₦airaland Forum

@ Enolase,

Allow me to disagree with your analysis

1. Access bank's EPS is at an all-time high not because of better fundamentals but because of share reconstruction aimed at reducing the number of shares without adding value. The EPS went up but so did the price and therefore the PE stayed the same. No winner, no loser. Frankly, any company that is growing will always have an EPS that is at an "all time high"

2. The bank is growing rapidly but not at 330% like you quoted. You used a sleight of hand in your calculations. Access bank declared PAT of N1.64B in 3Q to Dec 05 and then declared only N0.74B for the Full year! Meaning they lost N0.9B in the 4Q! Comparing apples to apples, they are only 90% up when you compare the last 3Q to the previous 3Q (still quite impressive but not 300%). Quoting 300% rewards them for losing money in 4Q06!

3. The current market price already accounts for that 4Q loss and the growth rate and the current PE is 59! If you project the 3Q result to Full yr, the PE will be 40 at the offer price and 52 at the market price. In other words, this share is 2X the cost of GTBank!

If you accept the bank can keep growing at 100% p.a. (u wish!), the PE at the offer price will be 20 a year from now. A reasonable PE but u have to wait one year. I expect the stock will make the usual after-the-suspension-is-lifted run, but how many people have we heard on this forum crying about missing certificates. By the time u get your cert, the price would have declined (see Dangote) and u'll be waiting for the fundamentals to catch up to your stock instead of the other way round.

Say no to POs!

kanugab:
please i need help
is there anyway i can dispose my oceanic without certificate. i bought it at ipo and will like to dispose it , but am yet to receive my certificate.

Sorry but you have to wait!  You can't sell without a cert. You may be looking at 4-6 more months

diva4eva:
hello peeps
Please any gist on cornerstone insurance? why was the price suspended for 3 days. it seems cornerstone is not really going to do well anytime soon. please any news on corenerstone insurance would be highly appreciated

@diva4eva, Look on the other thread for a response, my wrist is starting to ache!

@Wanaj0, thanks a mil for your Oando advice. I was about to bury a ton of money in that stock. I googled them based on your post and lo and behold! There is some info on the Johannesburg stock exchange that Oando is going to list 200M additional shares to exchange with Ocean and Oil. Granted they'll get some equity in other Ocean and Oil subsidiaries (which should add to Oando's bottom line), but dem suppose tell us self. I still think it's a buy, but not a home-run like I thought a few days back. I owe you one.

Now my wrist really hurts! 

diva4eva:
hello peeps
Please whats the gist on cornerstone insurance? why was the price suspended for 3 days. it seems cornerstone is not really going to do well anytime soon. please any news on corenerstone insurance would be highly appreciated

Cornerstone was not suspended and has started to inch downwards in the last 2 days. Most people missed the news when additional shares (now 5B from 1.9B) were listed a few weeks ago. That has seriously altered the fundamentals and the PE is now 105! If they don't release some amazing results soon (the full year 2006 results are due any day now), the bottom could fall out on this stock. And I don't see much room appreciation at this PE.

Another reason why you should say no to POs or stocks that have just done POs.

mimiye:
I just joined this forum because of how informative it has been to me especially on the issue of buying and selling stocks.
Right now I am seeking to buy Nestle Nig shares. Please can anyone analyse the benefits and disadvantages and the best time and rate to venture

Nestle has become the classic "value stock": very low growth rate (10-30% p.a, vs 60-100+% for most banks) but pays v good dividends (div. yield of almost 4% is good for a blue-chip in today's NSE). If you are looking for long-term stability and great dividends, buy Nestle at today's price. If you have the liver to make money backing a "growth stock", read up on this thread and others. Lot's of good advice available there. I'm deep into Wema, Wapco and Skye. Other buys on this thread include Beta Glass, Longman, & GTBank.

good luck.

feelgood:
Guys, It's difficult buying Oceanic, mutual benefits; it appears nobody wants to sell.
What do you guys think of Lasaco, C & I, Wema and Skye. I got 500,000naira to play with for only 3months - which stocks can I buy? Advise please.
Many thanks for the great work you folks are doing here on this thread messrs Frankiriri, aylala, easimoni et al

If you need the money back in 3 mos, u are better off with fixed deposit. To buy and sell will cost you ~6% so you have to make >10% for this to be worth your while. Not sure anyone can guarantee there won't be a market-wide correction as soon as you put your money in. You really should be able to wait at least 1 yr with anything you invest.

If you are prepared to bite the bullet, I'd suggest a 50/50 split btwn GTBank and ABC Transport followed by a lot of prayers.  

wanaj0:
Be wary of petroleum marketing stocks. Until you have full deregulation, you need to be careful. Oando like the other companies in the sector are having dwindling margins. What also makes Oando a bit risky is the hold that Ocean and Oil has on the company. Ocean and Oil is being used to 'ferry' money out of that company. Just look at the share dilution that is going to take place based on new shares to be issued to Ocean and Oil!

If anything, Oando's profit margins seems to be increasing! I'd really like to know how/when new Oando shares will be issued. Can't seem to find any news to that effect. A response will be greatly appreciated (I just placed an order for a boatload of shares).

moneybags:
Hi everyone, does anyone know when the technical suspension on IBTC and Afribank will be lifted?

Afribank is in no man's land. They have been too busy fighting off a takeover to launch their PO. They will remain suspended until they finish the PO or indicate they will no longer pursue a PO. If they choose the first route, expect a lift no earlier than 4Q07.

IBTC will prob be lifted after the merger with Stanbic

IT wasn't just the reconstruction. They also listed new shares based on some foreign investment converted into shares. This further diluted the value of the shares on the open market.

If you like doing POs (I don't), better ones have gone and better ones will come. This is one to stay away from! The fundamentals are weak, v v weak.

egoldman:
Hello , are you from the proshareng website or is this just an id name you like ?

Based on his other posts, I think he owns/runs Proshare

toyibanj:
To the gurus in the house.
What's your opinion on the Access Bank IPO offer of 14.90 naira. Good buy Was the suspension share price of 19.32 overvalued?

Thanks all as you contribute.

My spreadsheets say Access Bank's EPS could be 80k a year from now (accounting for the new shares). If you buy the PO, you'll get it at a FORWARD PE of 18.6 (not bad) but not until this time next year. Bank stocks are becoming overpriced and this PO heads the list. You'll be much better off buying GTBank on the market. Barring GTBank coming to the market for a PO, I can bet you'll get better returns with GTB (and my current hot pick: Oando) than with Access. Don't forget you'll wait months for the certificate.

Say no to POs!

desorlah:
Can somebody please tell me when the Offer will be closing and the minimum units that can be purchased.

https://www.naijabigoffer.com/

This is the official PO website. It'll have all u need.

@ All,

good piece by Allcorrect. My spreadsheets say Access Bank's EPS could be 80k a year from now (accounting for the new shares). If you buy the PO, you'll get it at a FORWARD PE of 18.6 (not bad) but not until this time next year. Bank stocks are becoming overpriced and this PO heads the list. You'll be much better off buying GTBank on the market. Barring GTBank coming to the market for a PO, I can bet you'll get better returns with GTB than with Access. Don't forget you'll wait months for the certificate.

Say no to POs!

egoldman:
easimoni , could you plz give more in dept details why think cornerstone is an immediate sell .

Following the PO, they now have 5 billion shares. if you project their 1Q07 results (PAT = N175M) to a full year, you get an EPS of 14k. So, a year from now, Cornerstone should be worth ~N3 (based on PE=22). Compare to the current price of N4.

kanugab:
I have small number of fidelity bank which i may like to dispose. But i don't know if there is still prostect of better appreciation in the nearest future. please advise needed

Fidelity has exceed it's fair value. Unless the profits grow miraculously, sell and buy GTB, UBA, Oando or other stocks that have been suggested in this thread.

kauskey:
Hi all,
Does anyone has any info on cornerstone insurance end of year (Dec 2006) result? Besides, is it a good buy at the current price of 4.02?
I have also noticed that the stock has been "stagnant" at 4.02 (both high & low price of the day) for 2 consecutive days now (i.e Friday last week and today) with changes in the volumes traded. Is the stock on technical suspension?
Any explanation will be appreciated.

A few weeks ago, Cornerstone listed additional shares and now have 5.06B shares outstanding. They have not released full year results most likely due to the fact that FY results have to be audited. I suspect it'll be out by month end. Did not hear any story about a technical suspension so I don't know why the stock is stagnant. Regardless, expect the PE to be very high at a price of N4. I'd rate it an immediate SELL and not a buy.

@ Senetee,
I like Oando but I'm not in to money doubling Just buy the stock with a lot of upside. I guarantee there'll end up being a better stock but you'll make money

@Shey,
yes 500k both ways sounds good. If you forced me to pick, GTBank and Oando. The other banks and Guinness in the first group may be hard to get. Oando is also well underpriced. And yes, you do need a broker.

@ feelgood,
sorry mate but a quick inspection of  BCC tells me it's overpriced. I understand why it had a good run (it was taken over by Dangote who turned it around and delivered solid growth in profit-after-tax) but the final year results & 3 months to March 07 showed that the PAT growth rate has slowed significantly. From 3.1B last year, they may deliver 4.5-5B this year. With 2.8B shares, you get an EPS of N1.7. Apply a PE of 25 (v generous) and you get a fair value of N42. I don't think the price will fall significantly, but unless the profit starts to grow miraculously, there is no room for growth!

shey:
please what i want is for any body to tell me what share u think i can buy and how many units i should buy for a start

I think you should start with two shares. Go for one of each and try a 50/50 split.

1) Go for a safe, stable company with solid returns almost guaranteed. Try GTBank, Oceanic, Diamond bank or Guinness.
2) Buy a stock with high upside (and therefore more risk). try Wema Bank, Africa Petroleum, Skye Bank or Oando.

then get plugged into all the websites and stay tuned. Most importantly, educate yourself on the use of ratios and indicators so that you can do your own analysis.

@ ALL,

just found this article. It says Intercontinental bank is about to increase it shares by 4.5 billion units as a result of the recent foreign investment in the bank. Not good. It also says they'll end up with 21 billion shares. They currently have 10.7b shares so I don't know how that math will work. regardless, maybe Intercontinental is no longer a buy.

http://www.stockmarketnigeria.com/2007/05/30/intercontinental-bank-increases-shares-by-45-billion-units/

No one knows if bonus will be given at year end. If you know, it's called insider knowledge and it's illegal. Loose tongues often leak rumors about such and sometimes they turn out to be true. Buy a good stock, bonus or no bonus. as a matter of fact, I always pray that my stocks don't pay a bonus.

crazyT:
@ EASIMONI and FRANK


Hi guys, I will like to have your takes on this stocks. Afprint I bought it when it was 0.88kobo and as of today it's #3.60 and Afroil was bought for 0.44 kobo and as of today it's #8.35. My question now is do I sell or hold these stock? I'll surely appreciate a very honest and good advise.

I don't know much about either stock. I typically focus on banks, cement and maybe ten other stocks. But if you have reasons to believe these stocks can still do well, then hang on. My view is that you've "ridden the bull" on these stocks and it's time to look for other winners. that said, when you pick your next stock, pls let us know. It seems you have the midas touch.

[quote author=Iyke-D link=topic=2703.msg1031644#msg1031644 date=1176336156]The board of TransCorp which confirmed the new development in a statement made available to the Nigerian Tribune yesterday and signed by the company’s Head of Communication, Mr. Adedayo Ojo, said they took the decision to enable the board committee to fully investigate the circumstances in which Mr. Longe left First Bank of Nigeria Plc.[/quote]The circumstances under which Mr Adedayo Ojo left his previous employer (ExxonMobil) is that he was fired for misuse of company property. That company is a bevy of thieves. Do not invest!

feelgood:
Many thanks easimoni; sure appreciate it ol pal, I suppose you endorse my disposing of my wapco now even at a loss, so I can get the suggested stocks?

I think that is the right decision. Keep your eye on intercontinental bank in addition to the other stocks I recommend.

nazzyon:
How far will WEMA go in 4 months time?

Based on Wema's yet-to-be-released full-year 2006 results, they should have an EPS of 50+ kobo and a fundamental value of N11+ (based on a PE of 22). If they decide to do a PO, they will also bid up the price to N15. If they declare a bonus or good dividend, N15 is also a good bet.

The downside if if they fail to declare a good dividend or bonus. In which case, it could max out at N10

SavvyLanre:
BTW - can you guys let me know how the bonus issue affects the trading behaviour in naija; and how one can factor it into decisions, My current biggest stake is in Zenith (1/3 of my current portfolio, if it rises to N60 then it would be 2/5). I need to know how to take good decision, in the event they do not declare a bonus issue.

A lot of investors who don't do their math (PE and EPS) erroneously believe that a bonus issue will increase the value of their portfolio. I know of several investors who are not aware that, on the day of the bonus, the share price is adjusted downwards to keep the value of your investment constant. People have told me "It means I have more shares". I try to tell them the value remains the same. But you know what, even though bonus issues add no fundamental value, Naijas love for it means that if you know of a stock about to issue a bonus, jump on it. Sell it before the bonus is issued. It might take you a long time to get your new certificate. I know of people who have been waiting for 2+ years for Conoil and Nigerian Breweries.

I would love to levy my employer everytime I failed to do my own job!

A govt that can't provide power despite collecting my taxes, is now charging me for doing myself. Na wah o! Govt is quick to forget that they work for the people. Any talk of pollution is rubbish. Lack of power will kill me more quickly than pollution will.

@ blacknbold

You are right. Don't commit a large amount of money to someone without a face-to-face. It's not about naija, it's just good business sense. Your ticket money could yield returns but hopefully this will be the start of lot's of deals for you.

sharestalk:
@easimoni
Thanks brother man.
I wonder whether you can help me analyse my current stocks, that is, offer advise on which you will retain and which you will keep. If you indicate a willingness I will send a private e-mail to you. Thanks again

Sure, email me on [email]easimoni2004@yahoo.com[/email]

Also, this thread was meant for the proposed Investment club. Let's move this discussion to a more appropriate thread.

https://www.nairaland.com/nigeria/topic-31554.1088.html

SavvyLanre:
Does anyone know why Intercontinental bank fell today after announcing a PAT of 104.7% and proposed 35k dividend per share?

My hypothesis is that the market is disappointed at the v. low dividend pay out of 35k (65K if you include the interim dividend). It's too low for a N30 stock! Also, Naijas seem to be addicted to Stock Splits (which we deceptively refer to as Bonus Issues). If you don't declare a "bonus", people get disillusioned with your stock (See WAPCO).

Anyway, for those willing to ignore dividends and bonus issues (like me and I suspect Frankiriri), Intercontinental is now a MUST BUY. I suspect some savvy buyers will soon step in and send the price up. The drop in share price should be short-lived. I project N45+ by year end. Does anyone want to lend me money? 

@ Salvage,
I posted earlier this week regarding stocks I own. more than 50% of my portfolio is in wema. please look at my post history (dated May 29, 2007, 09:14 AM) for the reason why I see Wema as a N12 stock in under 2 months.

@ Feelgood,
At the very least, you must hold Flour Mills until the full year results are released (due any day now). Flour Mills has a long history of delivering good 4Q results. This will boost the EPS and hopefully spark a rally in the share price. I suggest waiting a couple of months to see if it can push N100. + it has great long-term potential with the diversification into Cement production .

I don't see rapid growth for WAPCO, full year 06 and 1Q 07 have been released and neither was impressive enough to spark a run. In 3 months (your stated time-frame), the 6 mo result should also be out. It won't be good enough to spark a run. You might try to get some AP, Wema Bank, Oceanic or Oando. Those are stocks I think have good growth potential in the short term. Good luck trying to buy the banks!

Best buy ever was Japaul at 90k, sold it four months later at N3. Two months later, it is almost at N6 . Had a similar experience with WAPCO last year but it took much longer to appreciate.

Worst stock ever was AP. Bought it and 2 weeks later, NNPC announced AP had an N11B debt. Could not even find buyers. Only the second time I ever sold at a loss (1st time was when I took my broker's advice)

toyibanj:
Enolase
Who are the reputable stock analyst in Nigeria? Many of the brokerage firm i find don't have a strong analytical team. Most are after commission made on trades. Some recommendations would be highly appreciated.

Allow me to vote for IBTC. They provide flawless research on their website. Dunno about customer service though. I've seen Zenith touting some strong technical analysis on the proshare website. I don't see such analysis on the Zenith website!

@ Sharestalk,
thanks for the compliments. Allow me to explain my rationale behind my stock picks. Please note the post you referred to is more than a week old and prices have moved since then.

1. AP (was 65.85 last Monday, now 69.14)
AP's 9 month to Sept 2006 result showed a profit-after-tax (PAT) of N2.7B. If you project that to a full year result of N3.6B and divide by the number of shares (745M), you get an earnings-per-share (EPS) of N4.83. In this current environment (I don't think it's bearish yet), a PE of 20 is reasonable. AP should have a fair market value of ~N100. Don't know when the Full Year results will be announced or if my projections will prove accurate, but remember that they will also soon publish the 3 months to March 2007 results which should give an added boost. If nothing else, Otedola paid NNPC N80 per share. Stock came off suspension yesterday and did an easy 5%. My year-end expectation is ~N120.

2. Wema (was 7.86, now 8.55)
Similar analysis: 3 mos to June 2006 PAT  = N1.7B. Projects to full year of N6.8B. However, the MD said in church (yes, it was on the web) that they passed N5B in PAT. If we use N5B as the full year, 10.19 B shares will yield an EPS of 50K. Again if a PE of 20 is fair, WEMA is worth at least N10. Rumours have them boosting the price prior to a public offer later in the year. I have set my exit point at N12

3. SKye Bank (was 7.91, now 10.06)
This was a hunch. If you read my previous posts, I shared an excel file with my SKYE bank analysis that had some assumptions (basically, I said the profit margin would improve sharply and drag up the profits). The price movement has since borne out my analysis and I think N13-14 is a fair price by year-end. I plan on exiting very soon!

4. WAPCO (was 67.5, now 70)
This was a short term-play based on my expectation of a solid 3 month result (already happened). I might hold to see what happens if and when cement importation is banned in December. Market psychology may drive cement co. prices through the roof just like in late 03 when the so-called deregulation drove oil co. prices into the stratosphere.


My picks going forward:
I plan on re-balancing my portfolio v. soon and here are some stocks (other than the ones I own or that have just done/doing public offers) that I may consider.

1. GTB: may soon release 3 mos results, great growth rate but I only see N40 by year-end. Rumours of a public offer, that may drive prices close to 50.

2. Oando; PE of 14 is one of the lowest among the "blue-chips" (if Oando can be called a blue-chip). I see an easy 60-70% climb by year end. 100% is v possible.

3. Dangote: only if the price falls below N40.

4. Flour Mills: they have a tendency (for the last 5 years) of delivering v. strong 4Q results. Said results are due any day now and could drive this share to N90. Only a v.v. short-term play.

5. C & I leasing :  great results but I generally stay away from small companies.

Finally, stay away from JAPAUL, Crusader Ins, Cornerstone ins, Transcorp, and the Access Bank PO!

Enjoy.