₦airaland Forum

ukay2:
This Burundi Bull will tear any chart apart and keeps moving

We have seen it before...
Charts will always say something

Agbalowomeri:
Should we expect a pull back tomorrow or day after?
The bull is seriously mad though
Does the ASI want to do 100% before year end ni

Bring out your charts I beg

Equity snapshot....

Finally!!! We reclaim the top spot among equity markets globally. The Nigeria’s equity market is currently the best performing bourse in the world, soaring to a 23.94% YtD gain. As I earlier mentioned, the turning point was the CBN’s decision to revise downwards the MPR by 100bps; from that date, the market has ballooned 30%, with average daily trade metrics more than doubling. The bourse is on track for its first positive yearly close since 2017, and even if (a big IF) offshore sellers turn the taps back on, we have more than enough cushion to absorb any sort of sell pressure. This performance has been a huge reward for the locals who braved the risk of the market even in the face of Covid and FX uncertainty. The only blemish this year has been the inability of offshore players to access FX, inadvertently leaving the fate of the bourse into the hands of locals—it has mainly been a local to local market.

Here are some thoughts on the equities market, this morning;

 First question on your mind….who has been buying? We can confirm that mostly local asset managers (Non-PFAs) have been doing the heavy lifting in the bourse, while retail accounts have also not been left out. The traditional PFAs have also not been left out but more often than not, they balked at the high prices of some of the bellwether counters, however, we did see a few come closer to market levels late last week and early this week. Hard to gauge the trajectory of the speculators, they sell when sentiments are softer and join the bid queue when large buyers step in. In summary, locals are net-buyers of equites right now and with the further retrenchment of NTB rates, one would expect more money to trickle into risk assets.

 The story remains the same on the foreign front. A large chunk of accounts have sat by the sidelines still expecting FX from the CBN. The active players have mostly been SA funds and some EU accounts. These funds have been switching positions since H1; mostly selling ACCESS NL, FBNH NL and ETI NL to fund purchases in NB, STANBIC and GUARANTY NL. We have also seen the persistent use of NEWGOLD NL to repatriate cash..c.N40bn ($105mn) has been repatriated since the turn of the year.

 As at yesterday’s close, the NGSE ASI was trading at P/E of 12.1x—at a 6% discount to its 10-yr average of 12.84x. Current dividend yield prints at 5.84%--a 29% premium to its 10-yr average of 4.54%. Despite the recent jump in prices, the bourse remains cheaper than most of its FM and EM peers (chart below). P/E trading at a 22% discount to the MSCI FM bucket, while Div yield in Nigeria outpaces the MSCI FM bucket by 66%. Prices still have some room to run, before we catch up with our FM peers.



What Next?


Market sentiments would continue to be driven by the state of liquidity in the system, while the present drop in NTB rates would be another short-term catalyst for risky assets. We most likely would not see any strong offshore play till very late in the year/early next year as FX liquidity remains a steady drip. As I mentioned earlier, PFAs are of the opinion that prices are quite expensive, but we have seen steady recalibration in the last 3-4 trading days and we could see more dealings as year-end approaches. One thing is for sure; it would take something drastic for the bourse to erase all of its Ytd gains, for now the market is on course for its 4th positive yearly close in the last 10 years….this has been well earned considering all that has happened in 2020.

sellydion:
Fundamentally, the only sound stock here is JB

Sleep with both eyes closed.

JB posted a negative earning nine month ended September 2020.
The stock market could be very unpredictable though.
Last year was good for the company but the price did not go anywhere.

We are in a bull market and I think we are getting to a point where prices are driving up more by sentiment than any fundamental.
Will not be surprised if JB joins the bull even with the negative earning.

Princkez:
What is holding FUGAZ q3 results...

Anyone with info on what might be causing the delay? It is very unusual.

ojeysky:
Well am on meristem and my account was suspended as well, staff said they are looking into it though

Meristem are very responsive.
My account was suspended yesterday afternoon. I sent them a mail that I have done the KYC and just about an hour after the suspension on my account was lifted.

Equities Market in Review
What a week we had! The bourse rounded off the month of October in grand style, recording its biggest monthly gain in 33 months (since January 2018) and its best October return in 17 years (Oct, 2003). In retrospect, September’s MPR was the turning point for local bulls, since that date; the NGSE ASI has gained c.19%, investors’ holdings have swollen by c.N2.6trn, while no less than N130bn have trickled into the market— average daily trade metrics blossomed c.100% as institutional players resumed equity dealings. Local investors who are being outmuscled at the NTB auction, have had no choice than to plough those maturities into equities, last week’s record (12 year record) closing rate of 0.98% (1-yr paper) added fuel to the raging bullish storm. Amidst all this madness, foreign accounts remain sidelined, exasperated by their inability to access FX, the major active players (SA Funds) have merely been switching positions. Going forward, one would expect that the quality of Q3 numbers of the bellwether firms would be the main influence of market sentiments, with cash rich locals ready to gulp tickers who maintain YoY earnings growth.
.

Let’s look back at last week’s events;

 The bourse gained 639bps last week (6th consecutive weekly gain), mainly driven by gains recorded in the Consumer bucket (+12.2%) and the Banking names (+8.05%), moreover, every other sub sectoral bucket closed in the green WoW. Pertinent to note, that the NSEBNK has turned positive for the year (c.4.4% gain YtD)

Who did what?
Pension funds were the heavy lifters last week, executing block trades in most of the bellwether names; GUARANTY NL, FBNH NL, DANGCEM NL and UBA NL, while we saw some offers in FLOURMILL NL and DANGSUGAR NL. local retail accounts continue to chase high yielding names; nibbling WAPCO NL, ZENITHBA NL, UBA NL and the consumer tickers—speculators were busy in INTBREW NL.

Offshore accounts were mainly switching positions, selling ETI NL, FBNH NL, ACCESS NL and GUINNESS NL to fund purchases in GUARANTY NL, STANBIC and NB NL. We also saw an offshore buyer in MTNN NL late in the week, accumulating 1.4mn units. It also seems the major funds selling GUARANTY NL/ZENITHBA NL have taken a break, with no active offers from those accounts all through the week. We continue to see SA accounts repatriate cash using NEWGOLD NL, with N2.1bn (c.$6mn) dealt last week---I had earlier mentioned that the ETF ticked its highest metrics (both volume and value) in October—N16.5bn ($43mn).

Worthy of Mention
The 1yr NTB paper ticked its lowest closing rate since Bloomberg starting compiling data for Nigerian T-bills (a 12 yr low). The chart below paints the full picture.


Outlook

We project more institutional dealings amidst dwindling local fixed income yields, while market momentum will also be influenced by quality of Q3 numbers of the bellwether tickers.

Equity snapshots.....

ukay2:
Do they have Investors Conference Call for this Q3 result?

Hopefully there should be one.

Calebbold:
Study Wapco company result(not the group's result) 2019 q2 &q3, then u will understand that Wapco doesn't usually make much profit in 3rd quarter.

I feel it's majorly due to the weather in most South South states which is Wapco's stronghold...it usually rains alot during this period/quarter.

Wapco best result is usually in the first and second quarter of the year.

But I don't think they will come at a loss in q4.. but we could be expecting something closer to the 3rd quarter result or even better.

Most investment houses already know this...study their PAT forecast for WAPCO 2020..I think the highest was around 35 billion.

Some of your points are very valid but I have my reservation about the reason you adduced to the reduction in profit.
Going by your point, revenue should have reduced but that was not the case. The reason for the reduction in profit was because cost of sales went up significantly in q3, may be if we scrutinize this area properly we might get a better understanding of their operations.

On WAPCO..

Liquidity has increased significantly which is a plus.
The result also look good y/y.
However it is a poor result q/q and I am still studying it to see what might be responsible for that.
Cost of sales went up significantly from 32b in q2 to about 45b in q3 and PAT drops from 15b to 4.8b resulting in a drop of eps of 96k to 30k over q2 and q3.

Could this be a pointer to what will happen in ,q4 bearing in mind that the company reported a negative earnings in q4 2019?

Calebbold:
http://www.nse.com.ng/Financial_NewsDocs/31687_LAFARGE_AFRICA_PLC%20_QUARTER_3_%20_FINANCIAL_STATEMENT_F.pdf

Wapco Q3 2020 result

Below expectations......

Equity snapshot......

FG October Bonds Oversubscribed By N205.87bn - PUNCH

https://www.abokifx.com/news/32717/details

ahiboilandgas:
hopeful we will not vote for him or tinubu ....the youths will be wise....buhari also benefited from insecurity during Jonathan

We have not learnt anything. Majority of those protesting today will still not come out to vote.
Our next president will still be elected by mostly illiterate who will collect 2k to vote for either PDP or APC.

NL1960:
When these protests started entering the inner streets, i advised and warned several of the youths that the protests will be hijacked by area boys and hoodlums and it will spiral out of their control and that they should retreat to restratigize. They refused to listen saying they do not need any advise from the older generation. They think their generation is the first in the history of Nigeria to do protests.

I have asked people where the Feminist movement that was giving daily reports and Anonymous that was hacking websites upandan gone to?. Even Radio 'Soro Soke' is off the air.

When they started castigating the older generation I knew they were overestimating what they could do.
Tinubu was once a hero.

emmanuelewumi:
Yes if you don't over pay

Not talking about the price tag.

It is in relation to the current event.
What happened to the owner of those property that were destroyed?

Is real estate investment still a safe and secured investment?

Krisuba:
I wisj there is away to scatter this market. D country is on fire and all some people is thinking is money!! Y not shut down trading

Shut down trading for what?

Equity review for last week....


Equities Market in Review
Last week’s trading was categorized by three distinct phases: initial profit taking on Monday, three days of cautious trading and a sharp rally on Friday. Most of the locals had waited to see how low yields would go at the NTB auction and the release of Inflation data - 1yr T-bill at 2% and inflation hovering at 13.7% bodes well for our beloved stocks, as the hunt for yield will increase appetite for risk assets. No surprise then, that we saw c.N7.7bn (c.$20mn) of local money flow into the two highest dividend yielding Tier-1 lenders; ZENITHBA NL (11.6% yield) and UBA NL (11.3% yield)—for UBA NL, weekly volume and value (354mn units, N2.4bn) would tick its highest point in seven months. Notwithstanding, bulk of the purchases were executed by local retail accounts and asset managers (Non-PFAs), for the PFAs, we are seeing PMs quote bids at discount to current prices, biding their time till the release of Q3 numbers, while offshore accounts were net sellers all week. As we enter the earnings season, one would expect that the quality of performance would have the biggest influence on local appetite and set the course for the near-term trajectory of the bourse.

Let’s look back at last week’s events;

 The bourse gained 86bps last week, mainly driven by gains recorded in the banking names (NSEBNK +2.89%). Except for the insurance bucket, every other sectoral index closed higher WoW.

Who did what?
Pension funds balked at the high prices of some of the bellwether tickers last week, however, we saw some long term money flow into GUARANTY NL, with no less than N5bn dealt in that name (C.160mn units). Apart from GUARANTY NL, there were minute purchases in ZENITHBA NL, WAPCO NL, FBNH NL and ACCESS NL. On the flip side, the local asset managers (Non-PFAs) and retail accounts were the main buyers last week, lifting offers across the tier-1 spectrum. In the cement space, we saw thin trades print in WAPCO NL and DANGCEM NL—mostly retail sized prints. Speculators were active buyers in CADBURY NL, INTBREW NL, while we saw PFAs sell GUINNESS NL and FLOURMILL NL.

For offshore accounts we saw a sharp change in sentiments and strategy last week. Looking back at the last three months, we noticed that the active offshore players were switching positions (Selling one stock to fund purchases of another)—SA funds were selling ETI NL, ACCESS NL and FBNH NL and using the proceeds to fund purchases in GUARANTY NL and STANBIC NL. However, since the turn of the month, the flow pad has been stacked with sizable offers, as we saw 2/3 funds trim their Nigerian positions—for specifics, we saw c.220mn units of GUARANTY NL sold, 148mn UBA NL disposed and a c.40mn sell ticket in both ACCESS NL and FBNH NL . All this comes after we saw One particular fund trim more than 400mn units of ZENITHBA NL in the first two weeks of the month-the reason why prices have not been depressed, is because PFAs have taken up most of this block volumes. No surprise then, that NEWGOLD NL printed a record breaking weekly trade value of N6bn (c.$16mn) last week, as selling accounts repatriate cash proceeds. In fact, we have seen more trades in NEWGOLD in the last three weeks (MtD) than ever recorded since its listing—N12.5bn (c.$33mn )have been repatriated in the month of October.

Worthy of Mention
Special treatment to be maintained for Nigerian stocks in MSCI FM; Three weeks away from the highly anticipated MSCI November Semi-annual review; the MSCI FM index would be given a huge shake-up, due to the upgrade of Kuwait (currently 37% of the index) to Emerging market status and the addition of Iceland (proposed 5.21% weight ) to the index. The removal of Kuwait would leave a huge hole in the index, resulting in the possible increase of the weights of some of the current constituents. For Nigeria, the index provider had not effected any changes in its May and August reviews, citing the current FX illiquidity as the reason for the approach, The index maker had implemented a ‘’special treatment’; in which no Nigerian equity would be added/removed from its FM and Small cap index. Last week, the MSCI analysts released a disclosure stating that Nigeria’s special treatment would be maintained in the upcoming November review, and as such while other FM countries could see their weights rejigged, Nigerian stocks would maintain status quo (we currently have a 5.5% weight in the index—the 4th largest).


Outlook
We project more volatility in the bourse as speculative trades continue to pass through and as the current offshore sellers continue to trim their inventory. However, all eyes would be focused on the slew of Q3numbers expected to be released late in the week, the financial performance of the bellwethers would dictate the near-term course of the bourse.

lexy2lexy:
Hi Pluto, please who is your broker? Which company produces the report you share?

Cardinalstone.

Mcy56:
Hope Nsempas are not among those selling their UBA at 6.60?
Anyway, each man for himself. God for us all. Follow your mind or whatever.

Sellers are foreigners.

ositadima1:
Zenith vs GTB ?

The two stocks are highly correlated meaning that if you have both in ur portfolio then u are not diversifying - they are affected by happenings similarly.

From d excel sheet bellow if u buy in January and sell in December each year, ur returns will be like so. GTB has done much better in terms of returns over d periods in consideration. Also, buy and hold is less profitable.

Notes:
1. Historical data was scrapped off investing(dot)com with a python script.
2. The correlation coefficient was calculated with Pearson method (statisticians in d house )
3. I didnt consider dividends sha.
4. Finally, thank God for python language

Good job, well done.
I think BBM did something similar for us some years ago.
Will like to see more of this.
You can also do one for oil price and NSEASI.

DexterousOne:
Anti robbery squad

They have nothing or no business with yahoo boys

Leave yahoo matter and investigations for the EFCC...
Let them do their jobs properly

Its imperative we do things right in this country

Okay with the way sars has been harassing then
How many indictments have they been able to get?

SARS have definitely overstepped their boundaries by harassing Innocent citizens.
However, the good job they are doing cannot just be wished away.
EFCC will need more hands to tackle yahoo boys and for now I don't think we should leave them alone. The evil those boys do should not be allowed to continue just because we don't want SARS.

emmanuelewumi:
I learnt most of the digital agriculture promoters invested the funds in forex, crypto currencies and other highly speculative ventures

Okomu and presco are listed agric companies on NSE.
Well run and profitable..
Okomu has been in business for more than 40 years, prsco is about 30 years..
They have access to cheap money and latest technologies.
What they produce offer better opportunities for planning and profitability.

ROE this year will be about 25%, last year was less than 20%

Yet someone who is claiming to be starting a farm afresh will be promising people 25 to 40% returns in 3 to 6 months and people are rushing in claiming investment. It can only end in pain and disaster...

Phylife:
If the head is bad, the members too will be bad. Are the governments good? If reforms or restructuring must take place, it'd start from the top down and not otherwise because it won't work.

Just thinking out loud here.

Yahoo boys have hijacked the protest. They would rather wish that SARS die than being reformed.
The operations of yahoo boys in Nigeria is another time bomb waiting....

ahiboilandgas:
thank you very much i will do .it not easy been a Nigerian been trying to pay 300 dollars on a website it's declining must Nigeria banks.

There are lot of restriction on many sites with Nigeria banks ATM cards now.
On a good day,access can allow you to do more than 300 if the site is not restricted with their yeye rate of N445.
Alternatively if you have a dorm account, you can approach your bank for a dollar denominated ATM card.

emmanuelewumi:
Okay ooo, too risky for the banks and their billions of Naira but not too risky for the average citizen that is struggling to have save 500k and below.

It is just that people don't listen.
Majority of those promoting digital agriculture don't have any farm.
Mostly ponzi scheme.
Agriculture in Nigeria is no moinmoin .
People need to go into agric to experience the challenges in the sector and forget all this sweet talks of fertile land.

prof2007:
Oga Pluto,

please, which Company sent you this update?

Cardinalstone.

Wiseoldman:
Can someone help with the above. What is the normal charges I should expect?

See the attached...