₦airaland Forum

I feel you all. GTB is my favorite Nigerian company but I also don't like the way they've run the offer. With the tight deadline and the stringent requirements, it look like they already have the funds they need all lined up.

Back to the topic this thread was created for; recommending shares for our peeps. I'm thinking about Julius Berger and UACN. Both companies are trading at PEs ~ 15; about half of the average bank. Problem is they both have very low growth rates so a price explosion is not likely. What do the gurus think and what alternatives (outside of banks) are there?

BTW, Wanaj0, thanks for the BETA Glass tip.

Japaul is on technical suspension. They will soon unleash a N5b PO on the market. It was predicted by Proshare last month. Sorry if it took you by surprise.

http://www.proshareng.com/myproshare/portal_news.php?id=2458

L&G,
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Found an article on Proshare. Looks like GTBank will list an additional 4B shares to support the GDRs and a GDR is = 50 shares

Basic details on the GT Bank GDR.
Posted Friday, July 13, 2007

GTBank is issuing a $750 million GDR. $500 million will be for the international market and $250 million will be for the local Nigerian market;
4 billion ordinary shares of GTBank are being registered with the Nigerian Securities & Exchange Commission to support the GDRs to be issued;
The GTBank GDR is to be listed on the London Stock Exchange as the GDRs have been registered with the United Kingdom Listing Authority;
Each GDR will be backed by 50 ordinary shares of 50 kobo each of GTBank;
As GDR’s are traded in lots of 50, therefore, minimum application for the GDR will 50 GDR’s and additional applications will be in multiples of 50;
GTBank’s international advisers have come up with a valuation range of between $11.20 and $13.00 for each GDR;
The final price (i.e. clearing price) will be determined on 20th July, 2007, when all request will have been received and the subscription level determined;
Potential investors are meant to bid for each GDR within the price range as stated by GTBank’s international advisers;
For successful applicants, the clearing price becomes the actual price to be paid per GDR;
The international road show to market the GDR started on 9th July, 2007 and will end on 20th July, 2007. Accordingly, the GDR is tentatively scheduled to open on 13th July, 2007and close on 19th July, 2007.
The GDRs are fungible i.e. can be converted to shares and vice versa;
Application forms for the GDRs will be ready by Friday, 13th July, 2007;
FCMB has underwritten $50 million worth of the offer.
Interested parties can subscribe through any of the nine underwriters, including First City Monument Bank Plc. CSL Stockbrokers is making arrangements to receive bids orders from potential individual investors outside of Nigeria, through its London representative.
Funds to support a potential investor’s application must be forwarded to FCMB by Wednesday, 18th July, 2007;
Dollars will be available from the CBN at the CBN rate on the transaction date. The local Underwriters have tentatively suggested an exchange rate of US$1:N127.50;
Trading on the GDR will effectively commence the next trading day after allotment on 20th July, 2007. However, there may be a lock-up period of a month for the domestic tranche as the CBN may want to verify funds;

http://www.proshareng.com/myproshare/portal_articles.php?id=1169

dearstan:
from what you guys are saying, would it be wise to invest in dangote flours? i need specific replies with reason as to why

Again, wait for the prospectus. See how much earnings (and earnings growth) is promised and compared the PE ratios to companies already in the market. Factor in the time to receive the certficate and then decide.

When the offer comes out, post the prospectus right here and I'll share my opinion.

@ MT,
Competitive advantage? Dang Sugar is a monopoly, they have no competition! And the money you paid into Dangote Sugar could not have resulted in an expansion already; those things take time.

Here is my hypothesis on why Dangote Sugar did really well. In December (when it came to the market), this bull run had not started and companies were trading at PEs ~15 and Dangote offered Sugar at a PE of 10. Following the bull run, PEs of 20-30 are now commonplace and going from an offer PE of 10 to a current PE of 20 is what caused Dangote to double. There is no Dangote magic touch, no competitive advantage, no expansion. There has been a bull run that caused almost all the companies to double over that period.

If Dangote had known he could sell Dang Sugar at a PE of 20 a few months later, I'm sure he would have waited and sold at ~N30.

Now to Dang Flour, read the prospectus and calculate the forward PE based on the earnings forecast and see if it's much lower than other companies. That (and not the Dangote name) should influence your buy/no-buy decision.

@ All,
found this article on the GTB offer. It states that they are only raising N96B because raising any more will erode thier ROI. I love this bank! Still waiting for news per how many additional shares will be listed if any.

http://www.businessdayonline.com/?c=54&a=14634

@ Frank,
Happy Birthday and God bless. DollyP's post is smarter than anything I could come up with.

Ess:
@ All,
Please can someone explain to me why Ashaka has been dropping and is there any hope for it rising especially with Obajana making its move to the market?

Ashaka's Full year 2006 result came out about 3 weeks ago. It shows a 24% reduction in earnings over the previous year. Not the right direction for a stock to be heading especially with Obajana on production. I don't see much hope for a turn-around unless they release some interim results showing increased earnings. Sell.

@ dollyp1cute,
preach on sista! I don't think anyone has ever described my opinion on the NSE better than you just did. If not for the outstanding returns that you can't get anywhere else, I wouldn't bother. You want to talk shambles? I'll talk shambles; registrars who keep spelling my name wrong and won't correct it (so now I sell once a dividend or bonus is coming my way), a DG that sits on a board of a major company and manipulates it's price to preserve her net worth, price movements sparked by people who've seen the results and start buying before it goes public, unresponsive brokers who can't calculate simple PE (NSE website and Lead Capital) and advertise websites that don't work half the time. DollyP covered the rest.

I think it's like mining diamonds out there, it's all worth it when you find something but the integrity and quality of service leaves a lot to be desired.

I wonder how Access is able to grow at 200%.

@femlaj,
the attempted response above only served to confuse me.

Sterling has only released one result so far; 3 mon to Dec 2006 with a PAT of 630M. Not good for a company with 10.6B shares. even if they can make 3B over the full year, the EPS would be 28k and the forward PE is thus 28. Nothing to write home about. Your call.

Can someone explain in plain english what this is all about? This is a public forum, no need to get too personal. If there is something fishy going on in proshare, let us know.

@ Salsera,
I wouldn't advise pulling out of banks; just be careful about which banks and account for shares yet to be listed when doing your math (if you are speculating). Banks are mostly solid and are growing at a v good pace. But the PEs are v high so diversification is a good idea.

Nite Angel:
Aliko has his lessons in humility mixed up. What is the essence of being the richest man whether in Nigeria or Africa if hundreds die everyday from want of a life line which may be as cheap as a plate of food.

I really wouldn't spend my time discussing his level of wealth. If you know the impact he has made in his immediate society let's discuss that; his position on the money ladder aint worth my time.

The essence is to make sure the 30,000 peeps you employ (and the 30,000 you'll soon add) don't join the other 30,000 that are dying. Didn't you watch Schindler's list.

Give a man a fish and you'll feed him for a day, teach him to fish and you'll feed him for life. People like Dangote are teaching us to fish. Pay attention.

Besides, Mexico is just as bad as naija and Slim is much richer than Dangote or Oprah. You think he can cure Mexico? Every country has issues and capitalism is the cure to several of naijas issues. Pray that one day, Dangote will pull a Bill Gates and become a philanthropist.

@ Donzman,

Not sure how much of Zenith Jim own's but he'd need only 25% to cross the $1B mark. Zenith Bank is worth over $4.5B

naijacutee:
What I find intruiging about this is that the world's richest man comes from a country where 53% of the population live in poverty.

That's life. You need to drum some sense into some playa haters bashing Dangote for his Oprah comments. Dangote is our Slim, our level of poverty compared to the west not withstanding.

@ Oseitutu,
wise, v wise. The problem is human nature. Do you want to pull out and see your (ex-)portfolio climb another 50%? Case in point; I sold Japaul at N3. I think knowing the right time to pull out will be the challenge. As per land, you need to be v careful there, esp. in Lagos.

frankiriri:
While I beleive that most stocks are over valued, I still agree that the stock market remains the best investment vehicle available.

I agree. We need to get back to the purpose of this thread: advising on what to buy. Will consult the oracles (actually my excel files ) and get back to y'all v soon.

BTW, here is something I found on Proshare that may be useful to you IPO/PO junkies

"Diamond Bank, Access Bank, Fidelity Bank, GT Bank, Obajana Cement, Dangote Flour, NAHCO, CCNN, Capital Hotel, IGI, Nigeria Reinsurance, Nitel, Ecobank, ETI, Kaduna Refinery, Port Harcourt Refinery, Japaul Oil & Maritime Services, Guaranty Trust Assurance, Morison Industries, Skye Bank, FCMB, Continental Reinsurance, Wema Bank, Spring Bank, Design Union Developing Limited (a key player in the real estate sector) and Costain West Africa Plc are expected to come to the market through initial public offers or public offers."

http://www.proshareng.com/myproshare/portal_articles.php?id=1159

All I can say is WOW!

Frank, because you are my guy

https://www.nairaland.com/nigeria/topic-64907.0.html

All, use the link above instead.

egin:
Forbes magazine rating Dangote is like Forbes magazine rating IBB, Abacha and Obasanjo. He is part of the group that has made Nigeria what it is today. No roads, No electricity, No good public schools at all levels, No portable water supply, bad healthcare system. Fobes will only rate people with legitimate, verifiable income.
Let us stop deceiving ourselves so that we can start to solve these problems.

Does Dangote collect your taxes or embezzle oil revenue? Is Oprah responsible for sexual promiscuity or abortion in America? Is Slim responsible for emigration in Mexico? Is Mittal responsible for India's social ills? Dangote's income is legit even if he is in bed with the Govt. Think about how much worse off we would be if he had chosen to continue importing instead of manufacturing in-country.

Ask yourself why no Nigerian made it on the list? Not even Jim Ovia (a legit biz man) who's shares in Zenith clearly put him over the $1B mark. Dangote is not the only one. With the market explosion, wealth will become larger and easier to monitor. Expect several Nigerians to join the club in the near future.

ebos:
Before Bill Gate decided to give out a good percentage of what accrue to him, his name has since been a family one among the Orphans etc, and he has been known for supporting especially Africa countries in the fight agains AIDs, helping the less privileged, and so many other things in Africa, Asia and beyond. Tel me about Dangote, he has employed many Nigerians in his company - paying them peanuts.

At least it's more than what you or I have done. You should be praying that he sees the light and gives away most of his fortune. How do you know he doesn't do those things without the media spotlight the westerners choose to employ (which is often self-serving)? I've met Dangote a few times in a public gym I used to work-out in in Lagos. He used the same showers and changing rooms as everyone else and always politely asked for someone to join in in a game of squash (or was it  racquetball?). It took me a while to be convinced it was the same man, always thought it was a look alike.

Bottom line: it's easy to throw stones. Instead pray for him to do what's in his country's best interest and stop playa hating. All you PHDs. (Sorry Puffy / P. Diddy)

@ Omoba3,
Here is my pet peeve again; people using stats in a misleading way. Stocks don't have a yield of 3%. stock yields are dividends + capital gains. As long as a bank (or any other stock) continues to grow it's earnings at 50+% p.a., it'll remain the most attractive investment vehicle in Naija. That a correction is coming is not news. You can see the market slowing down already. The rash of mega offers (each one larger than the last one) may precipitate a slight correction but I don't see anything else that could cause a crash.

[quote author=Iyke-D link=topic=64811.msg1276027#msg1276027 date=1184018512]@sniperwolf

talk show queen, enh? Anyway while you are wishing for Dangote to bleeping himself, make
ure you don't choke on that Dangote pasta or only use a few cubes of Dangote sugar if its
tea you are drinking. . . have you built your house yet, was it Dangote Cement you used?
While you are at it, get ready soon for Dangote Petrol Now, who is bleeping who?[/quote]Profanity aside, this is the best post I've ever read on nairaland. Nice one. LOL!

MP007:
he is an idiot, who cares, u claim to be the richest and your fellow Nigerians are swimming in poverty, comparing himself to ophra is blantant, he is simply a fool.

And there are no poor people in Mexico or India? He boasted and that is wrong, but how much have all the other tycoons (incl. Slim) given back? Was it not just recently that Oprah built a school in S.A. and Gates & Buffet promised to give away their fortunes. What about the rest of them? Is setting up industries throughout your home country and listing on the stock exchange not in your country's interest?If you don't care, you would not post. You are simply bitter. Worry about your own money and how you'll account for it and stop hating on Dangote. Reserve your venom for people who have embezzled public funds for years.

@ MT,
Dilution means listing additional shares without buying a company or adding  a new line of business. If a company had 10B shares (like GTB) and makes N13B (again like GTB), the EPS is N1.3. If they add 5B shares through a PO or GDR (I new to GDRs) the EPS drops to 87k and your PE goes up. You did nothing wrong and now your shares are worth less than before. That is why POs are not always a good idea.

Questions 2 & 3 will become clearer soon.

To question number 4, I think N80k was an approximation. Trust me, a lot of people will be looking into forex to exploit any price mismatches. The investopedia definition of DRs may throw some light.

http://www.investopedia.com/articles/03/091003.asp

@ champredd,
Nice post. You are correct in your observation about our still pervasive colonial mentality. It's okay to sell to Onyibos and Chinese at rock bottom prices. Let Dangote (honest or no) or Otedola buy and everybody throws up their arms. Meanwhile, the MTNs and Shells are shipping billions back to their home countries and won't list on our market so we can partake.

I suspect Dangote is trying to promote his brand even further beyond our shores and a listing on Forbes won't hurt!

People keep insinuating Dangote is not legit. Where is even a rumour of complicity in illegal business?

@ amaikama,
Why the beef against Dangote? Oprah made her money by talking to people and is worth $1.5B as a result. Dangote made his money by starting a series of companies and watching them grow since the 70s into what they have become today. That is how every billionare in the world makes money: through shares, either in their own companies (Gates, Jobs, Ellison, Balmer, Slim and Oprah - owner of Harpo productions) or in other companies (Buffett). Shares are (directly or indirectly) the ONLY way you become rich. You clearly don't study markets or economics or understand how people make money. You simply sound like a typical bitter Nigerian. Why don't you buy shares into his companies instead and get a piece of the pie? Or raise money and go challenge him.

He is not bluffing (use spell check next time), he is not competing with Mariam (who is the one you should be bitter at), he is probably the richest self-made Nigerian and I wish him the best and hope he buys the rest of the Govt's ailing companies and turns them around.

That said; no need to invoke Oprah. He might have done so because she is the only black person on the list (I think). I'm interested to see what Forbes will say.

Financial Standard has a very poor website and that story never made it there. It's not news (at least not "new" news), it's been on business day, Proshare and other good websites. It's also been addressed in the risky business section.

Bottom line is CBN is not taking action but is simply setting itself up to say "I told you so" if/when it all blows up.

Does anyone know if there's going to be a technical suspension or if that's unnecessary with GDRs? I own quite a few GTB shares and was hoping to "hide" behind the 6 months it takes to issue new certs and the usual post-suspension bull-run. Now it seems the shares are going to be diluted instantly (the degree of dilution is yet to be determined).

To the Gurus  : does this make GTB a buy, hold or sell? Should I eat my loss (as I seem to be doing lately) and move on? Will the listing of GTBs GDRs (say that ten times v. fast) on the LSE put a premium on the share price (not worked so far for Oando)?

Iwerebor:
Hi All,
I say we make our posts inclusive. For instance the post by EMMAACHILE on Access bank's data had me staring without understanding, the reason for this is the deluge of acronyms. I'm new here (the forum as well as stock trading), I would like posters to aid understanding of their posts by putting full words of their acronyms in brackets.
While reading EMMAACHILE's Post, acronyms such as PE, PAT & EPS flew completely past my head. Please help!

Go to www.investopedia.com 

Look under "dictionary" and and read up on the definition of each of those terms. You need to make that site a good friend. People on this site and others in the financial world will not explain every acronym each time they use one

RoughCut:
Not quite correct as per the local portion of the GDR $250M dollars the pricing range will be given on 11.07.07 and exact pricing by 20.07.07. Quoted on the LSE(London stock exchange) and dividends paid in dollars.

For the details of GDR please visit --------------->http://www.proshareng.com/myproshare/portal_articles.php?id=1157

I read the article and found it tough to follow. I think I understand what a GDR is (and kudos to GTB for thinking out-of-the-box) but how many additional shares will be listed and when? I think someone who is knowledgeable should start a new thread to address this and keep us posted as things develop.