₦airaland Forum

The movement of Wema's price after TS will depend on the price when it goes on TS. If Wema goes into TS at N13 I will expect a rally after suspension is lifted as long as the bank can maintain potential PAT of at least 10B and the books are clean.

RoughCut:
@pumping777

The projected PAT of N8B for WEMA by nigeriansecurities.com is not actually a downgrade its a conservative projection personally  on an annualised basis i put them down for a PAT ~N10B for the full year

The reason I call it a downgrade is that they had a projected PAT of around 10B listed there just 2 days ago  

easimoni:
M Benefits did nothing wrong; Unic's interim results is too good to ignore. My ranking is based solely on forward PE.

I still have not lost my bad habit of having too many stocks in my portfolio so I piled up UNIC when it dropped to 2.40 last week. It was never one of my target insurance stocks because I've always thought there is some house cleaning required at UNIC. My thought is to bolt by today. Anyone with jist on UNIC? Are there any real concerns in terms of the management??

jehosaphat:
Pumping777,
I absolutely follow your line of reasoning, but I make I re-quote wetin my homeboy Warren Buffet bin talk, " better buy an excellent company at a premium than a "not-so-excellent' one at N 72" . I think the main issue here is price, I am a man of small means and so I am looking to maximize my eggs instead of one huge ostrich. Nice one tho, i don't see you budging anytime soon and that's what makes the GREAT investor, do your research and stick to it,
while I have your attention, what's your take on bank PHB , on a scale of 1-10 with 10 being "excellent purchase", how would u rate it or do u want to wait for the prospectus?

Yes o. I want to see baba prospectus. On the other hand based on what I know now, I don't think one can go wrong with this PO. A rating of at least 3 will fit the bill.

crazyT:
@ Pumping

So what you are saying in a nutshell is the time factor? But Flour Mills carry weight o 80 bucks!!! This means one needs to really consider the two i.e. the price and the time factor and chose the best alternative.

Well, with Bagco you don't make a dime until you get your certificates. In that time, I would have moved on from Flour Mills and hopefully with some good profit.

You see this is the first error one could make. 70% of new Bagco will be more than 100% of the old Bagco. If Bagco is not expanding, there is no point in the PO.

Bagco holds good value, but you are being charged a premium at 22x. I am not paying. Flour Mills is not expensive because it is N72 (my last purchase price) and Bagco is N4. As you bring, so you will be rewarded

crazyT:
@Pumping

Please can you shed more light into this your explanation? I mean buying PO without worrying about over-sub and waiting for cert. are you still talking about Bagco PO?

Yes, I am still talking about Bagco PO. Frankly the Bagco PO does not cut it for me. Lets assume Flour Mills retain majority interest in Bagco to the tune of 70%. Then if Bagco declares a PAT of 1 Billion Naira, 700M will be added to the PAT of Flour Mills. Of course, the question is what proportion of Flour Mills can I buy since it costs around 80 Naira. A different arguement.

In any case, while subscribers to Bagco are waiting for their certificates, subscribers to Flour Mills would have started getting returns from Bagco

Wema, Wema, Wema. All insider jist today pointed to Wema going on TS this week but still I am not selling this week. If it goes on TS tomorrow no wahala, I am already looking for the next gamble stock.

I will lock up 19% of my portfolio for maybe 3 months but if TS closes before Wema gets to N14, it will still be a bull run after TS is lifted. I will be waiting. I bought majority of my Wema  at N8.90 about 3 weeks ago anyway.

Interesting thing that Nigerian Securities site downgraded project PAT of Wema to 8B. I can't understand the logic but let's wait and see.

But come to think of it, where WindyWendy dey

jehosaphat:
TO all those interested in Bagco,
After reading a very insightful post by a very knowledgeable analyst (Windywendy) on SMN, I have decided Bagco is an excellent buy. I took the time to scour the web for every piece of info on the operations of Flourmills and Bagco in particular and I am convinced ( it is very evident) that Bagco is the MOST PROFITABLE subsidiary of Flourmill. At most, if her analysis is right then this Egg is backed by a very powerful chicken, which reinforces by decision to buy. If her analysis was not entirely correct with respect to Intra-company support among the various "children" of Flourmills ( what was Flourmills doing when Bagco was acquiring billions in debt??), then the profitability at least shows that Bagco is capable of churning out profits regardless of support from other arms. Sure enough PE might be 22x or thereabouts but that will correct itself when the dust has settled. I am buying with a long-term vision and I am sure that the prospectus will buttress my decision. Based on our analysis we rate this stock a "buy" " purchase" "buy"

Just for the heck of it, make i round my little business rant with proverb, " If you must kick somebody kick an old man because you know what he is, don't kick his child because you don't know what he will become".

I have faith in Bagco, this egg might hatch to be a mammal, .
Enjoy my peoples,

I think it is still very hard for me to see things from this view. I will still own a fraction of this mammal sha.

Flour Mills will own around 70% of Bagco. What is good for Bagco is good for Flour Mills but what is good for Flour Mills has nothing to do with Bagco.

Buying Flour Mills means killing 2 birds with one stone (make I add my own proverb too bo  ).

This is the easiest and fastest way of buying a PO without worrying about over-subscription and waiting for certificates  

The current price range of Flour Mills makes it a good buy in that sector but I heared that the fear of Dangote Flour is the beginning of wisdom.

easimoni:
I suspect the offer was not fully subscribed so the real # of shares is 1.732B. Regarding waiting: what if the trend reverses tomorrow?

.
If the shares outstanding is 1.732B then it does not matter even if you buy tomorrow since we're now working with a PE less than 10. You may want to start off from tomorrow. On the other hand the rumour is that sellers are from the PP and I don't think they have had their fill. The 5% drop today is sustained from open to close. I will put in a bid for the stock at N4.10 on Friday. I'm a greedy buyer 

capuchi:
hi, everyone i want to instruct my stockbroler to buy union bank shares tomorrow, do u think the price will appreciate to 20% before the register closes on the 22nd thanks

I don't think it will be worth the effort. You are looking at 2 weeks before the closure and personally I don't expect a gain beyond 10% if it even goes that high. The results were not fantastic and though the bonus offer is stimulating, this has been know for about 2 weeks and the stock never really rallied.

easimoni:
@ Pumping (or anyone else),
please do the math for Ikeja Hotels. Let me know what you see. Sept. 2006 Prospectus is still on the company's website if you are looking for a forecast. It's looking juicy.

Half year PAT is 398M but the outstanding shares is 2.08B according to the offer documents. Full year PAT will probably exceed 800M due to festive season but even at 800M it will exceed projected PAT of 650M. I'm going to look for the quarterly earning patterns.

Forward PE for 2007 is still around 11.8. I think we need to wait a bit more. I don't see this drop ending this week. This is real panic selling. The volumes are low but almost always maximum drop in price

easimoni:
I saw the question and I think the person may have seen some broker's report with 0.0 PE. They will do this for companies that have never released results or not enough results to calculate a total for 4 Qs. FSDH does this for companies such as Spring bank or Transcorp.

Interesting. I didn't even think of that.

RoughCut:
Yeah i would pitch my tent with you on WEMA but for the banks doing PO i would reverse the order  bank PHB and FCMB

ACCESS not too sure i have had the damn thing since 2004 and their complex capital structure does not give me confidence in the short -term_{well seems like a lifetime now}. GTB hmmmnnnnnnn, being stagnant since they did the GDR some months back and i would put Diamond up there with bank PHB

If Wema continues this run, it will be more expensive than Diamond Bank by Friday. This up coming GDR may be hitting Diamond bank hard but I think the baton of the new kid on the block in banking should be passing on to Diamond Bank by tomorrow.

I don't see any other stock of value in the banking sector at current prices. I goofed by holding on to half my Oceanic because of the promised result but really can Oceanic post 30B PAT Anything short of that leaves the stock expensive in the short term.

UBN - The result of UBN has been in public domain for over a week and the stock has not rallied. In truth, the result was below expectation so I will be surprised at a rise of 15% in the next 2 weeks before the closure.

I saw a question about what it means if a company has a PE ratio of 0.0. Interesting.

There are certain methods of calculating PE that posits that the lowest PE can really be zero instead of negative. Normally if a company is making a loss, the PE can be seen as negative but in this case it is considered zero.

A PE of zero itself is technically not possible except the share price is zero in which case there is no need to calculate anything. It will only arise when a negative PE is being reported. The general acceptable practise is not to report a PE ratio that is below zero.

Obviously this a company you want to avoid except you are sure of turnaround in the very near future. More info in the link below.

http://www.investopedia.com/ask/answers/05/negativeEPS.asp

The banking stocks were bullish today. Any market news?

I cannot contain my laughter on this thread.

babaife:
@easimoni
most times, the reduction in market price of shares cause the drop in PE. if EPS goes up, the market reaction is to INCREASE SHARE PRICE. theoretically, the increase in EPS is built in to determine the share price. therefore, an increase in EPS CANNOT AND WILL NOT RESULT IN LOSS OF SHARE VALUE IN A NORMAL CIRCUMSTANCE (all things being equal). rather the opposite.

I like it as you have also adopted "normal circumstances". I always like this to be the basis of any discussion and not exceptions.

Back to your comments above, I won't say this is the case most times. In a market like the NSE where information flow is very slow, newly announced positive results that exceeds projections often result in a lower PE. Recent examples are Zenith, Wema and Chellaram. These are not exceptions, it is quite common.

It is why we are all trying to get the results as soon as they are released so we see if we are sitting on a pot of gold. 

@ babaife - You are yet to tell me a reason why a company with a low PE is a weak company. I don't get it. So is a company with a high PE a strong company?

Let's look at this from both the point of view of the buyer and the seller.

- Buyer- low PE is the target because the stock is undervalued. The whole discussion I believe was based on how to select a stock to buy into so this is the scenario we should be looking at.

- Seller -High PE is perfect because the stock is overvalued and he/she now happy to sell because he/she bought the stock at low PE and can now make cool profit. So as a seller you don't want low PE if you want to sell at that point in time, but this is really a matter of price. Using PE here is confusing.

The price of a stock does not usually have anything to do with strength but more with perceived value. As an investor, if I find a sound company with low PE my antenna is stimulated. The lower the better.

You see, as a general rule of thumb we cannot base an arguement on exceptions. There will always be exceptions. For instance, it is not all companies that make profit but this is not the norm. All acquistions may not result in better value but like I said this is the result in most cases. A company that is not acquired can also go under by itself but this is an exception so I won't use it in an arguement.

So do you mean that if  I don't want competition to acquire my company, the action I should take is to make sure I have high PE? What about the investors that hold your shares? Won't they be concerned that the stock is overpriced and dump? Why do we have good projected PEs in these companies prospectus? See how everyone is screaming after seeing the 22x PE being projected for Bagco 

Low PE will usually mean others are not seeing the true value of the company. This is not a bad sign on its own. Do you realize that there were many penny stocks as at last year with single digit projected PEs? Check them out now and tell me if these companies are weak. eg Costain and  Nahco. Also go and check out the current PE of Transnationwide Express and tell me if this means it is a weak company. Haba.

I believe that as usual, this will be over-subscribed. Existing shareholders wanted even more allocation for rights issue.

UBA or UBN ?

UBN is giving away 78% of PAT as dividends.

At least we know it is not paper profit.

easimoni:
@ no_shaking,
it seems your source of company results are quicker and more detailed than mine. Would you mind sharing? Pretty please!

Yes o. I've always had an early view from Meristem but I'm surprised the list today did not include Unic. Please share your source.

I don't know what to make of this UBN results until they post some interim result. If the goodwill was written off the premium account, the result is no so impressive.

I could not resist buying some unic @ 2.40 last week and if it goes anywhere near N3 I'm out.

no_shaking:
H2 Results for UNIC out!

Earnings - N1.065B
PBT - N300.33M
PAT - N250.61M

Marginal improvement from same period last year, still a good result vis-a-vis its o/s no. of shares (2.6B) and its current price

The company says the H2 result reflects the challenges of trapped funds as a result of the on-going insurance industry recapitalisation verification exercise, the run off (exit) of its non-life insurance portfolio and staff right sizing. And that barring any , (u know the usual gist!)

Note, the disappointing FY 2006 result shows a EPS of 8K, whilst the Half Yr Result shows a EPS of 10K, so Likely price target in the region of N3.50 - N4.

Thanks. I've been asking for this all day. Do you also have the FY results?

RoughCut:
@hispy99

This doesnt sound like a good investment to me but guess what? CSL is owned by you guessed it! Otunba Subomi who is the father of the current MD

To make an even more omnious connection, Otunba Subomi started and probably still owns most of FCMB.

RoughCut:
WEMA bank closed at N11.69 today another 4.94% gain and if the stock keeps appreciating at the max rate allowable of 5% in the next three days it would break the N13 mark precisely the share price would hit N13.53_{easimoni i hope you are reading this!} so i guess if you don't already own the stock i think it would be a bit late to join the party!

WEMA is literally back to life so i'm just sharpening my claws patiently waiting for the stock to go on TS before i open fire!

To imagine that just last week WEMA was all but consigned to history what a remarkable turn-around (officially the come-back kid)

Another gamble stock that met it's bill. Time to track the next one,

Temmie10:
@pumping
you're quite right about Nascon not adding up.
But you have to look back. Its a similar case to the insurance companies.
Before merging with dangote salt, Nascon's half year PAT was 4m naira or so. Now its 500m.
The restructure is what has been priced into the stock price.

Somehow I don't see a PAT of 2B from Nascon this fiscal year but I won't bet on it. Maybe. Just maybe.

wanaj0:
Most of the companies merged or acquired others. Some did rights/public offer with different levels of success. Some spurned off certain segment of their businesses.

I have UNIC, NEM and AIICO. Note that I bought them at relatively cheap price some 15 months ago. Not bought anyone this year. Sold part of my holdings this year in those companies when they were at their year high.

Me I don't have the fear of Wema. Sold what I need to sell to lock in profits and moved to something else.

I know I downloaded it a while back. Thanks. Let me revert to it. This should be interesting.

RoughCut:
Well well if you have taken the risk to have 80% of your portfolio in WEMA and you seem to have come out smelling of roses i'm inclined to go with you on this one!

To be sincere i don't  hold any insurance stocks _{waiting till next year}  but i think that is about to change now

The insurance companies are churning out good Q-3 results and in a timely manner too. I think the best potential for growth is in this sector right now. It will be better though if the companies can be transparent with the numbers of shares outstanding. Who has seen the result for Unic? I'm waiting for the first(?) insurance company to run foul of good earnings.

Nascon is a stock to be wary of. The fundamentals don't add up. With a projected PAT of 1.1B and at least 2.2B(If not more) outstanding shares it does not look like good value even at N15.

RoughCut:
Dangote is paying himself a dividend of N2.8B every quarter on this stock because he still has 70 or is it 75%? holding in Dangote sugar

See another dimension of the chicken and the egg?

Please can anyone share the results of UNIC?