₦airaland Forum

ugodre: True that. My worry however, is their loan losses. Seems not to be abating. But lets see their Q2

A reason why i still favour diamond bank. NPL are 5% despite growing loans.

@ugodre, All the banks seem to be doing well. Forward p/e's average at about 5.

Joshuabak: Thanks guys really appreciate your responses...but am predicting Diamond bank is still coming down considering the fact that a lotta investors would want to sell theirs cos of what was discussed earlier on this thread. I would also appreciate it if you guys could give
me 2-3 reasons why you fink I should consider buying NEM and Japaul thank you all and if you have further suggestions it's welcome

Nagode Sosai

NEM has a low p/e ratio, quite cheap fundamentaly. Dont know much about japaul.

question: GTB, FBN and ZENITH.

ALL BANKS??.......hmmmmmmmm

The argument of dividend vs non-dividend is like asking about a house that brings rent or not. A no-brainer in my opinion. For instance, a flat in 1004 goes for 60M with rent of 3.5. Or a yield of 6%. A gtb, zenith, or julius berger will give you that same rate, and will still appreciate.

manie: Not all the time. I sold my Nestle at N850 before mark down date so that I will be able to buy back at a lower price, Nestle is still selling at over N900.

I sold some of my Nigerian Breweries shares at N150, so that I can buy back at N130. Nigerian Breweries is still selling at N160 or thereabout.

Exactly how does one define an exit point? For instance, i purchased skye a6 5.50 and did not pull the trigger at 7.05. Now it lingers at 5.80. Do you have a percentage appreciation at which you call it quits with the hope of re-entering?

ugodre: It doesn't really matter as the decision to pay or not doesn't affect the inherent value of a stock. Rather than bother on what the market does ask your self these questions.

1. Did the company fail to may because they don't have distributable profits? If yes then that's a company in trouble

2. Did the company refuse to pay because they made profits and don't have cash? If yes, then that's a company with liquidity issues

3. Is the company not paying because it made a loss in the current year despite having distributable reserves? Then that's a company either trying to crawl out of a hole or sliding further in.

4. Is the company not paying because it wishes to invest its earnings? Then you must check to see if its trailing ROE is above your expected returns or at least above local bond yields.

Diamond Banks case I think was the first

Couldnt you also say that diamond wanted to keep the cash since they still intend to raise $750m??

mercylicious: No wonder d price jumped yesterday after d mark down.
I told my stock broker to sell at N3, but wen I saw d jump yesterday, I cancelled d order.
I need to recover sum lost cash and sterling seems to be helping.

Nascon shld take a leaf frm sterling ooo. I also heard sterling is coming to raise funds frm d mkt, so I expect d price to rally b4 they start.

97 percent rise in PAT , yet stock falls five percent today. .....hmmmmmm

Great job ugodre, awaiting Skye analysis.

Born 2be Rich: SKYE bank plc has finally released their audited result with a dividend payout of N0.50k

Source: http://www.nse.com.ng/Financial_NewsDocs/SKYE%20BANK%20PLC%20AUDITED%20RESULTS%20YEAR%20ENDED%2031%20DECEMBER%202012.pdf

Good dividend. But PAT less than expected.

manie: You may need to look at the PE, and the PE growth rate, Peter Lynch loves investing in companies whose PEG is higher than the PE.


To Peter Lynch, a stock with a PE of 12, and a PEG of 15, is cheaper than a company with PE of 6 and a PEG of 5.

Roger that. Thank you

manie: When i bought UACN and GSK back in the days, the stocks had a PE of less than 5.

So therin lies another question. With many of these stocks trasding at P/E's of 15, is it still worth jumping in for the long term? Or in other words,what indicators tell you that the P/E ratios at which you make purchase are good value at the time of purchase.

No vexx, i know i can be very interrogative

manie: When i bought UACN and GSK back in the days, the stocks had a PE of less than 5.

So therin lies another question. With many of these stocks trasding at P/E's of 15, is it still worth jumping in for the long term? Or in other words,what indicators tell you that the P/E ratios at which you make purchase are good value at the time of purchase.

No vexx, i know i can be very interrogative

manie: Okomu Oil sold for less than N5, in 2004.

100k will buy 20,000 units.

A bonus of 1 for 2 was declared some few years ago. this will make the 20,000 units to grow to 30,000 units.

Okomu closed at 104 on 12th April 2013.

30,000 units of Okomu will be worth over 3 Million Naira.

Dividend of 135k was received in 2012, and a dividend of 189k will be received in 2013.

At what P/E ratios were many of these stocks purchased? Might help to make for better historical analysis.

manie: I am currently heavy in bank stocks, about 50% of the value of my portfolio is in banking stock. I will prefer Ashaka and WAPCO over Dangote cement, I still have corporate governance issues with companies that are 100% owned and managed by Nigerians.

Always helpful. Thanks.

@manie, im trying to diversify portfolio as i am heavily biased towards the banks. Amongst the infrastructure sector, would you advise ashaka or dangote cement? Ashaka appears cheaper in terms of p/e ratios. But what do you see as per growth prospects for each of them.

http://online.barrons.com/article/SB50001424052748704882404578390630500580920.html?ru=yahoo&mod=yahoobarrons

Interesting read

Seun: Since the amount invested is constant, this means you will tend to buy more shares when they are cheap than when they are expensive. That makes it arguably superior to the similar strategy of buying X shares at regular intervals over a period of time.

Thanks for this seun and manie.

ugodre: Also this was a flash back review for Skye Bank 2012





. Its Loans is also more than 5 times its Net Assets, still acceptable by CBN standards. However, the banks needs to increase its deposit base to about N1tr if it is to remain very competitive amongst its peers.

Going by the analysis of.diamomd bank and sterling. Doesnt this make skye high risk as well? Assets as a percentage of loans is 20%

manie: I will advice you to try Naira cost averaging, this is a good strategy for starters and long term investors.

What does this mean? Buying more as the price drops?

Zenith Bank Plc hosted a teleconference call with its senior management this afternoon, April 8, 2013 to discuss its FY 2012 financial results for the benefit of analysts and investors. Below are key highlights from the call:


The Bank's remarkable FY 2012 performance (with strong growth across key income lines) rode on the back of sustained robust growth in net interest income (driven by an expansion in NIM's) and fee-based income. The banks NIM was bolstered by interest income on Loans and Advances and Treasury Bills contributing 52.0% and 34.0% respectively to total interest income, derived mostly from its Nigerian operations, which accounted for 95.5% of gross earnings.

Explanation of the basis for Low Tax Charge in FY 2012;

In FY 2012, the Group had a total tax charge of N1.4bn representing about N17.3bn reductions from prior period charge of N18.7 billion. The bank attributed the significant reduction in the tax charge to tax credit which the bank enjoyed as a result of tax exemptions on certain income, especially income on FGN bonds (interest received on FGN Bonds is not subject to withholding tax and company income tax) and reversal of deferred tax liabilities. As a result of its huge investment in government securities, the bank obtained a negative taxable income of N19.0m which ultimately led to the application of the minimal tax rule, resulting in a charge of N2.47bn.


NPL's fell more than 300bps to 3.2% from 6.5% in FY 2011, one of the lowest in the industry and bringing the Bank's key asset quality metric closer to its historic levels. The bank's robust risk management strategy and its conservative approach to business may have accounted for such a low rate.

The management of the Bank is very positive in its outlook on the Bank's FY2013 performance and so are we. NIMs are expected to remain at current levels (sustaining the robust growth seen in net interest income in FY 2012), while the Bank's healthy & very liquid balance sheet (evidenced by the relatively low loans-to-deposit ratio of 52.6%) leaves a lot of allowance for credit growth in the year 2013.

Management intends to grow loans and advances by 15%-20% in FY2013, by exploring the potential opportunities in the power sector while maintain its huge investment weight in treasury bills and FGN bonds based on the post-tax yield effect compared to loans and advances. Furthermore, the bank intends to lower its cost to income ratio below 52% in FY2013.

Based on this impressive performance and bloomy outlook in FY 2013, we reiterate our ACCUMULATE rating on the counter in the short term. Our long term rating, which is however currently under review, will be provided in a subsequent publication following a more detailed analysis and revision to our forecasts.

ugodre:
[b]Stock Worth Buying?

Mobil Oil is currently priced at N123 and has declined in value by 12% over the past one year. Their 52% drop in earnings per share surely hurts their market value more even more. At N123 the price is 15x its earnings making expensive in my opinion.

@ugodre, my question to you is...what P/E ratio is considered expensive and what is considered cheap? Please do you have an idea of the historical AP/E ratios in the NSE? Afterall, Nestle continues to be steady at 28, whereas Diamond struggles to even maintain a P/E of 4.

manie: You also need to invest when you are young, so that you wont play catch up at old age.

My question has always remained, when exactly do you know when the market has bottomed out?? The current bears presents good opportunity, but at what point do you enter? What formulates the basis for such a judgement.

valacious: has anyone seen first bank result? why is it seeing red this much?

valacious, please how do you view live trading prices?

phemmie06: To me I dont think Diamond is a bad stock, but most of the investors are expecting dividend or bonus or both if possible, and moreover the short term investors will be bailing out and these has contributed to the shedding of the stock price. With the PE ratio of 4.21 as at the release of the result, I think it is a good buy but I guess it will continue to shed some weight at the floor for someone like me to join the train. Anyway I am still waiting for the comment and analysis of stockbull on this.

Read ugoder's comments on analysis of results thread. Tehy are quite highly exposed with regards to loans. Might be risky for medium to long term. But im no expert

@ugodre, do you see a similar fate for FCMB? Particularly with regards to low net asset to loan ratios?

valacious: the right qn is, what is diamond eps?

1.58

sellydion: The result is fairly good, however shareholders are showing displeasure with this no bonus and no dividend thing. Notting to take a loss about.

Exactly. You do all realise that this stock now has a current P/E of 3.5! Its just a pity there was no dividend paid.

valacious: guy i wicked o! but seriously diamond result is so dissapointing, and to think some people were so bullish and accumulating on this stock, gbese! yes, with this result, its not worth more than N2.50k. firstbank we dey wait o!

Sorry o!! How is a stock that just declared 22bn PAT worth N2.50k? Im confused

debostar: I just want to know what is happening to ACCESS bank
It's falling at an alarming rate
Is there any reason for this
Thanks

Cant give a definite answer. But ill try my best. I think the results had already been priced in for most of the banking stocks. Also, their Q2 2013 projection is very poor to say the least. 9bn Half year 2012 was 26bn!!!!! I think that's why they made the projections before releasing this result. They carried bad debt to this year, and hence the backlash from investors.