₦airaland Forum

easimoni:
It's the word "bonus" that has changed in meaning. Bonus means something extra for free but in the NSE a bonus means taking my cake, cutting it into smaller pieces and telling me the same cake should be sweeter because I now have 12 slices instead of 6.

Reminds me of the Yogi Berra story: A waitress asks Yogi if he wants his pizza cut into 8 slices and he answers "I don't think I can eat 8 slices, why don't you cut it into six". The same pizza!

The point is AIICO gave bonuses to distract you from the fact that they were not profitable. Bonuses don't mean anything, they never have and never will. I'd never buy a money-losing company even if they were giving 100-for-1

Thanks for helping me explain in a way that can be understood.

whitelexi:
I don't see anything wrong with the prices so far, i reckon, like temmie10 above has said, that the insurance sector will catch up with the banking sector over the next 20yrs at the most because the rate of expansion and growth is alarming.

No problem. To each his own. Someone said the same thing when buying NEM insurance at 6.37. Now NEM insurance is  < 3.00. Water will always find its level.

Many companies are doing well and will continue to do well. However, when they are OVER VALUED, you may need to take a step back and bid your time till when they are fairly valued or undervalued.

Mr. Risky:
My Peace,
Sorry, my last statement in my earlier post concerns ONLY CORNERSTONE, not Mutual Benefit, Crusader or others. Cornerstone is a great insurance company relatively speaking, but their profitability has not been impressive like its peers. For instance here is their performances so far:
MUTUAL BENEFIT (six months result = N448m)
CRUSADER (six months result = N593m)
WAPIC (Though no result yet, but they are expanding even beyond the Nigerian shores)
AIICO (recently merged with two others, and promises to do fine, and they are generous with bonus and dividend)
Cornerstone (six months result = N276m)
Staco (six months result = N301m)
Standard Alliance (six months result = N301m)
Sovereign Trust (six months result = N222m)
LASACO (Six months result = N560m)


This is what I have personally gathered from my findings about them. Although they all do not have the same figure as their shares outstanding, but you can even see that Staco, a new comer to the market did better than Cornerstone in their 6 months result. Methinks their profit results matters in one's analysis.

Mr. Risky:
to Add Others are:

Custodian & Allied (six months result = N435m)
NEM (six months result = N213m)
LAW UNION (six months result = N274m)
NIGER INSURANCE (Six months result = N354m)

Others I am not very interested for now

Talking about profit while not taking the outstanding issues into consideration distorts the picture.

AIICO is not generous. When they were facing reduced profitability, they were issuing bonuses to prop up the price. Can't remember the last time AIICO declared a dividend. Same for NEM.

UNIC is another good company that is set to gain from its investment in UNIC health. They are also opening a club at VGC.

The insurance companies should do well. The question is whether the current prices are right and justified.

Temmie10:
The smart money is still on Insurance. The big questions is 'when this plane will take off?'.
Many insurance companies are taking advantage of the favourable govt policy of underwriting for the oil and gas sector and the bottom line is already being impacted.
The impressive growths of 400-1000% profit increases in half year profit have happened without the release of the escrow funds. If this growth continues in the next quarter of their earnings, this sector will create a new batch of billionaires. The fact that Crusader, mbenefits, wapic, lasaco et al all posted exponential increases in earnings without reciept of the funds hints at the opportunity inherent in the sector.
The industry is still a gold mine waiting to happen. The trends of the next results released will indicate whether the growth is sustainable so i am looking at march 2008 onwards for the returns. Btw do you know that the Abbey society intending on listing on the NSE is 20% owned by Mutual Benefits. Some of the smarter md/ceos in insurance are pulling some major strings into making their firms fully fledged insurance firms with life and non-life assurance, oil and gas, asset management, medical insurance etc. I see more prospects in the sector abeg. The market will not react immediately but this is where one must definitely consider taking a significant position if one does not already have a stake (obtained at a reasonable price). The gap between insurance and banking is Nigeria is too Huge despite the fact that insurance is growing at an alarming rate. The economics of it will catch up eventually.
When the funds then get released, it can only create more value.

Temmie, while I share your optimism, certain things also need to be put into consideration.

Firstly, some of the exponential increase in profit is due to mergers and in some cases the investment returns of those insurance companies. Some are heavily exposed to the capital market.

Secondly, I think the amount with CBN is sometimes exaggerated. What I thought was that only 10% was kept with CBN. That was the initial plan though I stand corrected on this.

While the local content policy in the oil and gas industry is good, even with the capitalisation, the companies are not ready for that. Things can only get better though.

Life insurance, health insurance are going to be the money spinners. Hope they are ready for this. Pension is another one. Crusader seems ready for this.

The insurance industry will do well. The regulators however need to step up. Their handling of the consolidation exercise is at best shoddy. Just compare with the banking consolidation and the difference is as clear as day!

Treasury bill should actually be the LOWEST return that you can get. There are definitely far better options out there.

If however you are risk averse, then stick with Treasury bills.

In Nigeria, you don't make money from properties until you SELL. Rental properties is not the way. unfortnately, our culture is not really in support of selling of properties.

Secondly, like it was said before, entry level into property investment is high!!!!

The third issue for me is liquidity. I know someone who is planning to sell his buidling for N45m. How many people have that amount of money? Unfortunately, with properties, you cannot sell piecemeal. So he is stuck till get gets someone willing to shell out the complete money. With stocks you can sell in bits and pieces. You get yoyr money faster.

That said, property is considered a store of value. So, make money from stocks and 'LOCK it in' in property.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axUJKTYPoeA0

Ecobank Nigeria to Merge With Sterling Bank to Expand (Update1)

By Paul Okolo

Oct. 15 (Bloomberg) -- Ecobank Nigeria Plc will combine its assets with those of rival Sterling Bank Plc in the biggest merger since 2005, when the Central Bank of Nigeria restructured the banking industry in Africa's most populous nation.

``We're merging,'' Ecobank Nigeria Chief Executive Officer Ofong Ambah said today in a telephone interview from Lagos, the commercial capital.

A joint-statement on the deal will be released later by the two banks, Bimbo Sowemimo, a spokeswoman for Sterling Bank, said by telephone. The combined bank will have about 200 branches and a market value of 269.8 billion naira ($2.17 billion), according to Bloomberg data.

Ecobank is trying ``to scale up'' as part of its objective to become a top-three player in the country, Pabena Yinkere, analyst at investment company Afrinvest West Africa Ltd., said in a telephone interview.

Ecobank Nigeria, a unit of Lome, Togo-based Ecobank Transnational Inc., which has operations in 19 west and central African countries, has been holding pre-merger talks with rivals, Ambah said in an interview on Sept. 20. In May, it signed a memorandum of understanding with Unity Bank Plc, Nigeria's fourth-largest by branches, designed to increase its presence in northern Nigeria where it's currently not well represented.

The merger is the second since the restructuring of the industry in 2005, which saw the number of operators cut to 25 from 89.

In the first merger among the surviving banks, Johannesburg-based Standard Bank Group Ltd., Africa's biggest lender, last month acquired control of IBTC Chartered Bank Plc by combining its operations with that of its local subsidiary Stanbic Nigeria Ltd.

shigidi:
the recapitalisation of insurance coys has been cancelled. this is not good because the confusion in the insurance sector is going to continue.
i hear all mergers have been cancelled.

Not quite. What you have is a court ruling that said that the status quo be maintained. Interpretation is that all the companies in existence pre feb 2007 can continue to exist pending when the insurance act is ammended by the National Assembly to reflect the new capital base.

Ideally that should not affect mergers that were willingly consumated. Even without the legal backing, it is obvious that bigger capital base is for the benefit of ALL.

I don't expect it to affect the mergers except for Globe Re.

Also, the funds may now have to be released by CBN since it is no longer necessary to verify the funds of any of the companies.

zukkie4eva:
Wanajo, Shigidi, roughcut, stop evading the question on Japaul & FCMB offer!, please give us your analysis on these companies, abegggggggggggggg!, are they worth investing in??

_{"getting frustrated on the lack of info. on these coys".}

For me, I am not enamoured by any of the offers so I am not participating. A rash of offers like this shows that the market is over valued hence the rush by all of them. This is evident in the forward PE's of those offers.

Sincerely, you are better off buying on the floor than tying down money with these offers. Just my thoughts.

The result by UPL is good but I tend to think that Longman has more value. I expect Longman earnings based on previous trend to come mainly in Q3/Q4.

High PE just shows the value that investors place on future growth/earnings. The growth potential in Nigeria is just huge. The banks are yet to scratch the surface of the potentials. MTN just syndicated a loan of $256m. This was done by MANY local banks and some foreign banks. Soon, that will be done locally. Just note that we've not even talked about Mortage.

Look at insurance, the opportunity there is HUGE. Look at companies posting 400% increase in profit.

While it is good to be cautious, the reality is that if the current growth in the economy is sustained, I expect the current situation to continue at least till 2010. So no shaking.

Definitely there will be corrections. Nigeria will not have a market crash at least not now!

shigidi:
@ wanajo, what was your take on that result from university press? not bad ehn? however, loooking at their five year records profit seems to fluctuate, doesnt seem to grow steady.

on another note just thought id let evry1 know i was watching CNN over the weekend and got to business international where analysts were looking at markets in asia and how theyve grown so fast. many of these analysts said the bubble would burst soon and commented on how stocks are doing up to 25 times its current earnings and im thinking 25?? banks here are doing mid thirties. just some foodfor thought for evry1. lets not get carried away.

MyPeace:
wanajo, nothing for you

I am already getting my E-BOMB ready for you.

Alternatively, I may just FAX one Ogbunigwe to this number 01 4935178

Just perform. Not sure whether I will qualify for the rights if I buy now.

MyPeace:
where are the gurus its seems amatures have hijacked this threat. Abeg oooo!!!!!

MyPeace, you don get my Trans Express for me? How many units?

Anyone with the Oceanic allotment basis also

Temmie10:
The gist was in the guardian newspaper a few days ago.
Interesting developments there. The company's figures remain impressive in any case.

No totally true report.

No interim dividend was paid put final dividend of 15k per share.

Authorised capital was raised. Board also given approval to issue new shares (by rights, PO, merger). This was just o prevent them from calling another EGM to consider such issues again. Don't see them coming to the market at least not this year!

Mr. Cee:
For old clients, the on line access is active but the data is not always correct. For new clients, they are not providing on line access except it changed just last week.

Since the merger/acquisition with Afrinvest, their stockbroking performance has dropped. They seem to focus on other areas now.

Your account officer also matters. Right now, Bis is one of the best. Susan is also not doing badly. Will stay away from Dollop though!!!!





self-service,

Please again since Afinvest are into other things that they pay little attention to broking services are advicing that one should stay away from them? if yes what stock broker firm would you advice one should open account with that has good online services?

Go for Afrinvest. They are my ONLY broker. Had opportunities to try others but not impressed. itsyour account officer that matters most.

Yes they are into other things. Stockbroking does not bring that much money so I do not blame them.

walcolm:
Platinum declared 1-for-4 and it was effected yesterday, that is where the 3.4b units came from

Nope. The 1 for 4 was alaredy factored in.

easimoni:
@ Wanaj0,
WAPIC has 4.2B shares and Crusader appears to be the pick of the insurance companies. I disagree with your notion of 20 being to high a PE for insurance companies. Sure they are not as solid as banks but the growth rate in that industry in phenomenal! If anything, they should be selling at a higher premium. But you are right in saying it's murky waters. I still can't trace the full pic of outstanding shares for most companies.

PE of 20 is high for the insurance industry. Historically they average about 6.00. With low dividend payout and requirement to retain a large part of their profit as reserves, dividend yield is historically on the low side. While the growth potential is there, teh sector is still wobbling. Just imagine how the consolidation is going.

Risky's numbers looks realistic for me compared with the other figures being bandied around. Crusader is the jewel out there.

IBTC is adding another 3.4b shares to Platinum shares. Not sure where that is coming from. Well, it will never be high on my list. Oceanic is good but not for the short term. IBTC will also do well but is not available.

yodiyokun:
Anyone knows what is going on with Bank PHB.

Those guys are off the roof. they just released their 1st qtr results 3.5B PAT

Any one has the list of their outstanding shares - before their proposed bonus issue?

It also seems they plan to come to the market?

Meanhwile Dangote has started again ooo, Dividend of 40kobo this man no go kill person.

And I do not have the shares? chei?

This Dangote man is making me angry with all this dividend. Is he not a Nigerian? Dividend does not move the market. A bonus will make the price to skyrocket. However, because the guy need to take money out, he has to declare dividend. 40k for his 7bn shares translate to N2.8b dividend warrant for the guy!!!!! With 10bn shares oustanding possibility of bonus is very remote!

If that is what he will be doing, no more buying of any Dangote company. Thank God I did not make the mistake of buying the Flour!

Bank PHP is planning to come to the market so expect many juicy news. I cannot be decieved. See as Zenith has found its level.

yodiyokun:
Wanaj0, Wanaj0, Wanaj0 ---- how many times did I call you!!

Your eyes too dey shine for money

My eyes go start to shine when I reach $10m net asset value.

Got your e-mail already. Sent two e-mails on two sensitive issues

MyPeace:
Wanajo, lts not posible. Every shareholder is holding on to the shares for now. l don't even have any of it and wished to have.

Abeg let's talk!!!! We may be able to work out a deal. What is your number or e-mail address. I must partake in that TransExpress loot!. That is a 4.00 share!

Temmie10:
Its a con job being spinned by many companies on the exchange.
wapic did a public offer and rights issue totalling 1.25 billion shares in the same year they issued the audited statement you are talking about.

You now know why I am suspicious of those companies.

I was aware of the rights and public offer by WAPIC. What they did was to exclude those shares from the Feb 2007 end year result. For the uninformed, you will not be able to analyse the companies very well.

I hope people are not just getting carried away. That sector is currently in crisis. Jimoh Ibrahim is ready to fight dirty!

Temmie10:
Wapic is looking good not because of their eps but more because of the alliance with intercontinental bank and industry leadership, as well as profit margins.
wapic does not have 1 billion shares. they have grown their shares astronomically like most of their contemporaries out there. there is no insurance company on the nse with a pe of less than 10 currently (new results might prove otherwise), not in Nigeria currently.

WAPIC has always had an alliance with Intercontinental since Inter bought into them some years ago.

The audited financial statement for year ending Feb 2007 shows that they have 1Bn shares. Definitely, they've added more shares since then. That's what I was looking for.

From the figures posted by Risky, most of the Insurance companies are already fairly/over valued even based on forward EPS. That to me shows that the over bloated issued shares will be a problem. Note also that teh insurance companies are not used to declaring 'fantastic' dividends to shareholders. No reason to fall for the hype.

It is an industry that should do well. I however think that this is already factored into the prices of most of those companies.

Mr. Risky:
In my personal opinion, there is nothing wrong with the insurance stocks. The next direction for investors is the insurance sector. Once the ongoing consolidation is concluded you will be surprised that no fewer than 6 or more of the insurance stocks will do well above N6. Some will even cross the N10 mark.

It is true that many prices got shot up due to the bull trend during the 1st half of 2007. The recapitalization cannot fail, it may only be delayed. Efforts are being made to streamline matters in the sector. Not only the insurance sector, even the NSE itself have unreliable data of most if not all the companies listed on the Exchange. One way to get something close to the correct data is to follow the infos as they are given by notable broking firms like Meristem, Afrinvest, CSL, BGL, MBC etc. Compare the figures and you know how to strike the balance.

If you want to make above 50% returns, the insurance sector currently holds the dice.
Below is the record I have personally gathered from reliable sources of the performances of the following insurance stocks so far:

INSURANCE STOCK HALF YEAR RESULT SHARES OUTSTANDING
Crusader 593.2m 3.3billion
NEM Insurance 213.8m 6.2bn
CUSTODIAN 435.83m 4billion
Standard Alliance 301.94m 3.5bn
Mutual Benefit 449.51m 5.9bn
Law Union 274m 3.5bn
AIICO 82m (3months) 1.7bn (Dont have the latest of its merger with NFI)
Sovereign Trust 222m 3.5bn
Lasaco 506m 7.4bn
Cornerstone 276.3m 5.1bn (Don't have the latest)
Unic 82.9m (3 months) 2.6bn
Wapic No result so far 4.2bn (Year end is now December instead Feb)
Prestige 242m 1.7bn
Staco 301.1m 4.8bn
Niger Insurance 218.1m 4bn

The above are my only favorite insurance companies and I have been following information about them since February when the recapitalization exercise commenced. What they are saying is that the release of the fund in the Excrow CBN will contribute greatly to their performance, and many of them are hinging their performance on that, and also very anxious about the conclusion of the recapitalization. The govt is not being taking the matter lightly too. The implications of a failed recapitalization exercise is grave, everyone will agree.

It is pretty interesting to note that NEM, CRUSADER, NIGER INSURANCE, CUSTODIAN AND ALLIED, CORNERSTONE, STANDARD ALLIANCE, PRESTIGE, LAW UNION, SOVEREIGN TRUST, LASACO, each made no less than 1billion Naira Turnoever in just 6 months as per their results this year. Mutual Benefit though made 957.71m, yet recorded fantastic PAT of over 200% compared to their last year performance. And so it is with most of the ones above, they all recorded more 200% and are strategically putting in place for a proper take off to participate in big ticket jobs. Wapic is aggressive rebranding, with prospect to open new branches outside the shores of Nigeria BEFORE DECEMBER. Since they have shifted their End of year to December from February, they will most likely release only a 9 month result this year. Mutual Benefit seems to be poised to reward sharesholders with both interim and final dividends. Staco though made only a little above half a billion Naira in their half year result, but their PAT grew to 301.1m in just six months.

For fear the capitalization result is not out, many are selling, but courageous ones are busily averaging their buy prices to offload to them in 6 - 9 months!

Additionally, the Local Content policy of the govt in the Oil and Gas sector is greatly in favour of the indigenous insurance companies, hence they are anxious to have their fund released to them to participate in bigger ticket projects. The sector will sure boom in the short to medium term not minding our pace of industrial growth.

Since May, I have turned my face against the banking sector as I have made tremendous gains out of it, my outlook now is on the insurance sector, hence I have been somewhat diligent in following the news as they come.

All the gurus in this site are doing a great job of self sacrificing for their fellow brothers. I know many of you gurus are outside the shores of Nigeria and yet you have been so helpful.

The information above are for you to verify, you are not bound to take your decision by it, not until you have done your own ANALYSIS. Like easimoni, Wanajo, Roughcut etc have said, a long term outlook at the market is more beneficial than the way most of us try to make the stock market work in a matter of days or weeks.

This is my 2kobo contribution.
Regards

Thanks for the info. That's what I was looking for all this while.

Your figures if correct did not paint an interesting outlook in the short term. I however tend to trust your figures.

Looking at those figures, you can see that the EPS of those companies are not really attractive when you look at their prices. Assuming that the full year result will be double that of half year, Crusader will ahve the highest forward EPS @ 0.36. Using a PE of 20, then you are talking about a price of 7.2. And PE of 20 for insurance companies is quite optimistic!!!!!

Custodian allied may be worth looking at also. For the rest, they are currently OVER VALUED. Most of them should be in the 3.00 - 4.00.

Yes the opportunities are there especially in Life insurance. Also for non life, the oil and marine industry presents great opportunities. However, there is still along way to go.

On the recapitalisation, the case will be in court for a long time. A lot of cutting of corners. A lot of under the table dealings. A lot of sharp practices. I fear for those that bought the Globe Re private placement! They might have bought into a dead company!!!!

Let everybody shine their eye well well!

MyPeace:
Wanaj0, l fear you ooooooooo

how did you know that transexpress wants to do a right issue? Infact l am shocked - l work with the company.

You fit help me buy some transexpress shares Even if na only 10units so that I can qualify for the rights!!!! Na God I take beg you. Should I send you an e-mail!!!!!!!

I think CSL is the broker/registrar to Trans Express. Kindly help out!!!!!

Temmie10:
@whitelexi
You bought aiico at 2.95, so no reason to fear (except you want to take profit and buy something else).
MBenefit at 3.25 should not give you sleepless nights.

Will be so worried about AIICO!!! Now they've merged with NFI and Lamda insurance. How many oustanding shares do they now have? Not sure earnings will be able to sustain such bloated oustanding shares.

Anyone with info on WAPIC?

Authorised share capital N3.5bn. Paid up as at Feb 2007 was N500m which translates to 1Bn outstanding shares. PAT for full year Feb 2007 was N700m which translates to an EPS of 70k. For a share whose price is less than 7.00 that is a PE <10.00. Except they've added new shares, that looks quite attractive.

Does anyone has more info??

samstone4:
@all nairalanders

Asked for information about Thomas Wyatt before but no feedback.
Does anybody know anything about it?
The company was moribund for years but some core investors took position early this year and now there is technical suspension for a rights issue.
Does anyone know what is happening and have any advice?

Thomas Wyatt will be doing a rights issue. They've pumped up the price in readiness for that. I suspect an public offer will be done after the rights. Yet to see what plan they have for the company.

Not a liquid stock. Placed order for them but no show.

Watchout also for Transexpress. There is a rights issue also in the offing!

Shigidi, like I've always said, WEMA is not meant for the lilly livered.

If the profit forecast is not met, you are toast.

If the forecast is met, then you don 'hammer' be that.

Based on your risk appetite, you can make up your mind.

If the price drops below 9.00 next week, I will be picking up some. Selling Oceanic to pick up Wema or Diamond.

How did you not make money in NOSPETCO? Were you part of the last joiners??

LondonCool:
I have been using AFRINVEST W.A since when they were formerly known as SECTRUST. I have an online account with them which is still active, they helped to send my share certs for verification and obtained a CSCS account for me. I make monthly SWIFT transfers to them to fund my account. I only call them for execution of transactions and I don't take advice from my Account Manager as I am the Funds Manager o my own portfolio. They have lots of clients and you need to pester your account manager with emails to get any attention, but they get they job done though.

For old clients, the online access is active but the data is not always correct. For new clients, they are not providing online access except it changed just last week.

Since the merger/acquisition with Afrinvest, their stockbroking performnace has dropped. They seem to focus on other areas now.

Your account officer also matters. Right now, Bisi is one of teh best. Susan is also not doing badly. Will stay away from Dolapo though!!!!

spicie:
Please gurus i need your speculations. After loosing about 5m between Nospetco, Treasuline nd wealth solution. I bought the followin shares. Dangote flour 55,000 units at 15N, WAPCO 6,500 units at 61.20k. this is secondary market, Nahco 7,100 units 17.50k. First bank 3000 units at 33. Japoul 100,000 units at 3.89k. Fidelity 72,500 units at 8N. Ibtc ethical found 315,789, Units at 1.90k can i recorver my atleast fifty % of my lost. And step should i suppose to take next. I need your speculations. Thanks

If indeed you lost so much money in your previous investment, then you need to take a step back and understand the risk reward matrix!

I am surprised that you still want to SPECULATE in the capital market. Why don't you take positions with the Long Term in view. Chances of making a loss increases with a reduction in the time you plan to spend in the market. Just watchout!!!!

alliednetw:
I think that with the current EPS of insurance companies,NEM and LASACO are becoming increasingly cheap

How did you arrive at the EPS of NEM Have you factored in the newly listed shares from the rights issue? Are you aware of the merger with Vigilante? Hope you factored in the shares that will be issued to the Vigilante shareholders to consumate the mergers.

All those insurance companies are clowns. The regulators also are useless. With banks, you get teh scheme of merger arrangement. For insurance companies, everything is done in secret. No info, nothing!!!!!

As per the fund kept with CBN, can someone confirm how much this is? Last I heard was that 10% of the sharehoders fund should be kept in an escrow account with CBN. 10% is not that big to change the fortunes of those companies drastically.

Except you have big liver, be very very careful with insurance companies!!!!!!!!!!

Mr. Cee:
Please people does it mean that no one in this forum is using Afrinvest west Africa as his/her broker I really want to know how their services are please help before I make a mistake I am almost morethan half way in opening an account with them your comments are highly needed

I use them. Currently they are cutting over their IT systems hence the online facility may not be available.

Being with them for a while from when they were known as SECTRUST