₦airaland Forum

mikeapollo:
The provisions are meant to provide required funds for the eventual decommissioning of the assets in future, even if in 20 years time from now.
It is an industry requirement or standard that players in the upstream sector must comply with, because the decommissioning costs can be very huge and it is better they make adequate provisions long before the actual time/year the costs are incurred or expended

meaning its not cash outflow yet? (please correct me if i am wrong). Hence it just an accounting treating like depreciation, which is only expended (becomes an outflow) when the actual event (decommissioning) happened, but it is yearly charged against profit?

BabsO2:
Oando had a negative SHF of N214b in unaudited 2023 from a priot year negative SHF of N183b. Its rate of depletion of shareholder funds decelerated in 2023. The depletion of shareholder funds started in 2019 with a huge acceleration.

Looking at SEPLAT. Its shareholder funds increased in 2023 by N800b

Oando should be able to get a positive SHF in 2024 mid year assuming its unaudited 2023 is not restated. This is premised on SEPLAT's SHF growing by another N1000b in the first six months of 2024. Turning a negative N214b shareholder's fund to positive right now should not be a beggie for OANDO. Otherwise it has very very very serious issues.

Too ambitious

Yemy3m:
Oando still in debt but income near double.
Result out soon.
Dnt sell.

Income as in PAT or Revenue?

Debt did it reduced or increase?

ololufemi:
That's what seems visible to all of us o! There are some people or a consortium out there with deep pockets buying these shares up at every slight opportunity they have. 🤔

When the story of shares being purchased with deep pockets are told, Oando don show say levels pass levels o! It could even be transactions are being done to take control of the company sef. 🤷🏽‍♂️

Third time touching full offer in a single day

would it survive it??

KarlTom:
If you get BIG liver, you can still enter OandO...

i think it is moving towards a price when some VERY HEAVY CROSS DEAL would be done

what that Price is, is what i dont know (someone mentioned 94 as magic number here about a week ago when it was around 70ish)

mikeapollo:
Does that mean that Oando would have paid cash of about $583m for the ENI deal?

i mean real price / value could have been $900-$1b and the 783 paid was net of the pending judgement debt of >$200m.

$900-$1b looks more near to real price/ value if you consider what other oil major divestment figures were (including oando/ conoco)

Raider76:
Oando traded 93.8m shares worth N6.8b. Clearly institutional buyers at play. Probably Wale himself was buying.

hmmmmm Jite (Notore) that used to be the 3rd leg of the famous Ocean and Oil three musketeers just collected (within last 2-3 weeks) $150m for sell of 60% stake in Notore with management of Notore also relinquished in that sale.

could he be teaming up back with the remaining two musketeers?

hmmm $150m = N225b

KarlTom:
I dropped the ENI FY20323 report here some days ago (I will search for it again).
I asked myself the bolded and took time to search for answers...

NB: Mobil, Shell and co are also selling some of their assets.
I will bring this up again AFTER the deals are completed...

I am in the industry...

You dont need to go too far. check the notes to the last FY report published by oando and you would see that oando and naoc were already in arbitration for a judgement debt of over >$200m which is heavily tilted in favour of oando (such that naoc had to quickly get an appeal against enforcement) the Oando-Naoc deal is subsequent to that judgement. the deal was to be settled net of the judgement debt (this is also in the notes in the same financial report).

MARKETJJC:
Everything in life is game and in any sphere you decide to operate, first learn the rules of the game. TA is game, FA is game. What moves the market are sentiment and perspection. Nothing is valid or valuable except the value that majority (except those who have the fund/ money (not majority) gives to it.

correction in bold

MARKETJJC:
Everything in life is game and in any sphere you decide to operate, first learn the rules of the game. TA is game, FA is game. What moves the market are sentiment and perspection. Nothing is valid or valuable except the value that majority[b] (except those who have the fund/ money (not majority)[/b] gives to it.

correction in bold

Pesuzok:
Afreximbank that gave a loan of $650m did not look at the past performance of Oando aka FA, rather the future potential. A lot of people missed Oando because they were judging the company based on its past.

Oando is now the operator of the upstream assets and are already taking the bull by the horn with fantastic projections based on a presentation they did yesterday.

It's still not too late to enter for those still interested.

Grateful if you can share the presentation (the bolded)

Streetinvestor2:
The bank does not own the money in question. It is shareholders fund.And the senerio you painted is different

No mind Oga Hog he is just trying to rationalise a clear wrong decision/ policy from the govt for reason best known to him.

He even said the gain is from "forex sharp practices" and i wonder if the industry has any regulator and if so, what was the regulator doing by condoning sharp practices that yielded in excess of 3 trillion, yet no licence was revoked for the sharp practices.

if it stand and is fully implemented then it is clearly an expropriation (which is a good euphemism for collecting something with force) and not a taxation.

Because with taxation you know before you do the business and not after, i guess that is why finance / appropriation bill comes at the start of a fiscal cycle and not at the end of it.

KarlTom:
Everywhere RED...

why he no go Red. when una want collect 70% reward from wetin una no work for / put in any risk for

emmanuelewumi:
It can't fly, it will be challenged in the court

it has flew. The Act is passed. Should we await Bankers Committee instituting an action in court?

BullBearMkt:
Akinwunmi Adesina wrotes:

This whole issue on Dangote is shocking and creating bad waves for Nigeria globally. - Akinwunmi Adesina

Monopoly often exists where there are high barriers to entry or high capital costs.

How many individuals or companies can do railways? How many can do refineries of the scale of Dangote Refineries?

In a nation that has been importing refined petroleum products for several decades, the abnormal simply became very normal.

No smart investor would make a $19.5 billion investment and want it to be undermined by importers.

To manufacture is extremely expensive and risky. This is even more so in Nigeria, given the very challenging business and economic environment, fraught with policy uncertainties and policy reversals, and where the self-defeating default mode of “simply import it” is always so easily rationalized and chorused to solve any problem.

Competition is good for everyone. But is Dangote refineries anti-competitive? What is the evidence?

Has Dangote refineries prevented any other company from setting up refineries? Why have others not done so? How come they have not done so for several decades? Was it Dangote that held them back?

But Dangote refineries surely cannot be asked to ‘compete’ with importers of petroleum products.

That is not competition. Let the importers set up local refineries and compete by refining in Nigeria. That is fair and justified competition.

We cannot and must not undermine, disparage or kill local industries, talk less of one that is of this scale — a jewel of industrialisation in Nigeria.

It is more than simply delivering the cheapest product to the market. It is about domestic supply security, driving (and yes, protecting) globally competitive industries, maximizing forward and backward linkages in the local economy, job creation, reducing forex expenses and shoring up the Naira.

We must not be myopic.

This whole disparaging of Dangote is uncalled for. It is self-defeating. And it is very bad for Nigeria. Who will want to come and invest in a country that disparages and undermines its own largest investor?

Investing is tough. Pettiness is easy.

It sadly sends a signal that the price for sacrificing for Nigeria is to get sacrificed.

Akinwunmi Adesina

There is a Yoruba saying which goes : to ba fe le omo baba jinna mu omo iya ko lu pa" if you want to pursue your step brother far from you , then take your full brother (same mother and same father) and beat him to death.

bovali:
Just finished my research. Summary: Not worth it. It’s illiquid in JSE. Just 20k units traded on average, so can’t find units to buy

Hello Bovali.

would you be kind to enumerate/educate on what the process looks like. you never can say when a worthwhile arbitrage would come up on any of the dual listed companies (Seplat/Airtel or Oando).

Agbalowomeri:
Sure the Forex gains are baked in for this financial year. What happens next financial year? It's more like a one-off and not sustainable. That's why you don't see the price flying through the roof. Again, they are not allowed to pay dividends with the Forex gains and dividend is the major propeller of banks price appreciation.

On the technical angle, NGSEBNK10 is bearish with formation of lower highs and lower lows on the daily and weekly. Also the daily candles are playing below the Ichimoku clouds.

However, there is a recent volume spike and if NGSEBNK10 could break above the 860 region, we might witness a trend reversal. So, overall I am bearish on the banks.

Ahh talk too much. I dey my house dey sip my garri ijebu.

Oga Agba let me play the devil advocate on the fundamental part of your above thesis (i would leave the technical side to the in house expert like BullBearMarket and others)

Considering that the FX gain are baked in this year (just like last year also, i.e. two year running now) and that the regulator is not allowing distribution from it, do you think those gains would be idle in the books / operations of the banks. E.g would the about a trillion FX gain by UBA (2023&2024 inclusive) be lying down idle (considering its not allowed to be distributed) or it would be employed for further gain like all other capital in its arsenal. if employed for further gain wont that be impacting the bottomline going forward? let assume at current risk free rate of at least 20% as is currently isn't that an extra 200billion impacting the bottom-line going forward for UBA as an example (it would be practically the same for all other banks)?.

Omooloriredade:
It was in reference to OP's opinion of an offer price (N30 - N35). My point was that UBA will not tap the market for funds at a price higher than the prevailing market price on the NGX. Discounts will always be offered to attract investors. So not sure why he believes the price will be in that range except he also believes the price on the floor or bvps will be much higher than it is today when that time comes to raise funds in any combination of options available at their disposal.

All in my opinion.

Thanks

Omooloriredade:
It was in reference to OP's opinion of an offer price (N30 - N35). My point was that UBA will not tap the market for funds at a price higher than the prevailing market price on the NGX. Discounts will always be offered to attract investors. So not sure why he believes the price will be in that range except he also believes the price on the floor or bvps will be much higher than it is today when that time comes to raise funds in any combination of options available at their disposal.

All in my opinion.

Ok. Thanks

Omooloriredade:
This is normal legal finance talk. Nothing genius about it. I suggest you don't read too much into it. ALL banks will do the same. It's not about Tony.

Read note 9 of GT notice of AGM too. Any other bank notices that doesn't include book building doesn't mean they won't do it. It's just normal if you have a whole array of options for capital raising. Price discovery mechanism to be adopted won't be uniform across these avenues or platforms. Make no mistake about it though, a public offer on the NGX won't be at a premium.

Hello Chief, can you please explain / expatiate on the bolded.

aj8:
No. 9

Thank you

aj8:
https://doclib.ngxgroup.com/Financial_NewsDocs/40904_UNITED_BANK_FOR_AFRICA_PLC-UBA_PLC_-_NOTICE_OF_AGM_MAY_24,_2024_CORPORATE_ACTIONS_APRIL_2024.pdf




Tony is smart. Book building strategy is fantastic. Probably eyes fixed on an offer bid prices in the range of N30-35 judging by the new shares tabled (but a higher cut off is still possible) to raise the extra capital. He only needs to show that UBA can sustain a dividend policy above N3.00 yearly after recapitalization to achieve good uptake/bids. He has my respect 🫡 . He probably has a foreign underwriter. On this route, UBA should meet recapitalization in weeks or a couple of months. This is a clear pointer to a fantastic Q1 result. No one does this without good sure back up. Q1 results would probably come in right after closure of register to give wind to the sails of this option.

Hello Chief. Please can you share the document you are referring to in your write up? the document cannot be found in the link. Appr8

thebargainhunte:
If he wanted, he would have done it long time ago the way Ardova did. I think he needed the drama to tidy the results up. You might not be far from the truth, he wanted to turn a new leave now. Oando remains a stock to watch, but one has to know dinning with Oando is like dinning with the ....

"I think he needed the drama to tidy the results up" == in hindisght (20/20), this is looking more like the intention.


"You might not be far from the truth, he wanted to turn a new leave now"== i would not bet on this, i would rather say my goals are aligned with his. the day that goals does not align again you would really understand that he has not turn any new leave (or tree)

WT like most (if not all) Nigeria big man are driven by ego (forbes thing e.t.c.) so you can be rest assured since they are in government that would be on his top radar also. so Oando might not be going anywhere, might even witness a lot of pumping once the AFS are sound enough i.e. post release of AFS for 2022 and 2023 FY

( i am seeing/dreaming something like the AP / Otedola saga from sub 10 to over 300)

chillykelly86:
The CBN is in order not to allow banks use forex revaluation gains to pay dividends or for opex. It should be in a reserve account. This is because the exchange rate is not fixed and when naira stengthens, such reserves will come in handy to avoid rocking the boat. It's still part of equity and can be used to make money but shouldn't be seen as profits attributable to stakeholders.

for me the bolded is the key, imagine 500bn revaluation gain from UBA being invested in TB at current rate of over 20%, that is an assured 100bn profit for 2024 FY without any cost involve (no depositor to pay interest on the capital because it is part of equity)

Pesuzok:
Aside from the fear of delisting Oando, all eyes should be on the day oando will conclude with Naoc. Expect massive bull from that day.

Buying NAOC makes oando an operator in the E&P

The bold is the key.

that is where the difference between Oando (as presently is) and Seplat lies

Oando is presently not an operator (although is an upstream player)

But Seplat is an operator

meaning Seplat can ramp up production (if need be and financial wherewithal is available), which is exactly what they did upon becoming an operator

while Oando would only be contended with whatever the present operator produce (as a portfolio investor)

but the bigger question is would Wale allow the minority shareholder benefit from this largese whenever it materialises?

aj8:
The average of the last 2 dividends x 10 comes very close to the peak price before the declaration of new dividends in anticipation that the new year's end should at least meet the previous year’s yield if the EPS has been surpassed or met. This is true for most of the banks that average a yield of 10% assuming the shares were bought just before the declaration at the peak price before declaration. That price should climb after the declaration to reflect the yield and prospects of the stock. For example, Zenith Bank pays about N3.50 on average which x 10 gives say N35.00. This price would hover about this price till new prospects emerge, then the climb. Notice also the price matches the last organic EPS x 4 ( adjust without the variations induced by the foreign exchange valuations). Same for UBA, GTCO, etc. You can cross-check, and notice they would roughly come within a Neighboring range of x4 eps-x5 eps or x10 dividends. The companies however with huge FDI yields average about 5% so best to use dividends x 20 approximately…. e.g. Breweries, Oil and gas, conglomerates, MTN, Airtel, etc. I only buy these stocks for price appreciation once the price shows it’s well below a price commensurate with a 5% yield e.g. NB at current price and sell off once it attains dividends x20. Holding such a stock till dividends would mean you have settled for a yield of about 5%.

In other words to put it simply… if sentiments anticipate a 5% yield meaning that those invested in the stock are happy with a 5% yield, then the price would reflect 5% but the earliest investors probably got the stocks at a premium. earning far more than the new investors e.g. Seplat. , NB, Guinness, etc. since they bought at prices far much lower in the past.

So check the average yield in the sector. That should help. But 10% for banks. (EPS X4 or dividends x 10 most times reflects the target price before new EPS or dividends) .

Would be happy to apply the calculations on the next report of a company with a good yield so you appreciate it better.

Hope this clarifies it a bit better.

. Thank you

aj8:
My Common Sense entry point :
Buy if price of stock is well below 80% of 4xEPS FY estimates to guarantee at least above 20% gain in the investment . The 4x EPS FY will become your target price and the range if still strong could be 4xEPS-5x EPS. provided the company has good Dividend payment history within the sector. If the Dividend payment is very poor, aim at 75% 0f 4xEPS as target price meaning you would have to enter even lower ( that’s at least below 80% of this target). Review targets as new EPS come in. Use only EPS that’s organic ( I.e based on pure corporate sweat).

REMEMBER TO INJECT DUE DILIGENCE IN EVERY PICK ESPECIALLY WHEN CURRENT PRICE IS ABOVE 4 X EPS.

Consider these hypothetical examples below:

1. A company released Q2 half year results at say N5.5 but is currently sell at N18.00 . Dividend payment is adjudged good. My target would be N44 and range N44-N55. I would buy.
2. A company with a full year results EPS of N1.05 currently selling at N1.00 should rally quickly to N4.00 if with good or improving fundamentals . I would buy and target exit at N4.00 except new EPS suggest otherwise.

3. A company with current price at N60.00 but EPS of N2.00 is not a buy for me as 4x EPS is only N8.00 . It remained however good for those who bought it earlier at less than N8.00 .

REMEMBER all strategies were derived at a point in time. This works for me and keeps my losses to a minimum.

.

Hello Chief

what would you term a good dividend payment history?
is it only in term of amount? or it is in terms of % of EPS or in terms of comparision to peers in same industry? or in term of years of unbroken payments? or in term of growth to the dividend being paid?

would appreciate if you share

emmanuelewumi:
Might affect the share price of small and weak banks.

. The recapitalisation is long due. 25 billion in usd as at 2005/2006 when the last recapitalisation was effected was 200 million dollars which at today rate should be 130 billion naira so i expect a recapitalisation requirement between 150 - 250 billion naira. That said the fugaz and a couple of others should be in safe zone. It can be expected that there would be flight to safety for both deposit and shares from those below this range to those comfortably above it. Selah

essentialone:
Oando is set to raise their price from 7.07 to 14.14

Sarcasm or insider tip?

BabsO2:
Management response to the two key hot questions.
Dividends will be restored sometime in future
Some agitating shareholders already exited. However the scheme process will go the whole hog. Only the remaining minority shareholders at the court ordered upcoming scheme meeting will determine the way forward based on 75% majority vote.

My take - body language and comment from Wale suggest those minority shareholders that want to exit have exited. But the comment from a key board member suggest caution, as it's minority shareholders that will determine way forward. That process must be concluded. Umm - Looks open ended - a buy out could still happen. However market has responded with full BID again following these answers. With zero offers. ZERO offers.

Dont be too optimistic

if Wale meant well why was the issue not on agenda?

since it is not on the AGM agenda, it mean that another EGM to solely consider the issue would have to hold but what is the possibility of that holding from today and before November 28 (barely three weeks away)

if you also put into consideration that the AGM/EGM guideline mandates AT LEAST 2 weeks notice. then it is certain that no EGM would hold before Nov 28 hence there would be no definite action from the court case by Nov 28 at best what you would have is another adjournment

People should tread carefully

robobo:
really i dont understand how anyone that is holding this stock would sell it for less than 25 (half PBV)

Although it might look like the current performance would not be sustainable given that the major component ( revaluation) is one off but i beg to differ.

On a back of the envelope basis, my take is that UBA EPS going forward would sustain the upward of N8 per share going forward even without revaluation. The revaluation alone add over N800b to the bank asset which if invested in TB at average of 13% is over N100bn profit per year (without any cost) to the bank bottom line i.e. about 3.50 per share which if added to the normalised EPS (before revaluation) of about 4.5 per share would give about N8 per share going forward even without revaluation. Please note that this view goes beyond 2023 to as much as 3-4 years ahead (bar any major mishap from the management)

if 35% of the N8 per share is paid as dividend one would expect a dividend of at least N2.50 (both interim and final) which at N25 per share is a yield of at least 10%.

so i dont understand how any one would want to sell below N25, but to each mallam his kettle.

Selah

Above was just after release of half year result when the price was struggling to hold on to the 15-17 price range


If Tony pay anything btw 3-4 in final dividend (which is very conservative at EPS already at 12.94) then be rest assured UBA would definitely go to high 20s / low 30s

BabsO2:
Directors mobbing the shares. A new word on this page
Or is a new development by directors when they are released to trade in their shares
Let us see how much they can mob.

i dont see it as mobbing, the total units bought is still under 40-million (for a coy with 34.2b outstanding shares).

i see it more as a signal that the owners of the company see more value in the company going forward at this present price (despite the fact that the price has had a run from 8 to 21 recently)\.

hence it is more of a signalling technique by TOE