Breaking news!

Again, the MPC continues with its hawkish stance for the 6th consecutive time.
Summary...

>> Increase in MPR by 50bps (0.5%) to 18%. (previous: 17.5%)

>> Maintain the asymmetric corridor at +/-(100-700)bps around the corridor

>> Hold on the CRR @ 32.5%

>> Retaining the Liquidity ratio @ 30%

Interesting how the same consensus pattern keeps turning up, as 11 members all voted to adopt a contractionary stand (with one member inclined to a 0.25% increment in MPR), as against just one member proposing a hold on previous status quo.

My view? worthy decision.
Follow up analysis in due course.

It is well.

OBAGADAFFI:


Thanks.

Is it true that Zenit Might be having liquidity problems?

Honestly, I really don't know anything about that.

Regards

Cadillac15:
The negative factors staring at the banks at this time is too many.
Most of them own the junk bonds from Ghana.
Their Q4'22 and Q1'23 is going to be messed up due to emefiele's cashless policy.
Also, Nigeria's recent junk status rating is going to trickle down to them as they also own FG bonds and the outcome of the election is just waiting by the side.
I see ZB and GTCO doing N15 again soon with ZB even worse due to the ongoing board management fight and its holdco reconfiguration.

I like to agree with you.
However, it's important to also state that the impact on banks would vary, depending on their level of exposures so we don't appear to blow matters out of proportion.
Are there concerns? Absolutely!
But the question is; to what extent?

There's need to check what peg of provisions (for impairment) they've made in the course of that financial yr. (2022)
Is there a chance that some of these banks anticipated things and had a risk magt framework in place to cushion the degree of possible impact?
Recall that the Ghana bond issue followed a pattern, so magt should have been deliberate in their actions.

The figures from their financial print shows that FBNH, GTB and UBA have the least No of exposure while FIDELITY, ZENITH, ECOBANK and ACCESS have higher exposures from LtR in that order.
This is why I worry for ACCESS. Their growth model puts them at higher risk given the concerns on AsY and AsQ (CoR in view), and why I prefer UBA ahead of ACCESS now.

No doubt, Ghana's Sovereign debt will affect the capitalization of these banks and quite possibly, create higher loan impairment in the near term (like you, my projection are for Q4, 2022, Q1, 2023 but also H1, 2023), but I still maintain that impact will likely not be significant.
For one thing, these big lenders have their OPM/operating profit structured with strong pre-impairment (provisions in view), which creates the needed shock absorber to take in this sought of loses without a material impact to their capital structure.
This is even more so when you consider the relatively small sizes of their Ghana subsidiaries.

I am more worried about our domestic sovereign debt exposure in view of recent happenings than that of Ghana... which is why I like to think that our assessment should be on their current peg of CoF/CoR and how it's impacted AsY/AsQ prior to this time. (Q1--Q3, 2022)

As I said before; DBMs with a healthy/balanced-- favourably sector assigned loan book but also an investment driven portfolio, will continue to do well.
Otherwise...

I think that UBA and GTB with a lower level of exposure will maintain if not better their growth trajectory. (ref: YoY)
With FBN, well maybe, but am still not comfortable with certain Nos in their financial print.
I prefer UBA, STERLING and GTB at this time... though I must admit it would've been better to align with the last name @ N17.
With the requisite trade set-up, I will align with the 1st 2 names at this time, but that's just me.

Again, careful selective play should be the way to go! (for now)
Regards

OBAGADAFFI:


The impact will not be much on STANBIC due to the shareholding structure.

Am sorry I made a mistake.
That part in bold should be ECOBANK and ACCESS (not STANBIC)
Will effect the necessary correction to that post.

While I wouldn't align with STANBIC at the CMP, I think that impact from impairment on the bank will likely come from our domestic sovereign debt end and not that from Ghana.

Regards

For clarity; the concerns raised by @RabbiDoracle and a few others are of course valid.
But like I always say;

"Between uncertainties, difficulties and failures is the many 'gift packs' from the stock market.
...and inside those 'gifts' are smaller 'packs' with obstacles but which are sealed with CRAFT.
Yet down inside, are even more 'packs' of OPPORTUNITY."
~Sinclair

Careful selective play is the way to go!

Selah

eziokwunwoko:
Dear onegentleguy
PLEASE WHAT IS YOUR FAIR VALUE OF STERLING BANK.
STERLING BANK FINANCIAL Ratios as per unaudited Q42022; What is you take.

If you have bought @ N1.5 and below, you can of course sleep very well having peace of mind.

In the stock market world, a cheap/undervalued asset isn't just one whose price is low in terms of VALUE or high in REWARD... but broadly one whose price is lower in terms of RISK and even higher in peace of mind.
...a wining investor must know how and when to relate in between !!
~Sinclair
This Nugget is KEY !!

One of the finest similarity between a bull and a bear market is that both OVERCONFIDENCE and UNDERCONFIDENCE can be punishable offences.
..."the jury" tends to vindicate those who understand "the concept of neutrality" where necessary and are swift enough to act on it !!
~Sinclair

The stock market will more often than not, gift you with a "weighing scale" but unlike that device, your "measurement precision" would solely depend on finding the RIGHT BALANCE between holding on and letting go."
~Sinclair

RabbiDoracle:


Trying to investigate what one should expect from the 2022 yet-to-be-released bank results and using the recently released note on the delay by ETI, looking at their Q3 2022 report on page 5 about other comprehensive income, we hope that isn't what they intend to add to their P/L account. See attached.

Also ran checks on Zenith, UBA, FBN, Access, GTB and other banks are they seem to be having similar negative other comprehensive income (debt losses and fx loss) measured at FVOCI but not to the extent of ETI. And this was just Q3.

Sometime in Nov, 2022, I did some extrapolations on the OCI of banks (safe for Unity) stoked by the fair value differential (FVD) from eligible reclassified asset in their books, and its would-be impact on their NPM... and I remember telling some folks that;

1) ETI was a sell.
ETI had a fantastic run in on growth trajectory up until H1, 2022 following magt deliberate strategy to improve AsQ in Nigeria, but Q3 report printed a deviation in that line.
N12--13+ should've been the best exit price given how risk at the time, had a near equivalent peg to possible reward in view of the banks intrinsic value.
But I have to admit that selling now still defines playing safe.

2) ACCESS, ZENITH, FCMB, FIDELITY, UBA and GTB were a buy depending on ones trade set-up.
As I said then; I like the 6 names, but prefer the last 3. (portfolio weighting in view)

With the last name (GTB), there were valid concerns that NIM would continue to deteriorate and rein in on AsQ following the decision to adopt a Holdco structure and given how the banks CoF was growing at a much faster pace than AsY prior that time.
But people were probably not seeing the other positives, particularly in Q3, 2022.
@ N17, MoS from IV was almost at par to price hence it made so much sense to jump in! (stated it here then)

And what about now?

I still think that ETI and ACCESS will likely be impacted more (YoY match in view)
Though I like the Nos in ACCESS Q3, 2022, I expect a moderate drop in AsY and AsQ in Q4 and it's YoY comparable period.

My expectations for ZENITH and GTB are obviously that of a mild one with a slightly higher degree of impact on the former (I expect a weaker NPM driven by added CoF/CoR as the Holdco plans set in)... this though, will only be in the short term.
With GTB though, my projection is that NPM and AsY will be impacted QoQ but not YoY. Notwithstanding, I expect GT AsQ to remain strong.

With the last 3 names (FCMB, FIDELITY and UBA) impact will be almost immaterial.
These 3 names have on average, been the most efficiently run in the last 5 quarters.
That said, I would gladly put my money in the last name (UBA) ahead of the 1st 2 in view of their CMPs (risk-reward margin in view)
...I like UBA.
For near similar reason, I also like STERLING BANK.

With them banks, it should be a selective play... of course, having a trade set-up that suits ones investment personality.

Selah

Breaking News...

The Supreme court has ordered that the old N200, N500 and N1,000 Naira notes should remain in circulation as legal tender until Dec. 31, 2023.
....the apex court also nullified the Federal Government’s naira redesign policy, declaring it as an affront to the 1999 Constitution.

We await the reaction from the Apex bank (CBN) and the FG.

And the drama continues... that country called Nigeria.

It is well.

machine606:

Sir,

1 & 2 I know, but 3 I know not.
You know say some of us still dey nursery 2 for this stock thing self. That 3 I no understand oh

No 3, like 2 is a great growth and value stock to align with.
Look well!

Just ensure to have a good trade set-up.
As I told some fellows then; REDSTAR EXPRESS @ N2.4 and below was a great entry price given how the potential MoS from accrued value was @ premium to the combination of inherent risk and market peg.

Regards

debeey87:


Improvement of almost double their sales in their retail sugar sale boosted their revenue. I can only hope the continues to improve their bottom line in 2023

The truth is that DANGOTE SUGAR will do well!
Save for the low div declaration, everything appears to be super fine at the moment.

Price of raw sugar is also going down (albeit slowly) in the intl market, which is an added positive for the coy.
Had mentioned this as a worry then (when raw sugar price was pushing up) but later highlighted how price could likely drop following the Russian-Ukraine crises.
I also mentioned the strong positive trajectory the company was building on at the time. (refer to the same article above)

It is well.

yMcy56:

Boss you made the right call on UACN that time. Kudos.

...but now, with food inflation and UACN well diversified, I think it's not bad for a pick @ 8/8.50. I don't think it can test thatN5 region again......barring any unforeseen circumstances.
What's your take on this sir?

My post was actually making reference to exiting then @ N12--13 and waiting to reenter at a lower price.

As for buying @ current price levels, I honestly would prefer to see and digest their YE, 2022 report before given any insight.

Regards

onegentleguy:


I just published an article with the title:

"BETWEEN UKRAINE, RUSSIA AND THE NSE"

https://www.booksie.com/668849-between-ukraine-russia-and-the-nse

A extensive look at how the recent RUSSIA-UKRAINE crisis might impact on certain select assets in the Nigerian stock exchange.
...making sense of the tiny details between top-down impact and current bottom-up stand of the companies involved with a view to seeking VALUE!

It's published on booksie, the U.K blog, medium and the personal finance section of some select Nigerian dailies.
You may wish to read through by using the link above.

Regards.

yMcy56:
UACN:
8.50

Anyone who didn't exit UACN @ N12--13 after holding from entry @ N4.5--5, should have themselves to blame.

NOT after reading the article above which highlighted some of the growing inherent risk at the time.

It is well.

Finally, as a growth and/or value investor, I will seek to align with STERLING BANK, UPDC and REDSTAR EXPRESS @ current price levels.
...of course, having the necessary trade set-up.

Again, NOT to be inferred as any sought of recommendation. Due diligence still applies as always.

Selah

onegentleguy:
Dear @ currentprice,
I often smile when I read some of your post on INTERNATIONAL BREWERIES.

Hear this bro...
The hardest part about fundamental analysis is not in seeing the good in a good report/financial print, BUT SEEING THE GOOD IN A BAD ONE... and in reverse, sporting the BAD IN A GOOD REPORT (when you should seek to exit before others do)
...I have always stated this, and it is a FACT!

FA has gone beyond looking out for just the good in a good report. ...Not that it isn't a fine strategy, but as an investor (especially a growth and value driven one), you tend to have an edge (better MoS in view), hence, greater potential for higher returns when you can see the good in a (sometimes presumed) bad financial print.
....this is because unlike the guy who focuses on looking for the good in a good/fine report, YOU ARE LIKELY TO enter/align with the target asset at a lower price having done the necessary due diligence.

One of the secret is in knowing how to spot the TURNING POINT OF INFLECTION (turnaround point) of a company.
But you also need to carefully extrapolate and interpret matters using a combination of certain Key Nos in the target coys SCF and BS.
Might sound simple, but it involves a lot of effort but which is often worth it with time.

It is how I bought your DANGOTE SUGAR @ btw N11--11.7... when the coy witnessed a turning point, but many persons were probably seeing just the bad in it.
Its also how I bought UNILEVER @ N10+ when, at the time, some persons weren't seeing the good in it.
It is also for the same reason that I gave a buy on DIAMOND BANK @ 90k, WAPCO @ N9, NEIMETH @ 38k, WEMA BANK @ 56k, UACN @ N4.5, PZ @ N4, ACCESS @ N7, TRANSCORP @ <90k, CHAMS @ 20k... and I could go on and on with the list.

Pls note that I am NOT and can never be perfect, so of course, there have also been 2 or 3 occasions when things didn't turn out accordingly.

In recent times, I have given the same highlight with GSK, INTBREW and most recently UNILEVER.
As I said and reiterated then; BUYING INTBREW @ N5 IS LIKE BUYING A BOTTLE OF GRAND MALT (which is currently sold for N150 and above) for just N30!


Soon, people will begin to see "the light"
Time will help set matters straight and put things in their right perspective!

It is well.

In line with that part in bold, I will seek to exit certain select names if I hold a stake in them.
Top on the list are;
BUE CEMENT, WEMA BANK, AIRTEL AFRI and GEREGU.

I have since said that people should be very careful with the last name.
It's current financial print best describes an asset with pricing well ahead of the combination of its 2 yr feasible growth margin... and that, without attaching what should've been an appropriate risk premium. (ref: negative MoS)

NOT a recommendation... just an advice.
Everyone is totally free to do as they so wish following their instinct.

Selah

Dear @ currentprice,
I often smile when I read some of your post on INTERNATIONAL BREWERIES.

Hear this bro...
The hardest part about fundamental analysis is not in seeing the good in a good report/financial print, BUT SEEING THE GOOD IN A BAD ONE... and in reverse, sporting the BAD IN A GOOD REPORT (when you should seek to exit before others do)
...I have always stated this, and it is a FACT!

FA has gone beyond looking out for just the good in a good report. ...Not that it isn't a fine strategy, but as an investor (especially a growth and value driven one), you tend to have an edge (better MoS in view), hence, greater potential for higher returns when you can see the good in a (sometimes presumed) bad financial print.
....this is because unlike the guy who focuses on looking for the good in a good/fine report, YOU ARE LIKELY TO enter/align with the target asset at a lower price having done the necessary due diligence.

One of the secret is in knowing how to spot the TURNING POINT OF INFLECTION (turnaround point) of a company.
But you also need to carefully extrapolate and interpret matters using a combination of certain Key Nos in the target coys SCF and BS.
Might sound simple, but it involves a lot of effort but which is often worth it with time.

It is how I bought your DANGOTE SUGAR @ btw N11--11.7... when the coy witnessed a turning point, but many persons were probably seeing just the bad in it.
Its also how I bought UNILEVER @ N10+ when, at the time, some persons weren't seeing the good in it.
It is also for the same reason that I gave a buy on DIAMOND BANK @ 90k, WAPCO @ N9, NEIMETH @ 38k, WEMA BANK @ 56k, UACN @ N4.5, PZ @ N4, ACCESS @ N7, TRANSCORP @ <90k, CHAMS @ 20k... and I could go on and on with the list.

Pls note that I am NOT and can never be perfect, so of course, there have also been 2 or 3 occasions when things didn't turn out accordingly.

In recent times, I have given the same highlight with GSK, INTBREW and most recently UNILEVER.
As I said and reiterated then; BUYING INTBREW @ N5 IS LIKE BUYING A BOTTLE OF GRAND MALT (which is currently sold for N150 and above) FOR JUST N30!


Soon, people will begin to see "the light"
Time will help set matters straight and put things in their right perspective!

It is well.

leparj:


Impressive.
How much dividend declared?
And payment date?

For DANGOTE SUGAR, its been an impressive management style in recent time.
Fantastic YE, 2023 report!

But not too good DPR (dividend payout ratio)
A megre N1.50 proposed... which is just approx 33% of earnings cap.
I had expected a bit more (ref: N2-2.5) given how the coys CCC, CGPR, CRB, JPMG, and NCR all printed better benchmark ahead of earnings delivery... with the last 3, ensuring you have an MoS @ 0.7x of current mkt peg.

But DS is obviously a BUY @ present price levels.
Intrinsic value @ near 61% above CMP (ref: N30.5 racking-off surrounding risk)

Rating: Retained at outperform.

Disclosure: Hold some DS in a few management portfolio.
Caveat: NOT to be inferred as any sought of recommendation. Due diligence still applies.

RabbiDoracle:


Yes, it was explicit enough but people will take sides and say you are biased by pointing out person A and not person B. And the argument will be heated.

People will start posting Polling Units results, videos of electoral violence to justify their points and at that point, this thread will be gone.

Thanks for your understanding.

Gracias!

RabbiDoracle:


Nwanne, this can be viewed as political discourse o.

Remember SMN o.

I would've thought that several parts of my post was explicit enough to highlight its essence- which is; juxtaposing the current trend in our political space and the mkt, WITH A VIEW to seeing where/what sectors and by extension, coys could be anti-fragile or winners, and how we should prepare for them.

This is one way to bet for or against the system in view of what it prescribes, and how to permute from available OPPORTUNITIES amidst inherent difficulties.

I have always maintained that every mkt circle births opportunities in varying proportions.
Our duty as investors, is to look out for them- having a BALANCED VIEW of matters.
Bull or bear, money can be made.
A value investor should in fact love them bears!

As I said; I see a continuation in the present positive mkt trend as technicals hold up and some fundamentally sound names reprise to cover up for wide margin of deviance from intrinsic valuations.

I trust you understand and believe there are many others here who also do. But I also agree there'll be some who wouldn't or who may choose not to, hence misrepresent matters.
So I am sorry if my post is seeing or interpreted as off tangent to stock-related matters. It was not my intention.
I reiterate that I am and will always be non-partisan. (and you know why )
And yes, I remember SMN Nwanne.

Regards

Following my last post, several persons have been asking what my views are on the mkt, and if by implication, I only see a mkt underperformance outside a Peter Obi win?
Here's a straightforward answer...
In the near term, I like to think that the mkt uptrend will continue as technicals hold up.
However, mid to Long term direction will to a large extent depend on this election and what follows after it.

With what I have seen and heard since 25th, belief system appears to have decelerated as in-country risk premium pushes further upwards.
We need to, as a matter of urgency redeem whatever is left of the country's image.
...the stakes are sky high now!
No country can witness effective growth (RPC in view) with this very low level of image amongst the community of nations.

If a country can not conduct a task as simple as that of a free and fair elections, then it becomes very easy for other nations to give her a BAD NAME and in time blacklist her.
Not that we had it good before now anyway, but this is yet another case of missing out on the opportunity to turnaround what has clearly been a wrong trajectory and MAKE THINGS RIGHT.
Needless to highlight what almost always happens when "a dog is given a bad name"!

From an investment standpoint, you might only expect foreign direct and portfolio investment to continue to narrow down.
Quite frankly, the ripple effect can be all-touching.

This is why I tell folks to lower their expectations, given the crop of current leaders we have. ...the rut in the system is beyond deep!

I will and will always be non-partisan.
I prefer to look out for opportunities in difficulties.
The question is; What opportunities are there for an investor to "bet for or against the system" in view of what it prescribes?
How will I as an investor benefit from a Peter Obi, Atiku or Tinunu presidency?

I think the 1st name will bring about a robust and growth driven market than the last 2 names.
With the middle and last name, I see a likely continuation in the status quo (low investor apathy, weak cooperate governance structures etc) with pockets of facile positives every now and then.
...the mkt may not align towards the much desired sustainable path to growth.

A Peter Obi win? Likely gonna be a "positive explosion"- Riding on the high believability index already attached to the name and its brand.
Countries live on change driven by hope and believe!

A Tinubu win?
NAHCO- Already a great coy, but it could favour them even more as more Nigerians will likely seek to "japa".
Oando, Ardova and a few O&G names- For near obvious reasons.
Brewery Ind- Frustration likely to highten... "revenge with the bottle"
A few Manufacturing coys and insurance Names.

An Atiku win?
Some banking names- For obvious reasons...

I just wanna think of how to benefit from the system.
Pls prepare your minds for all outcomes!
Nigeria is a failed state.

It is well.

Might be too early to make a call, but with what I have seen and analyzed thus far, there's a near 1 probability that the presidential candidate of the Labour Party, Mr. Peter Gregory Obi shall win the ongoing presidential election.
...likelihood of occurrence is high even with a 50% voter turnout!

My forecast based on a combination of different plays and scenarios.

I would gladly love to be proved wrong.
Everyone knows I am, and will continue to be non-partisan.
Just love playing with Nos, which necessitated this post.

I see something in play.

May the voice of the masses PREVAIL!
May the deserving candidate Excel.
May Nigeria Win!

It is well.

FOLLOW UP REVIEW...

For those asking if this policy decision by the Fed. Govt will solve the present issues of cash squeeze experienced in the country?

Absolutely NOT!
Why so you may ask?

A brief...

Well, while it may bring about some measure of ease, its impact on the citizens vis-a-vis the business environment will only likely be a scratch on the surface. (can only make out a small positive impact)

Part of the reason is that the said currency denomination (the old N200 note) that has now been given further grace for use as legal tender, makes up a smaller proportion of the total approx 80% MS "chopped off" from the system, when compared to the other 2 redesigned denominations of N500 and N,1000 prior to the mop up of liquidity by the CBN.

A better or more impactful "balancing out effect" would've been created if further allowance or similar grace period were also extended to one of the higher denomination of N500 or N1,000.
That way, the ease in scarce system liquidity can be better felt in view of the already deep shortfall in money supply. (ref : @ >37% above requisite threshold)

This is especially true given the present extensive strain in the supply of the redesigned Naira notes (of N200, N500 and N1,000)... with supply-demand disequilibrium widened beyond acceptable levels.
Again, the expectant velocity of electronic transactional activities in view of the ∆ in external MS (off-banking system) has been losing momentum as the rate of execution continues to lag/cover up for the (expected) jump in surrounding needs, particularly in urban areas.

DMBs haven't been helping matters too... considering their level of indifference towards the clearly wide disconnect in meeting trade/business needs and the general plight of the masses.

Part of the Apex bank's objective for this whole exercise (currency redesign and cash withdrawal restriction) is to curb the recent wave of inflation... and I think they'll succeed on that, albeit in the near term.
So yes, I expect the INFLATION figure for the months of Feb, and quite possibly, March, 2023 to drop from previous guide (21.82% in Jan, 2023).

However, I also expect our GDP figures in Q1, 2023 to narrow down QoQ both in the comparable period of 2022 and it's trailing time-frame. (Q1, 2022 and Q4, 2022)

We may be "sacrificing a fertile chicken for the short time benefit that comes with having just some few eggs."
...only time will tell if this whole exercise/policy was indeed worthwhile!

I still maintain that this is a case of doing the right thing at the WRONG TIME... and to some extent, in the wrong way!

It is well.

KEY TAKEAWAY FROM Mr. PRESIDENT'S SPEECH...

1) The old N200 note shall be released back into the system and WILL REMAIN legal tender until April 10, 2023 (an extension of 60 days from the previous termination date of Feb 10, 2023) as a way of helping to beef up surrounding liquidity in light of the current cash scarcity in Nigeria.
...it (the old N200 note) shall henceforth, run concurrently with the already released new redesigned notes of N200, N500 and N1,000 after which it shall cease to become a legal tender.

2) In line with item No 1) above, deposit money banks (all banks) have now been mandated to immediately release the N200 notes back into the system. In other words; they can now pay you with it and also accept it until April, 10, 2023.

2) Unlike the old N200 note, the old N500 and N1,000 are NO LONGER acceptable as legal tender having exceeded the deadline of Feb 10, 2023 for such funds to be returned to the banks. (though some persons still do return to their banks)
...by implication, you can only return the old N500 and N1,000 notes to the CBN using the CBN currency redesign CASH RETURN PORTAL (you can access it using this link; https://crs.cbn.gov.ng/)

Note however that the grace period to return to the CBN expires tomorrow, Friday Feb 17, 2023. (unless the date is further extended)

BOTTOM LINE:
In lay man's terms, the old N200 can now be used one small as the deadline has been extended to April 10, 2023... but NOT the old N500 and N1,000 notes.

Pls do well to be guided accordingly.

Truly, there was a country! ...the drama continues.
Regards

RabbiDoracle:


I may be wrong. But let's see what Mr Market does.

You have been right in many instances.
You are doing great bro!

But it is well with UNILEVER!

Regards

onegentleguy:


NPM... Net profit margin
CCC...Cash conversion circle
AER... Asset efficiency ratio... etc

I've highlighted the meaning and financial description/use case of these acronyms and more in time past.

Regards

ositadima1:


You discussed the previous state of the company UNILEVER Nig Plc, having given an underperform/sell rating.

Then predicted that UNILEVER's price could rise and suggested that potential reward had accelerated ahead of surrounding risk.

Then calculated a fair value estimate of N29.15 for the company.

I appreciate the detailed analysis you provide, which is much more informative than predictions without background information. However...

I have highlighted and even explained many of those acronyms in time past.
You might wish to refer to some of my previous post should you require further guidance.

N.B-- ROCE- Return on capital employed.

I saw the improvement in UNILEVER (ref: inflection point, ∆ trajectory) in Q1/Q2, 2022 and not in 2020.
As at 2020, my stand was still a SELL and not a BUY.

I do NOT have an MBA in Economics. ...I am only but a learner!
Grateful for your kind words though.

Regards

onegentleguy:


A pivotal line of disclosure...

Over 2 yrs ago (btw Q2-Q3, 2019), We highlighted the worries in the company UNILEVER Nig Plc.
Before that time, I gave an underperform/sell rating given the coys near N30 market price.

Fast forward to Q1, 2020 and things only worsened for the company with inherent risk consistently taken a bite from what should've been due to an investor.
See 2 amongst the last post I put out back then. (Note the lines therein)

Within that period, risk was clearly ahead of the combination of REWARD and price with the continually pressured MoS resulting in the jettisoning of the stock by value investors. ...and unsurprisingly, the coys equity peg underperforming both it's sector and NGX index in the last 2 yrs.

What has changed?

Many of the major risk drivers highlighted then have been dwarfed by the company's present stance. (diminishing effect in view) ...with improvement recorded accross several key revenue and earnings line (at least by a 72% margin as certain triggers from core top-down and bottom-up positive line combines to good effect)

The present UNILEVER...

• Accelerating RM and OIM amidst drive to recover initially lost mkt share.
This is already working for the company!

• Healthier working capital stand on the back of higher ITP (ref: >> ∆ inventory turnover) and better performing receivables.
There's been a 64.9% YoY jump in consumer spend... with Nigerians parting with over N108 Trillion in 2021 alone despite inflationary pressure.
In retrospect, "tough times can't really be that tough" as passthrough impact from cost reflective challenges is minimized by higher comparative prices amidst increased consumer appetite.
A coy like UNILEVER now appears well placed to wither the storm given her broadly inelastic product mix.
Again, the decision of the Nig gov't to reopen the border should by implication, also greatly improve this line.

• Expanded reach in distributorship chain amidst in-company restructuring.
Expect lower CBR (ref: CRP) and higher CCC to JPBM in 2022.

• Back to back improvement (QoQ in view) in AsQ, ROCE, EM, AER, CGPR and AsY following deficits/squeeze in the previous 5 quarters.

• Improved value accretive stand at present compared to most sector peers in view of the current low base effect. (ref: NCPS, EV/EBITDA, JPBM)
...I also highlighted this same line while comparing WAPCO @ N9 and later, INTEBREW @ <N5 to their respective sector peers. (P2P weighting in view)

I see a similar pattern to fellow P2P coy, PZ.
Recall that we also gave a sell/underperform recommendation on PZ @ over N15 sometime in 2019... forecasting that price could drop to N4+.
Well, it did... and we later issued an outperform/buy signal @ that N4+.
PZ is currently trading @ N13+ and could rise even further.

UNILEVER can well follow the same path. ...the probability that its price can rise from current level is now closer to 1 than zero. (aside it's FA, certain KEY technical indicators are beginning to gather momentum)

With UNILEVER, potential REWARD has accelerated by an approx 2.7x multiple ahead of surrounding volatility/risk in view of it's CMP.

Using an appropriate blend of valuation model that assumes a minot growth margin of 0.15x TTM (5% QoQ to YE, 2022) but also benchmarked to risk-discounted levels of 500bps above current surrounding peg, UNILEVER' FVE computes to N29.15
This, by the way, implies a very conservative approach. ...that FVE can expand by well over 46% if a similar growth margin from Q1 is reproduced in Q2, 2022.

Rating now upgraded to; Overweight/Outperform

IT'S TIME TO INVEST IN UNILEVER!
BUY... ACCUMULATE... HOLD!

CAVEAT: The need for due diligence should still take higher precedence ahead of this post.

RabbiDoracle:


Something isn't right about these two stocks : PZ and Unilever. They have been slow for 3 years even when there was a boom in the sector due to inflation.

In my opinion, there could be a high likelihood of PZ touching N3.5 or lower. And that should be the last historical low.

But PZ rose from <N4 to N13+, printing an over 237% return in the process.
You'd recall when we put out a buy recommendation on the stock @ <N4 after previously forecasting that the price would drop from N15 to N4+

As I stated back then, a N4--5 target entry price should''ve been anyone's best bet.
It's always best to KEY IN when the price of a coy appears to be making a mockery of its inherent VALUE!
The stocks (PZ) circle of trough and crest appears to be "closing out", in line with the company's present dynamics.... so yes there's a favourable probability that the price could drop from current level.
That said, something might be brewing in that company.

N.B: PZ is one of the few names I highlighted as possible candidates for a buy out (ref: MTO, M&A)

As for UNILEVER, that coy ticks all the boxes of a buy candidate.
Already said as much before now. (see post above)
Price already up near 30% from recent low...
It's got all the potential to do much more!
Check well Nwenna.

Regards

Breaking news;

The Supreme court retrains the Fed Govt, CBN from implementing the deadline of Feb, 10/17 for use of old Naira notes (200, 500 & 1,000) as legal tender.

https://www.channelstv.com/2023/02/08/breaking-supreme-court-restrains-cbn-from-implementing-deadline-for-old-naira/

Drama everywhere.
Indeed, there was a country!

onegentleguy:
There has been a reoccurance of mergers/aquisation or takeover/buyout and follow-up delisting of some quoted companies on the NSE bourse.

Over the yrs, the likes of NBC, BAGCO, IHS, CAPPA & D'ALBERTO, OASIS INSURANCE, CRUSADER INSURANCE, 7-UP, ASHAKA CEMENT, AVON CROWN CAPS, DIAMOND BANK, NEWREST ASL, DANGOTE FLOUR, CONTINENTAL RE, 1ST ALUMINIUM and most recently AG LEVENTIS to mention just a few, have either undergone a merger, aquisation or takeover/buyout. ...with the last 6 all brokered in less than a year !!
However, I think we might see a few more in the not-so-distant future.

Given the current position of their financial print(balance sheet position in view) in relation to their present equity prices, the following coys could be future candidates for a merger, aquisation or take over/buy out:

NEIMETH PHARMACEUTICALS, CHAMS, FO, GLAXOSMITHKLINE NIG, COURTVILLE, TRANEX(trans-nationwide express), UNIONDAC, PZ and BERGER PAINTS PLC.

Why?

1st off, is to ascertain if there are doubts surrounding the survival of these companies, so one doesn't lose their money taking(early) positions in them. And next, is to look in on their current earnings capacity, then gauge its relative sustainability over time.

On that line, keeping a tag on their OHLSONS O-SCORE(a key financial tool used to forecast if a company could go bankrupt), I see them remaining as a going concern. ...which makes them attractive candidates for 'external forces'(investors) who could bid to take them on at a cheap and turn them around.

...and using the EPP(earnings persistence approach: a valuation technique used to predict how often the earnings return of a coy will likely continue to reoccur over time after raking-off risk), I see a higher probability that any take over/buy out(should they occur) will be priced @ great premiums to their current market prices.
With some, at potential premiums of near 105% ROI !!

I particularly like the 1st 5.

On a side note, a few coys in the financial services sector, particularly the INSURANCE segment 'could also be up for grabs'... so watch that space !!

CAVEAT: This piece is only intended to look at quoted coys with chances of a merger, aquisation or takeover/buy out.
...it is NO licence to any sought of recommendation !!

My advise: Always do well to follow ur instinct.

Coolcash1:


I hope In the end, there will still be companies trading on the NSE with this rate of delisting as more companies keep leaving the market. Bad sign of how terrible the APC has destroyed the economy. I cum in peace.

A few yrs ago, I put up the above post on coys with a high probability of delisting (MTO, M&A in view) following some very extensive analysis.

...some of the names in the list have already come to pass.
I still think a few more will follow suite!

For some of the delisting, investors are probably better off! (Management inefficiency)... same can not be said for some others though. The reason might not be unconnected to the low investors apathy amidst a broadly laggard mkt in terms of cooperate governance.
The NGX hasn't really lived up to expectation in the course of time.

It is well.

Breaking News; ARDOVA PLC plans to delist from NGX

Ardova PLC (“Ardova” or the “Company”) has notified the Nigerian Exchange Limited (“NGX”) that Ignite Investments & Commodities Limited has approached the Board of Directors of the Company with an intention to acquire the shares held by other shareholders of the Company at an offer price of ₦17.38 per share, and subsequently delist the Company from NGX (the “Proposed Transaction”).

Meanwhile, the coys share price closed at N17.65 today.
What a ridiculous MTO peg!
I remember sending out a few clear warning about FO/ARDOVA in the past. ...have also done same with Gerugu power in recent time.

Inference: He who sups with the d**** should have a long spoon.
...the games men play!
Caution is the word!

#coyslinkedtosirFO

onegentleguy:


I just published an article with the title:

MTN NIGERIA: "THE ANATOMY OF A PUBLIC OFFER"

...Dissecting the recent PO (public offer) proposal by MTN Nigeria; everything from interpreting the Nos to looking in on the recent financials with a view to seeking VALUE!

It's published on booksie, the U.K blog medium and the personal finance section of some select national dailies.

You may wish to read through by using the link below;
https://www.booksie.com/663437-mtn-nigeria-the-anatomy-of-a-public-offer

Regards

callmeRichie:
What's with this mtn share update?? The increments has been nothing to write home about and it's disappointing.

Who got on the share then??

Kindly share your view

Read through the article above.
...might help with the clarification you seek.

Do take care.

And on why the banks could be big winners in 2023...

Naturally, a high rate environment favours banks... as it support their NIM/NIR and further aid NPMs. So a positive impact, particularly in Q4, 2022 wouldn't be in doubt.
Notice how the apex bank had maintained a hawkish posture virtually all through 2022. (a contractionary stance would usually favour lenders with a healthy/balanced-- favourably sector assigned loan book but also an investment driven portfolio)

But again, the policy on currency redesign should give them liquidity like never seen in near 2 decades. Whether it will be sustainable (remain that way) will however be debatable depending on how things develop from here.

These "free" monies will not only help support NIM but also non-interest related income given the capacity for trading play with higher cash volume from increased cash pool.

It's interesting that this time, unlike in previous traditional instances of the chase for higher deposit pool, the funds are or can be gotten at practically no cost (CoF in view).
Again, you must take that money to the bank, but can only get back a big proportion of it by following through with some electronic transactional means wherefore you'll still have to pay various forms of charges and all, to them banks. (withdrawal restriction policy in view)

In retrospect, the banks can now play around with much more cash, profit more from lending given higher liquidity with CRR maintained and LDR already near CBN approved pegs for most key lenders... Implying more interest earnings per "naira pull"

There's a reason virtually all the banks have announced that they'll be working overtime including Saturday and even on Sunday to collect your money.
Now the CBN has even extended the date (to return old Naira notes) to Feb, 10 and Feb 17, 2023 to banks and the CBN respectively... so the money chase continues.

One way or the other, the banks must make money off you!
Time will not permit me to put out much for now.

There are just 1 or 2 drawback but overall, it's a big + for banks.
...only the efficient ones though!

Aside the banks, there are at least 2 other sectors that could benefit from this policy.
Permute from those and KEY IN!

Selah

CircleOfWilis:
Pls help me.....How will the naira redesign and the issues around it reduce inflation.

I really don't get it, the CBN governor claimed so

I think Mr meffy and co might be relying on that belief as a last resort given how what should've been the "traditional way" of curbing inflation appears to have failed.

In reality, the clearly contractionary posture by the apex body virtually all through 2022 should've at the very least, birthed a decelerating trend in inflation considering how it gives the CBN power to control money supply.
However, just approx 15.48% (ref: N0.5T of N3.23T) of the total money in circulation was within the banking system as at Q3, 2022.
The implication? There was only very little the monetary tightening (rate hikes, QT...) of the CBN could do to rein in on inflation with near 85% of MS outside the boundaries of it's control.
Things have now changed though... with that figure squeezed to just above 25%, as approx 75% of target liquidity finds it's way back to within the banking system.

In meffy (and co's) thought, if we redesigned the currency, we can then "force" people to bring these funds back to our "circle of control"... that way, we can influence it and quite possibly, curb down on the wave of inflationary pressure.
Guess this explains the thinking that redesigning the currency might help reduce inflation.

That said, I also think there are other reasons for the policy at this time.
Aside the expectant increase in the flow of liquidity/MS back into banking system, the move isn't unconnected to the push to fight illicit transaction/money laundering and perhaps terrorism financing and of course, vote buying ahead of the 2023 general election.
Might be why the policy was immediately followed with a cash withdrawal restriction/QT.

Do I think the policy can help curb inflation.
Yes... but the impact may not be far-reaching.
Nigeria's problems are structural in nature... and untill the fiscal end of "the stick" connects appropriately, many of these monetary policies will only be short-lived.

In times past, I had highlighted why in several post here including the one from this link; https://www.nairaland.com/1131485/nigerian-stock-exchange-market-pick/6796#117896129

For me, our concern/goal should be how we can benefit from these policies. (when made)
As I always say; until things get better (we should have a clear direction when that time comes) Nigeria remains a portfolio country.
Just make your money and clean mouth.

As i've stated here in the past; these policy will benefit the banks. Some of them could be big winners in 2023!
...will highlight why in a jiffy.