₦airaland Forum

samguru:
Before you press that SELL button on UNITED BANK OF AFRICA PLC (UBA PLC) shares

Lets reason together;

*NPL (Non Performing Loan ratio) reduced in the year under review
* The Gross earning and profit after tax increased significantly
* No pending court case that that can claim up to 50 billion naira
* Directors of UBA are buying more shares
* Tony Elumelu and his family members are increasing their holdings in UBA


But at the end of the 2020 FYE, UBA declared a very poor dividend which is not as a result of poor performance.

Ok nah, you want to begin to dump UBA shares because of poor dividend and thrash their good performance to teach the board small sense.

I strongly believe UBA is embarking on investment drive in 2021 that will require alot of cash and that is the reason the company has retained a large chunk of the 2020 profit.

the MM is already fighting back

im loving the season film.

lolllllllllllllllllllllllllllllllllll

]

PharmAlfred:
NSE is a weird place. Don't be surpprise to see UBA go up within a short time. They did very well, so I wonder why they will be paying less dividend. It is still a surprise to me. We all anticipated a bad result from Nigerian companies but they turned the corner. Shareholders deserve better.

My Oga i really wish but im a hard nosed realist, nothing like that wld happen particular with the negative mood on the NSE now.

expect maximum punishment

PharmAlfred:
UBA made more money in 2020 but are paying less dividend. Total of N.52 as opposed to N1 paid last year.

May be 2021 will be the real ghetto.

At this rate, it is only God that knows what Access Bank will do.

Dividend hunters got it wrong this time.

im positive something is at play here. (maybe opportunistic acquisition, hence need for cash)

but the issue is that the market is not going to entertain anything like that. pple had wised up to the fact that what they eat (dividend) is what matter.

so you can expect maximum punishment for the rest of the week.

the bottom wld be quite deep particularly when there was no form of market warning before now (like profit warning / guidance or conference call hint during 6 month / 9 month result release)

market (worldwide including Nigeria) HATES surprises (like this)

it cld be fishing in the 4 - 5 range for a long time (minimum of 2 quarters) till the Management direction is known for such drastic drop in dividend payout.

N.B not an attempt to run down as im heavy here

seyisanya:
The offer will be very very full tomorrow!

more than full self cos there was no basis for the reduction as all major lines (GE/ NI/ PBT/ PAT / OCI) went up by double digit percentages.

zimams:
I just saw this summary from investing.com
I never see the full thing...

its on NSE site

zimams:
What did they pay for interim dividend again?

UNITED BANK FOR AFRICA PLC - DIRECTORS PROPOSE A FINAL

DIVIDEND

OF N0.35 PER SHARE

* UNITED BANK FOR AFRICA PLC - FY GROUP PROFIT BEFORE TAX

131.86

BILLION NAIRA VERSUS. 111.29 BILLION NAIRA

wey d result?

safepaulooo:
A gut feeling in me says there is still one more major bull before the decline. Might be utterly wrong

was thinking also before but its very doubtful now. ASI had crossed below 50MA making it near impossible for any rally

OBAGADAFFI:
Meaning they generated more funds by selling off some assets or Adjustmented their Liability.

But the year they paid that dividend, Chams balance sheet was showing the negative retained earnings.

Wale can pull fast one us anytime.

My Oga where would he get the money to pay from? has he finish paying the Banks? or you think the Banks would allow him pay dividend when he is still owing dem loan that had become delinquent? Oando cannot return to profitability except oil reads 70 (that was the projections on which the conoco asset were bought, check the coy previous financial statement) and unlike some other marginal player he cannot increase the volume from the oil well to compensate for price fall because it is not the operator.

My Oga i really wished the rumour has an ounce of possibility to it cos im heavy here (though fully written off now) but im a hard nosed realist, so i wld tell you not to bet on it.

nna777:
Yes. Thanks. I just corrected it

the fall i think would correlate (inversely) with the NTB rate. if the NTB approach 7-9% you can expect a steep fall, however the signal wld first come from OMO cos if NTB is to rise then OMO wld rise ahead of it just as was the case some few weeks ago.

nna777:
After holding above 40k for 4 weeks. I don't think the fall will be brutal like when FPIs are exiting the market. Domestic investors currently dominate the market. Slow but steady drop.
NTB 1yr pegged @ 10% though

Good perspective. but i think NTB 1yrs is 5.5% (this week auction). the 10% is OMO which i dont think affect NSE that much because that market is only open to FPI & Banks (i dont even think its open to PFA, not to talk of retail). its the NTB that i think affect the NSE quite much cos its open to all comers

OBAGADAFFI:
NSE-All Share trading at 39799.89

shey no be say d dam don broke be dat??

Are we going to break 40k hmmmmmmmmmmm.

nosa2:
More than 600 U.S. companies are zombies, defined as not making enough money to pay the interest on the debt they've accumulated. You've heard of all of them: Macy's, the four major airlines (Delta, United, American, and Southwest), Carnival, Exxon Mobil, and Marriott International, to name a few.

Culled from

https://www.fool.com/millionacres/real-estate-investing/articles/us-zombie-companies-are-now-26-trillion-in-debt-what-does-that-mean-for-investors/

And this is with rates at the current level oh!

FED cant raise rates because it will tank the US economy

ok thank you i appr8

nosa2:
Not happening

Hello Chief

wld appr8 if u share the thinking about ur response above

nna777:
I think 2020 was unique. If you remember, they issued bonds @ very low interest to offset their debts. This really helped their balance sheet FY 2020.

As for sustainability, as an investment bank, they are in a good position to either maintain it or grow further. My opinion.

I pray soooooo

when the full report comes out we see where the spike came from and the sustainability of that source(s)

samguru:
very huge

Super Huge

How Sustainable is another question. 1st Q 2021 should give a hint, but with the Coy being the Major arranger (as per funding) for Tony foray into Oil & Gas then it might look sustainable at least in the short term (1 to 2 years)

nna777:
Let's see how it goes. They might just surprise us

I pray so, but i ma just managing my expectation

nna777:
From what is going on in UCAP, looks like dividend will be 60k. Volumes are packed @ 6:50 to 6:60.

My opinion.

Chief i dont see them doing more than 50k

sellydion:
If you remember Sir Wanajo comments, that day the NSE struck a major resistance.
I pray the market breakthrough

42k is a major resistance and it is normal that it wld be tested, so what is happening is normal. my take is that if 40K hold for this week close and next week close, then the ASI wld test 42 again. if it breaks 42 then the next test is 44 which is not far off so it might want to test both in one sweep. if it is able to break both then expect a very big leap and if not then it means the two year electoral cycle (downtrend) has kicked in (cc Agba).

factors that cld help with breaking 42/ 44 are rate in fixed income space does not increased further from current point (e.g. NTB 1 YR/ 4%), devaluation of naira (this has an inverse relationship to ASI), better recoveries from ravages of COVID 19. Factors that cld hasten the onset of the two year electoral cycle decline are opposite of above i.e. rate in fixed income space increases further (e.g. NTB 1 YR/ 8-12%), Naira not devalued, continue struggle with COVID 19, increase in insecurity. woeful performance from major clisted coys

Zagee:
How low can Zee go?

Bloody and beautiful

They shld put it to full bid by close today and also tomorrow so that we can arrive at sub 20 quickly

They shld pack all their money and go back to the NTB and leave this market for us.

wisdom2345:
The Plumming of this stocks is as people expect NTB rates to be above 5% for the 364day bill and then 10.1% in the OMO would hint Foreign investors to sell equities and even bonds in the secondary market to lock cash in OMO @ 10.1%

We just pray and hope that today’s NTB still dips lower but if it appreciates more locals would sell off assets in the stocks market to gain risk free return in t bills

you sabi well well

locodemy:
Trading is over for the year.

We tried our best in 2020.

2021 will be better for us

Amen

nna777:
Agba please help me confirm. Next key ASI resistance is 43k briefly before touching 45k and time frame is btw now and second week in January.

Cc: other TAs should help me check and confirm too. Thanks.

My Oga we MIGHT be surmounting both resistance this time around (unlike 2014 and 2018) however the ride would be quite VOLATILE and BUMPY. Also the time frame wld be a little stretched. My thesis rest on twin factor of big caps listed within the last up (2018) and now (e.g MTN / AIRTEL/ BUA) and the fact that the world is just at the START of resurgence / recovery from a Global hit (Covid 19) with more leg room to UP and its attendant spillover into our market.

currentprice:
the way this stock is pumping is a likely sign that mkt Bears is closer. nothing supporting the cp

let be careful

my Oga na Forbes thing plus possibly finance raise viz a viz expansion of the Group (3 new cement lines, pivot into refinery, pasta e.t.c) by using the shares (and invariably its price) as the currency/ collateral to back intl debt raise (a la Dangote model)

bigjay01:
NSE ASI 5YR High was 45092 on 19/01/2018.

Let's see how this one compares

i think we are going back there, though the journey wld definitely not be str8

ositadiima1:
I think Zenith highest price ever was 34 something in 2018. Will zenith break this record ? Simple calculation shows that it is likely .

If dividend payout remains same at 2.8 Naira then 2.8/34*100 = 8% which is still better than current interest rates.

oil dey ur head i sincerely believe it wld beat that ATH also considering the paucity of outlet for such gain in the Nigeria financial space currently but even at that if anybody is heavy on any stock (e.g those who do 2 -3 stocks only) i wld advise dey get down at intervals instead of trying to target getting down at peak.

RabbiDoracle:
The global asset fall should accelerate. EU, US and Asian equities will be battered. Contagion effect will cause others to fall. Circuit breakers should be triggered there.

The foreign index market structure was broken in September 2020. But people were basking in the euphoria.

Activate your contingency plan.

Goodluck.

Hello My Oga

While i agree with you that contingency plan should be readied. we need to note that the current bull run on NSE is largely being fueled by wall of liquidity caused by regulatory policy (CBN) in the fixed income space (though it was late in coming). so me wld say d thing to really look out for in other to know when the party has ended/ is ending wld actually be CBN play on the fixed income market space and / or when the dividend yield on major counters start rivalling the current yield on long term fixed income instruments (currently circa 6-8%).

All said, my take wld be that pple shld gradually take profit so that they wnt be taken unaware when the tide changes.

N.b i took some even before the current bull run, presently taking some also now, while i reserve some shld in case my readings are wrong.

RabbiDoracle:
In this context, the two banks considered are commercial banks and not investment banks. So I expect more of net Interest income than net trading in them.

Do you know that investors will wonder and ask questions on the reduce net interest income (for Access bank) to know if there is any issue with the loan books? If there is any issue, how bad is it? How are the provisions going to be? Did they make lower provision for losses which in turn made the PAT look good? These are the questions that can arise from just seeing that lower net interest income.

Investors can ask questions on non-core items but it will not be like the core items. Core item is the life of the bank. Just like Japaul having gross profit of less than N1b in its core operations but declaring N42b in non-core profit. Wetin be that? That tells you that the Japaul can't function after that one off gains.

Now back to UBA, investors will not ask questions on the core function because they can see growth even during this pandemic. However they will ask questions about the 'other expenses'. And you will agree with me that those other expenses can be easily controlled. Like the covid donations, it is within the management prerogative not to donate and if they don't, this adds to the PAT. So you will see that while management can control this line items, but you can't easily control current loan losses.

So if you see decline in Net interest income as nothing, bro, it is a big deal o. This means that some of the loans aren't performing.

let me contribute to the discussion cos i like d intellectual bent of it and i have picked some salient points from both perspectives

my scan reading of UBA half year showed that the spike in expenses where largely form 2 expense line employee benefit (increase of 7b) and other opex (14b increase) which in total give 21b. The employee benefit spike i am sure wld largely be associated with the January 2020 mass realignment of its workforce (severance pay likely) hence shld be one off and also bring some future savings. while further dissecting of other opex showed that the spike on this line was caused by spike in donation (of 4.7b); spike in contract services ( increase of 4.8b) and amcon levy (increase of 2.5b). now speaking to each of this sub head: donations should be one off, contract services i wldnt know d cause but my guess is also January workforce realignment, while amcon levy is regulatory.

Summary of above is that the spike in expense which was the cause of decline in PAT are largely one off (except for amcon levy).

TLAX:
http://www.nse.com.ng/Financial_NewsDocs/31355_STANBIC_IBTC__HOLDINGS_PLC-_QUARTER_2_-_FINANCIAL_STAT.pdf

Interim dividend of 40k. Down from N1 in 2019 even though profit after tax & EPS increased. COVID 19 matters.

I know most of the accounts will be released this week.....

from above . it can be reasonably assumed that the reduction of dividend has some kind of regulatory impetus hence would go round.

year end dividend might take a cut of between 15-30% (compared to prior year) across board

nna777:
What of those that have been hoarding?

Won't they sell now leading to liquidity?

I want to believe dollar scarcity was artificial

Chief those that are hoarding wld not sell until they see that someone is in the market that could make the scarcity go away. it is only then they wld be willing to offload. it is just simple human economic behaviour.

so if cbn want to be taken serious it shld enter teh I& E window and provide enough liquidity as well as sell two to three weekly rounds to BDC

only then wld d hoarding / artificial scarcity go away