₦airaland Forum

barge:
@ windy wendy

 howz da little one , nice to have you back. gast to go my exam is on sat.

Thanks! All da best in your exams oh! remember to sleep the night before the d-day

Temmie10:
@windywendy
Dun move the mkt too much with this stash of cash o
Personally i really like the phb po. i think its december's winner in terms of pos/pps.
BUt i'd appreciate if you helped scrutinize it

Hehehe, move the market? Naaa. Come to think of it, I recently bought betaglass at 13.12 -- _{really cheap at that price, I wonder what the market was thinking to put a price like that on the stock}  that transaction may have moved the price a bit though,

I'll take a look at the Phb prospectus and share my comments.

easimoni:
Wendy,
weclome back! Hope you are back for good. Missed you around here. How's the newbie?

Hope so too . The newbie's fine! I see you've been doing some great work here. Keep it up bro!

Temmie10:
long time
missed your incisive analysis
hws the baby?

Thanks Temmie10! Baby's doing great.

Any new stock ideas or PPs in the horizon? I have a stash of cash waiting to be invested . . .

pumping777:
AG Leventis (Last Fiscal Year)

The turnover of the company increased by 1.43%, from N7 billion to N7.1 billion in 2006. profit after tax also increased from N343 million to N395 million in 2006, an increase of 14.9%. The full year EPS stood at N0.18, while a dividend of N0.10 was approved. The company is likely to begin manufacturing of generators here in Nigeria, and this will boost its profitability in the nearest future. It would interest you to know that Nigeria is the largest importer of generators in the world at present.The register closure date ids May 14, 2007.

So in Q-4, turnover grew from 5.08B to 7.1B but PAT only grew from 0.36B to 4B. Most of the PAT was reported in Q-3 in 2006 and also in 2007, but Q-4 2006 recorded a PAT that is only about 25% of the PAT in Q-3 2006.

To summarize, I think one can enter this short term because this growth may not be sustained in Q-4.

I think I remember talking about AG Leventis on the SMN forum. The power generating sets plant business is being done in conjunction with Cummins and is billed to be completed early next year (as I recall). I personally believe that the power sector is a major growth sector, and with this partnership set to cover the whole of West Africa, expect some growth for AG leventis.

So, Pumping777, why do you believe growth may not be sustained in Q-4? Just curious  

WOW! I'm gone a few weeks and look how this thread has expanded and changed Amazing. This is definitely a testimony to the talents we have in Nigeria. Keep the good work up guys!

What spreadsheet(s) is/are everyone talking about? @Pumping777 it seems there's one from you, and @Wanaj0, it seems there's one from you too. Please send me copies (email is windywendy121 at hotmail). _{Keeping up with the market is becoming more of a challenge these days . . .}

Of course I agree that such things happen, but my problem arises when people say "most". It is not most men who are unfaithful in their marriages, it is not most lecturers who'll want sex with female students before awarding marks, it is not most men in the army that r a p e and it certainly is not most men that r a p e their daughters -- if this were the case then the population of men in prison on such charges will certainly be more than the population outside of it. So your idea of reality is definitely wrong. You get used to the reality that most men are not like that. If that's the way you are, speak for yourself, but definitely don't generalize or try to give us the idea that most men are irresponsible.

I laughed when I read this, because it’s quite lame. Your post portrays women as simpletons and men as deceptive and insensitive. Is that really the case? Of course there may be exceptions, but that’s just what they are – exceptions.

First of all, I take it that you don’t know the meaning of the phrase “creatures of easy virtue”, otherwise you would be smart enough not to use it in generalization, especially in a public forum. Your use of it here is in very poor taste.

You say that 99.9% of women don’t know the difference between lust and love? Do you honestly think that women are that dumb? Or are you saying that men are such good fakes as to make lust look like love scuh that it’s impossible to tell the difference? NO ONE IS THAT GOOD A FAKE, and no one can feign love for any meaningful length of time. Most people (the exception being the minority that have never experienced unconditional love) can tell the difference between someone who genuinely loves them and one who’s just lusting after them. If anyone chooses lust, it’s because that’s what they want. Women are not as dumb as you portray here, unless of course you’re referring to the women in your circle of influence.

In verse 1 of your post, you portray males as deceptive sex-crazed creatures who would go to any length (even to the extent of promising marriage) in order to get a woman into bed. I suppose this includes you? If men are generally that way, then the whole world will be in turmoil. Thankfully most men aren’t that way. Of course there are the deceptive men (and women) who will do or say anything to get what they want (what’s new??) but the generalization is needless.

Verse 4 of your post, I found very funny. How many men do indeed get married because they want a “trophy” wife?? Are men really that senseless?? Why go through all the trouble of cheating, lying, exploiting and even stealing just to acquire a “trophy” wife that, according to you, will “get rusty with age”? That’s the dumbest thing I ever heard. I assume this is just your opinion and is not what generally obtains.

And in your verse 6, I assume that when you say “too much sex” you actually mean promiscuity? If that’s the case, then this is applicable to everyone, as sexually transmitted diseases have no gender preferences!

Finally, please don’t give this type of advice to your daughters (or sons), as it’s quite unnecessary. Just showering them with unconditional love and helping them develop a solid moral foundation, a healthy self esteem and self confidence will enable them exercise good judgment in most situations. Casting men (or women) in an ugly light will only instill fear and/or suspicision into them and seriously hamper their ability to form healthy male-female relationships.

Temmie10:
@Easimoni

I was reading yesterday that Crusader's asset base is 13 billion naira,
For a company whose current market value is 16.2 billion naira and with forward eps of 0.36, i still think its a hot bargain.

Anyone knows how we can obtain the financial statements of Crusader? If anyone can scan and post here, that'll be great, so that we can do some number crunching and investment analysis

For all those thinking about union diagnostics, I'll advise you consider it as a long term investment. If the news I've been hearing about private placements is anything to go by, you probably won't be getting your certificates in time to have it verified and lodged into your CSCS account for sale within 6months.

yodiyokun:
Yeepa,

I was hoping to get in on insurance this month but it seems I am too late. I am not ready to buy in the middle of a bullish run that may not last. Please join me in praying for the bears.

OK I'll join you. Oya, everyboy repeat after me: May the bears go to sleep, remain asleep and not wake up for the rest of this year.

Amen

On a more serious note though, you should hold on and wait for the speculators to start taking profits. Then the prices will come down again and you can buy . . .

Thanks Temmie10!

Based on the DPS calculation, it seems those who buy the PP will be eligible for the 2007 dividend, because the calculation of 15.2k is based on the 1.3bill shares that'll be in issue after the 550m additional shares are added to the existing 770m. Dividends of N200m divided by 1.32bill will give the 15.2k dps calculation.

One more thing before I call it a day:

I have tinkered a bit with Frank's spreadsheet and included some revised projections, based on the following:

1. The company's 2007 sales increases by the average historical sales growth of about 30% (I'm not banking on the fact that the PP funds will have any effect in the 2007 financial year, since the PP is being concluded close to year-end)
2. The company's 2008 sales increases by 40% (purely arbitrary number, but perhaps reasonable considering that the PP funds will be used for the expansion stated and some impact will be felt then) and 2009 sales increases by 50% (again, arbitrary, but I expect more impact on sales growth from the PP funds used for business expansion. Also, I believe the expansion will take about 2years to be fully reflected in the company's topline.)
3. The company maintains the historical average PAT margins of about 15% (which I think is conservative but perhaps reasonable, considering that this is what many companies earn as net profit margins).

On the basis of the above assumptions, it seems like this is a good long-term investment -- P/E ratio in 2009 will be somewhere in the 27 range, which seems quite reasonable for a company that has very good growth prospects.

See attached spreadsheet and feel free to change the assumptions and post your comments.

I'll be looking forward to reading your comments tomorrow 

Temmie10, Frankiriri and the rest of the gang that seem to like the Union diagnostics PP:

I have used Frank's spreadsheet to do some reasonableness analysis on the forecast P&L figures for this company -- see attached spreadsheet and take a look at rows number 6 to 9. The 2007 figures look over-optimistic and somewhat out of whack. What is your opinion as regards the forecast sales growth and profit growth and the profit margins? What could have happened in the year 2007 that could have led to such growth? Do you guys think (or know if) the figures are reasonable -- at least we're in the last quarter of 2007 now, so there should be some knowledge on what the actual figures to august 31 are, and then what projections for the remaining 4months could be.

Also, seeing that the company hasn't paid any dividends in the last five years, and that they plan to use the offer proceeds to fund working capital and business expansion, I'm wondering where they're going to get the N200m cash to pay dividends in 2007 and the other funds for proposed dividends in 2008 and 2009. It's a pity we don't have either the cashflow statement or the asset side of the balance sheet to give us an idea of how liquid this company is (I wonder why such crucial info would be omitted from a prospectus though). Any takers on this view point? Please share if you have further info 

Temmie10:
This should give you some answers: http://cashcraft.com/uniondiagnosticpropectus.pdf

Thanks Temmie10! It seems the government is indeed doing something about health insurance afterall. This should be good news for businesses like union diagnostics, as it would make their services more affordable and result in increased business volumes. After reading through the prospectus, this seems like a good long term investment to me.

frankiriri:
The files are 1mb each and the maximmum size allowed is 200kb

Frank, thanks for the compliments on my new one. I'll certainly be motivated to make more money . . . who knows, she might one day tell me that she wants to study at Harvard, and I'll have to pay tuition  

About the Union Diagnostics prospectus, can you PLEASE send it to me via email at windywendy121@hotmail.com

thanks in advance!

Temmie10:
@WindyWendy

Interestingly enough, the situation in Nigeria has played into the hands of the private sector.
Hospitals are grossly under-equipped, and health is not negotiable as you know, people want their families to have good health, its one of those inelastic services, people will always need it,
A 50m naira med equipment was installed last year (can't remember what it was) in a private clinic in otta. OBJ was there to launch it. Its the only one of its kind in naija, its just 50m naira and no govt clinic has it in the whole country, doctors and nurses go on strike in spurts. Its annoying but we're talking about profit here.

Union Diagnostic has referrals from over 1000 hospitals every month. Its very close to a monopoly in terms of the equipments they have. Their monopoly spreads a bit to West Africa. They have a partner firm overseas and with 700m out of the 1b to be spent on med equipment, the task is on the management to deliver.

Union diagnostic seems to me a growth stock with very real (not absolute) opportunities to outperform,
. About 1/3 of the company is still being held by the same doctor who started it a few years ago and the money is for expansion as opposed to going to the pockets of the owner a la dangote

I think its worth the try,

Thanks Temmie10. It's so sad that the information on Union Diagnostics is very scanty. Isn't the prospectus available electronically.

I have some further questions on this, Temmie10, so please oblige me. What exactly does Union Diagnostics do? Is it a medical lab? Also, who's the major competitor in Nigeria? I like the idea that 70% of the PP proceeds would be spent on ramping up the business! Can you please provide the name of the overseas partner -- perhaps I can start my research from there. If only the prospectus was available electronically . . . _aarrghh

@ Temmie10:

I was thinking about Union diagnostics yesterday and wondering what would spur the growth of this company in Nigeria? Do you have any ideas? Assuming health insurance was in place in Nigeria, health services such as those offered by Union diagnostics would be affordable and the company would be able to substantially increase turnover volumes. I know that UNIC insurance currently offers health services, and from what I hear, the business is not doing particularly spectularly (if that's an english word!). So what's the catalyst for growth in Union Diagnostic's business?

_{don't take everything you read in a prospectus hook, line and sinker, especially the financial forecasts}

Awww, thank you all, for the good wishes   I'll communicate them to the lovely little girl once she's old enough to understand  

Emmaachile, thanks for posting the dangote flour prospectus. Just did a brief overview, and N15 does look expensive indeed, given a trailing consolidated EPS of 42k, which gives a P/E of 35.7 -- that's high! Not even flour Mills and DSR have P/E ratios this high (My guess is that the stock is going to be listed among the Food/beverages and Tobacco stocks). Projected EPS for the 2007 year end is 55k and then for 2008 is N1.49 -- that's a more than 100% increase. Not sure what the catalyst for this significant increase is (anyway, I haven't read through the whole prospectus yet).  I'll read thru the prospectus and give my comments later. I already did some research on the company (posted on SMN. See http://www.stockmarketnigeria.com/forums/other-stocks-investment-strategies/42-dangote-3.html#post1639) it looked good based on market considerations. The information in the prospectus however should complete the picture.

jehosaphat:
@ All the gurus in the House
_{We are missing frankiriri, dollypcute, windywendy and others, abi because them don get investment club them don dey shun person}

Not so o my brother, I've not joined any investment club oh, and I no dey shun person. Windywendy just had a baby -- a lovely little girl, with oh so cute and kissable pink little feet -- and has been a very busy new mom  But from time to time sha, I'll find time to post . . .

Panadol:
@WindyWendy

CIRCULAR TO ALL PUBLIC COMPANIES from (SEC)


The Commission in its effort to sanitize and improve the efficiency of the capital market for the benefit of investors, hereby directs that bonuses declared by public companies to their shareholders be issued to the beneficiaries, within one month of the passage of the resolution by shareholders, at the company’s Annual General Meeting (AGM).

All public companies are advised to immediately comply with this directive, as failure to do so would attract sanction.

MANAGEMENT

Thanks Panadol, that's the one I was referring to. Apparently it relates only to bonus issues and not POs.

egoldman:
Not that am doubting you , but are the words in bold red really true ? do you have any link to an article about it ?

Sorry I don't have the article. Also, the information in the article, which I read about a month or 6wks ago, relates to bonus issue -- ie. NSE (or SEC, can't remember quite well now) ordered that companies that declare bonus (NOT POs as I initially mentioned) credit shareholders or send out the certificates within a month of the declaration. Sorry for the mis-information.

ebos:
You know, I'm not a Broker but I know everything about Share, the dealers like Bull, Bear and Stag, and that is all I know and nothing more. My friend is a Broker and a close Brother of mine works in the Stock Exchange. This my friend called and encouraged me to buy First Bank Shares, according to him they have not returned all the forms filled by the Investors. What he did was to get a form which I filled, and I saw many other forms filled by so many Investors and were ready for returning. This was just recently, many weeks after it has been closed. I then paid my money into his account. He's a trusted friend - 99% trust I have in him. That's the possibility.

I'm sure you trust your friend, but this deal sounds fake. FBN offer closed on July 5. To my knowledge, most brokers have until 2 weeks after the closing date of the PO to make returns to the registrars. That date should have been July 19 or thereabout. By now the registrars ought to be sorting out the forms and handling the allotment, etc. I'm also aware that the NSE has ordered that companies allot shares and issue certificates within 1 month of the closure of an offer. So your broker's deal does not sound credible -- unless of course he's the registrar and can allot you shares at this point prior to the certificates being sent out.

aksance:
@WindyWendy

the N2.12bn is the extraordinary item charged against profits for 2006, so I added it to the reported figure of N0.74bn, abi??
the N2.052 is subtracted was the Proceeds from disposal of long term investments

please find below the link to the full prospectus:
http://www.accessbankplc.com/downloads/Prospectus.pdf

thanks a lot

Ok I see what you mean. For the 2006 extra-ordinary item, what you should be adding to PAT is the after-tax extra-ordinary item (because if the extraordinary charge wasn't included, taxes would have been higher, see . . .). So to estimate the after-tax extraordinary charge, take 1 minus the tax for the year divided by the PBT, and multiply this by the extraordinary charge -- i.e. [1 - (382/1119)]*2102. Add the result of this to the PAT to get the PAT adjusted for extraordinary charge. From my calcs, that comes to 1384.4. Adding this to the 737 gives 2121.4. Therefore the increase in PAT from 06 to 07 is about 187%. There is no need to subtract the proceeds of long term investments from the 07 PAT, as this is included only in the cashflow statement -- it is only the profits made (i.e. total proceeds less cost) from the disposal that is included in the PAT, as should rightly be.

Of course the PAT includes a lot of non-cash items, because of accounting standard requirements. So take a good look at note 6.25 to see the reconciliation of PBT to cash from operations. This note makes adjustments for all the non-cash items included in PBT, and shows that what the company actually declares as profits is less than the actual "cash profit" that came in from operations -- a good sign. You should look at the trend of this "cash profit" over time and see what's happening. The picture does look good for Access Bank. Another thing you could do is to compare these figures to the Bank's peers to see how the company is doing relative to other comparable companies.

You might want to take a good look at the forecasts in the P&L before investing. There are significant portions of the loans that are convertible into equity. In determining the EPS forecasts, the company has assumed that only portions of this loans will be converted at different times. To be on the conservative side, I would assume that all convertible portions will be converted and then re-compute EPS (and P/E ratio based on the offer price) on that basis. Also note that the company intends to absorb a certain level of over-subscription. So in the event of an oversubscription the actual # of shares that will be alloted will exceed the # currently on offer. All of these will have an impact on shareholder returns, and could potentially increase the holding period of your investment if you're looking to make meaningful returns. But whatever the case, this looks like a long-term investment. The company itself has given a 36month time-frame for the full benefits from investing the offer proceeds to kick in.

BTW, thanks for posting the prospectus.

ty_ademolu:
Hello WindyWendy, Well lets say I had some units of Zenithbank, and I was waiting on NOSPETCO to refund my cash which took them about 3 months, I wanted to use the funds to buy into firstbank offer so since they did not pay me back on time, I sold part of my zenith to buy into the first bank offer. And promised myself to buy back into it once I get my refund from nospetco. But now that they have paid me, I am wondering if it is a good idea to buy back into zenith bank to keep my holdings, and also against the rumoured bonus and dividends.

what do you think?

Well, if your objective is to get the bonus (which isn't a sure thing, as it's just a rumor) and the dividends, then you can buy Zenith. But I'll advise that you don't get sentimentally attached to any stock -- it's always a dangerous proposition. You objective is (or should be) to make money, so search for undervalued stocks and invest in those. If in future, the price of Zenith becomes reasonable relative to earnings and growth, you can sell the stocks in your portfolio that you've made money on and move on to buy Zenith (or any other undervalued stock). You'll make more money that way.

EMMAACHILE:
@WINDYWENDY
QUOTE ON STANDARD ALLIANCE
WHY SHOULD A NEW INVESTOR BE WORRIED ABOUT DILUTION OF SHARES. I MEAN SPICIE CAN WAIT FOR THE UPCOMING PUBLIC OFFER OF STANDARD ALLIANCE AND INVEST FOR A MINIMUM OF ONE YEAR TO SEE GOOD RESULTS.

I'm not talking share dilution, I'm talking EARNINGS dilution. If a company is going to (for instance), increase its shares outstanding by a multiple of 2, it'll have to be able to double earnings in order to maintain the same EPS. It'll also have to double dividends to be able to maintain the same dividend per share. Since these are two important factors that drive share prices on the NSE, they're worth watching. Take a company like Nig. breweries for instance. There once was a time that company would give bonuses, etc. Now they have so many shares outstanding, that their returns to shareholders is not too meaningful, inspite of how profitable they are -- and to think it's a more profitable company than Guinness . . . . I think i've made my point. I also think first bank is headed in the same direction . . .

My broker just informed me that mid to late August is a more realistic timeline, as they're currently sorting out stuff with the NSE

aksance:
Please gurus esp accountants/auditors help me out here on Access Bank – I intend to buy a lot for the medium term, I have been trying to do some 'fundamental analysis' but have near-zero accounting skills:

• Exceptional item of N2.12bn was charged against 2006 profits (page 58 of full prospectus).

• Also, frankiriri mentioned cashflow in another thread and I looked this up in the prospectus and found (Investing activities, page 59): Proceeds from disposal of long term investments +N2,052M (2007); +N25M (2006)


2006 2007 %change
Published PAT (Nbn) 0.74 6.084 725%
Extraordinary items 2.12 (2.052)
0.025
Adjusted PAT: 2.882 4.032 40%

Adjusted PAT of 40% (rather than the advertised 725%) still looks ok for me but i want to know if this a correct reading, or am I just being paranoid

What exactly are you trying to get at? Can you post the P&L and Cashflow statement here so that we can analyze? Also, if you're saying the extraordinary item was charged against profits, why would you deduct it from PAT in arriving at your adjusted PAT? Unless the charge was a positive one. Also, cashflow from investing will involve both proceeds from disposals and amounts invested in LT assets. I think you should be more concerned with the cashflow from operations, adjusted of course for deposits and loans. In any case, I don't have access to the financials, so if you can post the cashflow and profit statements here, perhaps we can help you out with your worry.

ty_ademolu:
Well I do have a problem. I would like for the experts in the house to help out on. I sold part of my Zenith Bank shares to meet an immediate emergency, I sold them then at N61. but now that I have the cash back, do you think it'll be wise to buy back into zenith bank and lose some few bucks since its selling now at N63. Or should I just forget the zenith bank and buy something else with the cash? Your reply would be best appreciated. Thanks

You'll have to give us more information than this. What are your investment objectives, and how long are you willing to invest? I personally think that Zenith is right now overpriced due mainly to the bonus rumor going on.

EMMAACHILE:
WAIT FOR STANDARD ALLIANCE FOR A PERIOD OF ONE YEAR INVESTING

I hope you're aware that standard alliance is planning to raise additional N20b in the near future. This is in addition to the convertible prefered shares that they issued sometime this year or late last year. If holders of the convertible shares decide to convert their shares to ordinary shares, this, coupled with the new shares that'll be issued with the planned PO will result in some serious earnings dilution. So you might want to check out their future earnings prospects very well before committing your hard-earned money.

wanaj0:
Nigerian German is undervalued. Price is coming down because of the 45k dividend without any bonus which seems not to meet the expectation of some people. But it is a company set for growth. See it bottom out and make a rush for it.

What is the catalyst for growth with NGC -- (in other words, what's going to fuel NGC's growth)?

@all who've sent me emails requesting for the private placement memo and/or forms:

I don't have either one. The only thing I learnt is that the private placement will commence sometime at the end of July or in August. I have no other info.

thanks!

jesu seun:
which of shares do u guys will be a good buy,which can have like 200% ROI in the next one year
afroil @5.7
ethernal oil @13.08
fidelity @10.65
wemabank@11.03
ibtc@11
japaul oil@6.02

i have some money to be invested in at least 3 of the company above.i need your advise fast TO make a decision.thanks

Apart from Wema, i'm not too keen on any of the other companies on your list. Japaul is going to do a PO at almost half that price, so it might be worth waiting for -- i'm assuming you're not one of those who are simply out to make quick gains and therefore jump before they look. As for IBTC, unless someone is really really intoxicated enough to sell to you at N11, you're never going to get it on the floor at that price when Standard bank is offering holders N16. If you're looking long term, why not research some companies in the insurance sector? Focus on those with diversified revenue streams, positive cashflow from operations, good management and reasonable margins.