Intercontinental Bank has market capitalisation of $2.15 billion (N273.05billion) with price of $0.20 (N25.4) per share. Oceanic Bank, another Nigerian Bank studied by Ai, is valued at $0.21 (N25) per share with market capitalisation of $1.98 billion (N251. 46 billion).

However, some of these Nigerian banks performed better in terms of price earning ratio, which measures the period of time during which an investor recovers his initial investment outlay. Whereas it would take an investor about 26 years to recoup his investment in Attijariwafa Bank, and 53 years in BanqueMarocaine, it would take the same investor about 17 years to recover his initial investment in Oceanic Bank and Intercontinental Bank. It would take an investor about 30 years to recover his investment from Standard Bank, 34 years in Zenith Bank and 32 years in First Bank.

The Ai report did not however cover returns on investment where Nigerian banks have done so well. A report by Capital Assets, a Nigerian stock broking firm in 2006, using capital gain, dividend payment and bonus issues show that First Bank returned 153 percent to investors in 2006; GT Bank 106 percent; Intercontinental Bank 80 percent; UBA 68 percent while Zenith Bank returned 53 percent.

http://www.businessdayonline.com/?c=45&a=15437

It shows that while our banks are comparable in terms of market cap and favourable in terms of returns, we've done so many stock splits (bonuses) that the share prices make them penny stocks in U$D. There's a bank alsmost the same size as FBN (maybe smaller following FBN's offer) with a share price of N43K! Enough of the stock splits, let the price speak for itself.

@ the Japaul crew,

Anybody have a prospectus?

@ Temmie10,
I'm currently kicking myself for missing the 3 months results of C&I. If I had seen it, would have bought a ridiculous number of shares. Now, with the 6 mos, the cat is out of the bag and the price is heading to the skies. You need to help a brother out by publishing more of that suff. Please!

Shigidi,
the full year result projects to an EPS of 66k. This is easily a 10-12 stock within the next 6 months. Good to see you using the lingo. Thumbs up!

Pelican:
easimoni, if you had N2 million today and you were to invest it in stocks for a 3 months investment, what will you go for. Please this will help my decisiion presently. Thanks brother!

Never invest for 3 months. In spite of the get-rich-quick stories you hear, that's not what a stock market is meant for. Personally, I'm up 1% on the stocks I've bought in the last 3 months. That's probably a reasonable expectation.

But sinnce you asked, I like Oando, C&I leasing and Julius Berger in that order.

KnowAll:
Nigeria bank stocks are still very cheap relatively, i see Zenith, First Bank, Oceanic, Union Bank, UBA, and some other top banks getting to N200.00 per share (Still less than £1.00, and a about $1.80 ). The most expensive Bank stock is Zenith and that is worth 0.25p or 0.50c, damn cheap when compared to other emerging economies. I don't think it will slow down for now, the economy is growing, so will the stock exchange, and all the shares.

My guy, the price of a stock has very little to do with how cheap or expensive it is. There are N80 stocks that are cheap (Oando) and N4 stocks that are quite expensive (e.g Crusader Ins). Theprice of 1 share must be compared to the eearnings dividends of that share to make a judgement Go to iinvestopedia.com and read up on PE, EPS, DPS and look for the stock market tutorial. Good luck.

Iwerebor:
when you buy stocks from the secondary market, do you get dividend from the companies that own the stocks?

Yes you do.

lokia:
hello temmie1 eamoni, mr frank

can you enlighten me on the skyebank shelter fund. i read what is in the previous treads but i am not too clear. i know nothing about shares and stockmarkets o. is the fund like the discovery fund or is a share fund like GTB GDR? please explain.

thanks in advance

It's a fund that invests in real estate and not the stock market. It offers low price growth (25% a yr) but plans to pay a high dividend (prospectus promises N19 dividend on a N100 unit). It's a good idea for beginners and risk-averse investors. Hope this helps.

crazyT:
If I have about 50,000 units of Japaul (bought from the floor) and during the IPO I bought about 200,000 units (Right offer), do I need to also wait for the certificate before I could sell my whole 250,000 units?

N, You can sell the 50k units you bought on the floor whenever you wish. You have to wait for a certificate to sell the rights offer purchase. Obviously, you have to still own the "floor" units when you go purchase your rights.

I've played for 3 seasons now and it's a lot of fun! Looking forward to kicking @#$!

@ doncaster, it really depends on how long you can wait. it may take you 6+ months to get your access shares (I'm assuming you want to buy the PO). I own Oando shares and would not advise you to sell them. I also own WAPCO and I'm not impressed. Buy Access if and only if you can wait 6+ months. Esle, hold/ buy more Oando.

shigidi:
@ easimoni, i used their projected PAT from their prospectus and also the one on IBTC stock select, which is about 18.6 billion, and i chose p.e of 28 because of the rumored bonus and good divivdend

Temmie10:
Fortunately, because the market is full of irrational people, even some rational people who havent factored the extra shares, sentiment, year end approaching, I have a feeling this stock will eventually get to close to a pe of 30+ in which case i would not be surprised if the stock price reached a high of 40 even if it eventually subsides

You guys may both be right about Oceanic but any buyer will be left holding an overpriced share and may become subject to correction without notice. no upside here

aksance:
Ha! at last, a thread on Skye - i was thinking of starting one up

for starters, the prospectus can be found at:
http://www.skyebankng.com/uploaded_files/Prospectus.pdf

looking at the forecast offer statistics (pp 21), it seems that they are looking at paying out massive dividends of N19.72, 23.79, 28.28 per unit of N100 in 2007 (yes, this financial year!!), 2008 and 2009 !! This looks very attractive to me - it means that if i invest N100k and buy 1000 units, i'll get a dividend of N19k by the end of this financial year - Dec 2007!! And in 18months, after year end of dec 2008, i should get a total dividend of over N43k (19.72k + 23.79k) i.e. i get back almost half of the funds i invested, while still havine the same number (1000) of units!!

Is this realistic or too optimistic? when is the offer money going to get to Skye; will it do so much work for a N19.72 dividend to be paid THIS financial year? or is there something i'm missing?

over to you gurus - frankiriri, easimoni, windywendy et al - help us out here

seems like a good deal if you are not too concerned about growing your portfolio. It's great for those looking for income. You certainly won't get 19% didvidend from any major company on the stock exchange.

@ Temmie10,
You don reach here already?

@ K2,
If the split took place today, the price would come down N46. You'd still be up ~N13 from the PO or N15 from the rights. Still not a bad return but not the 80-100% you may have been hoping for.

I thought it was a smart move by FBN to dissuade the PO group from dumping shares upon receipt.

shigidi:
slay kay, people are selling their fidelity because theyve made profit and don't want to wait for another three months before the ts is lifted, just give it some time, the net offer will soon turn to net bid(in a month or so)

Fidelity is selling at a PE of 42! The full year to June 07 results had better be fantastic, otherwise both the PO and the price after the suspension is lifted will fall flat. My advice, wait till the results are released (or as long as possible) before buying the PO or buy on the floor if you have faith in the bank (I don't).

@ shigidi,
Oceanic's 3Q was N13.4B PAT. That projects to a FY of N18B. current shares  = 11.64B, PO shares = 3.36B, total shares  = 15B. Therefore, FY EPS (With PO shares)  = 18/15 = N1.2. If a PE of 25 is okay, the price is N30

This depends on how many addtional shares will be listed and meeting/exceeding the projected PAT. Your EPS may be based on  another time-frame (say 1-yr from now) but you are on the right track.

See another reason why I hate POs? Oceanic is N29.95 as we speak and I think it's worth N30 by the year end. Don't see any reason to buy for the short-term.

Easimoni to self: Maybe I should become a "long-termer"

shigidi:
@ easimoni,
i need to ask u two questions,
1) ive bin getting quite confused when calculating eps of companies with public offers just concluded. how do u know when new shares are listed?? and if these newly listed shares always seem to affect the eps negatively then why do companies do pos at all.
2) bearing in mind what ive just said, what do u think bout possible price appreciation for oceanic in the future with its new shares and all. because without it, the forecasted eps is 1.60 naira which should translate to about a 38-40 naira stock shouldnt it

Never has a better question been asked, I think! You simply have to keep in mind the number of shares sold during the PO and know that those shares WILL GET LISTED. You won't know when, except you have get solid reports from your broker. I don't use FSDH but I get their daily reports and they always report when additional shares get listed. E.g. 108M shares of UBA got listed today. And that doesn't include anything from the PO yet.

Why do they do POs? About 8 banks plan on being the biggest bank in Nigeria within the next 7 yrs. To do that, they need money to grow so they do POs and then do more POs. If they grew by retaining earnings only (not paying us dividends), they could grow at say 40% p.a. If they raise more money, they could grow at say 60% p.a. The thing is, there are now more hungry shareholders (like me to satisfy).

In the short-term it's bad to do POs, but it's probably good in the long-term if the money generates returns.

Any price appreciation on Oceanic will stop/reverse as soon as new shares are listed and the EPS is revised to account for new shares. If you want to calculate your own EPS, use the number of shares offered during the last PO, add ~10% (for over subscription) and then use the new total shares . Double-check when NSE lists the new shares (FSDH will tell u).

Quote from my Lead Capital report of Today

Afribank, which emerged for the umpteenth times as the most traded stock, also gained maximum points, fueled by expectation that the stock would soon be placed on technical suspension, in anticipation of its public offer.

Are these people crazy? You place a stock on suspension for 6 months because of a planned PO that never materialized, cancel your plans so your stock can rise and then go right back and do a PO? Might be gist anyways, but still

@ Temmie10,

Crusader Ins 3.257B shares , PE = 32
Cornerstone Ins  5.06 B shares, PE = 48

Not so impressive now eh? These are from FSDH, I'll be sure to do my own and let you know if it's different.

And "The Warren Buffet Way" is a GREAT BOOK. Must read. Helped me realize that diversification = mediocrity. I now focus 60-70% my holdings in 2 stocks and the rest in 3-4 additional stocks.

Transcorp has been on net offer at the market for over 2 months. Sure signs that soooo many peeps are trying to sell. sure to be a bear run as soon as the suspension is lifted. BIG TIME. I'd say sell now and maybe buy back when it drops below N7. I'm very sure it will.