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Looking at the market situation and performance since the last general election especially at the start of the year, it may surprise you that out of more than 12 companies that has released it earnings so far in the year only two have five days positive earnings reaction while others recorded negative reaction days as the stock’s price decline within the period under consideration.  The table below shows the stocks that have gained the most on their earnings reaction days so far in the year.

Securities Released Date Period 5-Days %
PZ 26-Jan-16 Q2 Flat
International Brew 29-Jan-16 Q3 29.60
Guniness 29-Jan-16 Q2 11.22
Flourmills 2-Feb-16 Q3 0.11
Vitafoam 6-Jan-16 Q4 -2.96
Honeywell Flour 28-Jan-16 Q3 -3.95
FO 28-Jan-16 Q4 -4.81
RedStar Express 27-Jan-16 Q3 -5.00
University Press 28-Jan-16 Q3 -5.00
7up 29-Jan-16 Q3 -9.85
FCMB 29-Jan-16 Q3 -13.59

The average stock that released its earnings during the peak of 2015 earnings season has rallied 0.61 percent on its earnings reaction for five trading days following its report date for the full year earnings while stock has declined on the average of 0.06 percent on market reaction to first quarter earnings reported so far in the market.  Below are lists of selected stocks that released their Q4 of 2014 with their performance as per market reaction to their reports for the days under consideration.

As revealed on the table, Nacho ranks first with a huge gain of 40.63 percent on its earnings report for five trading sessions, Vitafoam ranks second with a gain of 36.96 percent, followed by Learn Africa 28.57 percent, Total Nigeria Plc, Berger Paints and Trans-Nationwide.  It’s noticeable on the list that Total Nigeria is the only blue chip company among the top five.

Securities Released Date Q4 5-Days %
Nahco 3/27/2015 40.63
Vitafoam 4/30/2015 36.96
Leran Africa 3/31/2015 28.57
Total Nigeria 3/26/2015 25.01
Berger Paints 3/31/2015 24.75
Trans-nationwide 3/26/2015 21.70
GSK 4/1/2015 21.51
Fidelity Bank 3/31/2015 20.35
Dangote Cement 3/26/2015 20.25
Unilever 3/26/2015 19.53
Livestock Feeds 3/25/2015 16.98
Fidson 3/26/2015 15.86
Zenith Bank 3/5/2015 14.47
GTBank 3/5/2015 13.48
Sterling Bank 3/25/2015 8.72
Diamond Bank 3/30/2015 8.37
Mobil Oil 3/24/2015 8.24
FcmB 3/23/2015 7.25
CCNN 3/31/2015 7.20
Caverton 3/27/2015 6.67
UBA 3/26/2015 6.01
Seplat 3/31/2015 5.53
Ashaka Cement 3/31/2015 4.95
CAP 3/30/2015 4.88
Stanbic IBTC 3/31/2015 4.60
FBNH 4/7/2015 3.15
Nigeria Breweries 2/12/2015 2.60
Cadbury 3/27/2015 1.96
UACN 4/2/2015 1.33
Dangote Suagr 4/17/2015 1.11
Custidian &Allied 3/31/2015 0.25
Nestle Nigeria 2/25/2015 -1.09
Forte Oil 2/19/2015 -2.66
Access Bank 3/13/2015 -4.59
Lafarge Africa 3/13/2015 -4.91
Africa Prudential 3/10/2015 -8.33
Royal Exchange 4/30/2015 -9.09
United Capital 3/12/2015 -9.30
UACN Property 4/7/2015 -9.42
Transcorp 4/7/2015 -9.43
Okomu Oil 4/1/2015 -9.65
NPF Micro Finance 4/22/2015 14.65


Let the tables above guide you this period that prices are low on the strength of liquidity and confidence problem as you position for earnings to know how to set your target if the reports expected are positive  or negative when the market react to it.  It is important to set target as every investment is against expectation, if not met exit on time to cut loss and protect your capital.


In the last one year after the pronouncement of the incumbent president as winner of the 2015 presidential election, the nation’s stock market had continued to nose-dive to formed a bearish channel, reflecting Nigeria’s falling macro-economic indices. Key indicators such as the nation’s external reserve continued to point southward, the naira lost a lot of flesh, with the exchange rate hitting an all high of N420/$, before adjusting to N380 in the back market, due to the limited available foreign exchange, in addition to the low purchasing power of Nigerians at a time inflation and interest rates soared high reducing the propensity to save and on that note what will drive investment.

The market had remained under the upper line of the bearish channel which is the blue line standing as a strong resistance level all through the one-year period. This was despite the seeming recovery recorded in the last two months of the first quarter, attributed to the early earnings surprises that ushered the earnings season of 2016.

The Composite NSE All Share Index for the first quarter of the year lost 3,336.03 points to close the period at 25,306.22 from an opening figure of 28,642.25 points, after it had recovered to a high of 26,020.40, representing 11.64 percent decline. Market capitalisation also dropped by 11.68 percent from N9.85 trillion at which it opened the year, to N8.70 trillion representing a value loss of  N1.15 trillion.

The year-to-date returns of the NSE’s basic indicator is currently 10.95 per cent negative, just as market capitalisation for the same period has lost N1.08 trillion. Within the first quarter trading period the market had 33 bull sessions and 30 bear trading sessions to record a mixed performance of one month down market and two months up market.

NSEASI Weekly Time Frame of YTD

The NSE ASI closed above the lower band by 44.7%.  During the past 10 bars, there have been 5 white candles and 5 black candles.  During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles. Currently MACD is bullish since it is trading above its signal line. It crossed above its signal line 4 period(s) ago.  Since the MACD crossed its moving average, NSEASI’s price has decreased 1.21%, and has ranged from a high of 26,250.34 to a low of 24,181.51. RSI is currently reading 42.59. Other indicators MACD and CCI are signaling buy while Stochastic Oscillator is giving sell signal. As the market continue to trade below the blue line the bear remain in charge, suggesting that traders and investors should target stocks that are out-performing the market now, due to the intrinsic value and other fundamentals in favour the stocks. The chart above also revealed that the market is trading below the short and long moving average like 20, 50 and 100 DMA.  This is also a signal of weak market with less external stimulus to trigger upmarket in the short term.

NSEASI Quarterly Time Frame


The chart above has shown that the market has been trending down since the third quarter of 2014, the pre-election year as the major fund provider of the market, the foreign and institutional investors continue to pull their funds out due to fear of the unknown, before the election. But with the elections over over, there has remained an economic policy of the President Muhammadu Buhari administration that so far remains unclear in terms  giving direction to investors, but existing and potential. This has not been helped either by an equally unstable monetary policy and the fear of not getting stuck in Nigeria, and even worsened by the current exchange rate volatility.


For those interested, below are lists of best and worst performing NSE stocks during the first quarter of 2016.

Best Performing Equities in Q1
TIGERBRAND 1.13 2.32 105.31
SEPLAT 203.00 300.00 47.78
INT’L BREWERIES 15.99 20.49 28.14
A G LEVENTIS 0.62 0.74 19.35
NEM INSURANCE 0.68 0.76 11.76
UBA CAPITAL 1.31 1.43 9.16
JULIUS BERGER 42.00 44.80 6.67
VONO PRODUCTS 0.81 0.86 6.17
PRESCO 33.00 34.60 4.85
TOTAL NIGERIA 147.01 153.82 4.63
BOC GLASES 3.79 3.95 4.22
CAP 37.00 38.50 4.05
FIDSON HEALTHCARE 2.50 2.60 4.00
ACADEMY PRESS 0.55 0.57 3.64
U A C N 20.00 20.48 2.40
DANGOTE SUGAR 6.03 6.14 1.82
NATIONAL SALT 7.15 7.25 1.40
MOBIL OIL NIG. 160.00 161.99 1.24
VITAFOAM NIGERIA 5.41 5.42 0.18


Worst Performing Equities in  Q1
DEAP CAPITAL MGT 1.69 0.54 -68.05
DIAMOND 2.30 1.15 -50.00
FCMB GROUP PLC 1.69 0.88 -47.93
CAVERTON OFFSHORE 2.47 1.40 -43.32
SKYE BANK 1.58 0.91 -42.41
FBNHOLDINGS 5.13 3.15 -38.60
UNITY BANK 1.12 0.70 -37.50
UNILEVER 43.25 29.00 -32.95
LAW UNION & ROCK 0.73 0.50 -31.51
MANSARD INSURANCE 2.69 1.87 -30.48
HONEYWELL FLOUR 2.06 1.44 -30.10
OANDO 5.90 4.18 -29.15
GLAXO SMITHKLINE 34.20 24.98 -26.96
IKEJA HOTEL 3.13 2.35 -24.92
UACN PROPERTY DEV. CO. 6.09 4.61 -24.30
ZENITH INT’L PLC 14.05 10.75 -23.49
PFZER PRODUCTS PLC 0.89 0.69 -22.47
N NIG. FLOUR MILLS 8.55 6.65 -22.22
ACCESS 4.85 3.79 -21.86
NIGERIAN BREWERIES 136.00 107.00 -21.32
GUARANTY 18.16 14.30 -21.26
LAFARGE W A P C O 96.80 77.00 -20.45
LIVESTOCK FEEDS 1.33 1.07 -19.55
WEMA 1.00 0.81 -19.00
UNION BANK 6.90 5.60 -18.84
CONOIL 24.74 20.10 -18.76
NESTLE NIGERIA 860.00 700.00 -18.60
MAY & BAKER 1.10 0.91 -17.27
BETA GLASS CO. 54.45 45.50 -16.44
7-UP BOTTLING 182.00 155.00 -14.84
NIGERIA-GERMAN 4.91 4.22 -14.05
CADBURY NIGERIA 17.15 14.77 -13.88
TRANSCORP HOTEL 5.80 5.00 -13.79
GUINNESS NIG. PLC 120.40 104.50 -13.21
CEMENT CO. OF NORTHERN NIG. 9.35 8.17 -12.62
E-TRANZACT 3.04 2.67 -12.17
AIICO INSURANCE 0.91 0.80 -12.09
P Z CUSSONS NIGERIA 25.70 22.71 -11.63
STERLING BANK 1.83 1.62 -11.48
FORTE OIL PLC 330.00 293.23 -11.14
FIDELITY 1.50 1.34 -10.67
PORTLAND PAINTS 3.76 3.36 -10.64
RED STAR EXPRESS PLC 4.25 3.80 -10.59
ETERNA OIL & GAS 2.05 1.84 -10.24
CHELLARAMS 3.95 3.58 -9.37
STANBIC IBTC HOLDINGS 16.53 15.00 -9.26
ASHAKA CEMENT 25.00 22.80 -8.80
CHAMPION 3.37 3.08 -8.61
CUTIX 1.66 1.52 -8.43
UBA 3.38 3.14 -7.10
FLOUR MILLS 20.80 19.35 -6.97
UNION DICON 11.45 10.69 -6.64
GREIF NIGERIA 9.83 9.23 -6.10
BERGER PAINTS 10.00 9.46 -5.40
UNIVERSITY PRESS 6.00 5.70 -5.00
MRS OIL NIGERIA 49.66 47.18 -4.99
NCR (NIGERIA) 11.02 10.47 -4.99
PHARMA-DEKO 2.25 2.14 -4.89
SCOA NIG PLC 4.16 3.96 -4.81
THOMASWYATT 0.64 0.61 -4.69
JOHN HOLT 0.92 0.88 -4.35
PAINTS AND COATINGS 1.04 1.00 -3.85
TRANS-NATIONWIDE 1.13 1.09 -3.54
AFRICA PRUDENTIAL 2.49 2.43 -2.41
OKOMU OIL PALM 30.30 29.85 -1.49
DANGOTE CEMENT 170.00 167.80 -1.29



Market Outlook for Q2


Looking at the market performing towards the end of first quarter is likely that the party is over as the major factor earnings season that push the market up is coming to an end as the blue chips have released numbers and players in the market are giving different analysis to benefit from the numbers. Equity market is likely to slow down as the expected quarterly results would not have much strength to influences prices considering the economic situation. The just approved budget will not make any impact immediately until end of Q3. The recent hike in interest rate, CRR by the CBN will naturally make money market instrument slightly attractive since the risk element is zero and at the same funds that are insufficient in the equity market will flowing out.





FCMB, Fidelity Bank, Access Bank, Lafarge Africa, Dangote Sugar and Dangote Cement








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The strategic business decision of the board and management of Vitafoam to expand capacity, brings the acquisition process of competitor- Vono Products to an end. Already, the process of integrating and thereafter delisting Vono Product from the official list of the Nigerian Stock Exchange is ongoing.

This is expected to boost and enhance the company’s performance in subsequent quarters, as its expansion drive to create value for shareholders has made it the first Nigeria Company to go into motor spare part production through one of its subsidies. This is fantastic a development for shareholders, especially when the effect is combined with current efforts to manage cost and improve profitability on the long run.  All these are likely to impact positively on the company’s bottom line at year-end and beyond, if properly executed.

The latest financials of Vitafoam is that for its first quarter ended December, 2015, which revealed an unimpressive performance in all financial indices for the period under consideration.  Turnover dropped marginally below that of the corresponding period of 2014, just as profit after tax fell by 19.73 percent from N134.77 million in 2014 to N108.18 million. Also, Earnings Per Share (EPS) decreased from 16 kobo in the previous first quarter to 11 kobo. The Return on Equity (ROE) stood at 2.88 percent, as against 3.85 percent in 2014.

The company’s profit margin is poor by all standard, despite the relative improvement in cost management to 2.40 percent from 2.86 percent in 2014. Also investors waiting period has increased to 9.77x, while book value was down to N3.82 from N4.23, as a result of the increase in outstanding shares in the same period a year ago.

COY 2014 2015 % Chg
(N) (N)
Date Released        August , 2015 March 17, 2016  
Turnover                   4,704,478,000 4,511,617,000 -4.10
Profit After Tax 134,766,000 108,179,000 -19.73
Shareholders’ Fund                   3,500,462,000 3,758,487,000 7.37
Earnings Per Share 0.16 0.11 -31.25
PE Ratio 8.49 9.77 15.08
Earnings Yield 2.94 2.56 -12.93
Book Value 4.27 3.82 -10.54
Price to Book Value 0.76 0.89 17.11
ROE 3.85 2.88 -25.19
Profit Margin 2.86 2.40 -16.08





Technical View

The price action of Vitafoam shows that the stock has been trending downward since September 19, 2015, after the management delayed the submission of its 2015 financial year end results. There was however an attempt to reverse the rend in November 2015, but soon continued its southward journey, even when the full year report finally hit the market due to a drop in dividend offered.

The strong reversal finally came after it concluded acquisition of Vono products and announced plans to begin motor spare parts production soon.

On daily time frame the stock is strong as it recently broke the N5.24 resistance line, due to long term positioning. At this point profit taking is imminent. Any NEW positioning should wait for pull back before jumping in.

Meanwhile, traders are likely to start cashing out, while investors are waiting for dividend.  RSI is currently at 78.92, and other indicators like stochastic oscillator and CCI are in the over bought region, while Money flow is signaling entrance of funds into the stock.




If the equity is considered on a book value basis one will rather conclude that the stock is currently overpriced and not attractive for traders now as its waiting period has increased at a price earnings ratio of 9.77x. In conclusion, each unit of Vitafoam is fairly priced at N4.00.

Analysts Opinion/Recommendation

The equity is good for dividend investors as it guarantees  annual returns, meanwhile, traders may not enjoy good margin in the equity probably in this financial year, especially as it tries to integrate the production process of Vono and especially when its loan exposure is put into consideration.

On the other hand, the management of Vitafoam needs to execute its strategic business plans with all existing subsidiaries to boost its performance, while utilising its modern research and development exposures.

Secondly, its should  curtailed its dependence on loan and rather opt for equity participation, strict strategies to cut running cost should be put in place so as to report improved financial in the current financial year.


Vitafoam Nigeria is a leading manufacturer of flexible foam, reconstituted foam and other household products. It has the largest foam manufacturing and distribution network which facilitates just-in-time delivery of products throughout Nigeria, with off-shore operations in Ghana and Sierra Leone.

The company was established on August 4, 1962 by British vita and Unilever and listed on the floor of the NSE in 1978. Vitafoam is currently Nigeria’s most prominent and leading producer of Polyether, foam products, furniture, upholstery products and adhesives. In 2010, it became a major shareholder of Vono Products and established two sister companies; Vitapur Nigeria (an insulations products manufacturing company) in the Oil & Gas industry and Vitablom (fibre processing and soft furnishing company). Finally in 2012, it established its youngest inclusion- Vitavisco for production and sales of Visco elastic foam and latex products.


Vitafoam Nigeria PLC
Share Holding Structure
Chief S.O. Bolarinde 12.59%
Other Nigerians and Associates 87.41%
Other Statistics
 Shares Outstanding (MN) 982,800,000
Opening Price (2015) 4.03
Close price ( 2015) 5.41
Opening Price ( 2016) 5.41
Current Price 5.42
Date Listed 1978
Year End 30th September


2015 Performances Analysis

In the period under consideration, the revenue witnessed a slight increase and the company’s  operating and finance expenses continued to grow. This reduced profitability and bottom-line for the year, with cost of sales pointing in the northward direction.

With all of these, the company was forced into cutting its dividend, the first in five years. It paid a dividend of 25 kobo per share to reflect the seeming decline in its earnings power for the period, which also represented 100 percent payout ratio as all its earnings for that was paid as dividend. First quarter EPS of 17 kobo moved to 42 kobo in second quarter, representing more than 147 per cent increase, while third quarter was 41 kobo, before declining at year-end to 25 kobo.

The company’s profit dropped at the end of 2015 despite the impressive scorecards in Q1 and Q2, but nose-dive in the other quarters, a situation that affected its payout. Turnover was up by 2.84 per cent to N17.19 billion while profit after tax declined by 42.83 per cent to N249.05 million.
The price performance for the year moved up and down to reflect the performance pattern of the earnings because EPS was up for Q1 and Q2 and subsequently dropped in Q3 and full year.   Price was down in the first quarter and rallied in the second and third quarter till September 2015 but trended down in Q1 and Q2 of 2016 financial year before the recent up trending.  On the long run, it is expected that earnings will drive price in the future when the company’s expansion and invention start yielding positive results.



Five Years Financial Figures of Vitafoam Plc
Company Figures
2011 2012 2013 2014 2015
Turnover 13,979,353,000 14,479,781,000 16,808,851,000 16,712,922,000 17,185,741,000
Profit After Tax 673,024,000 501,594,000 390,231,000    529,135,000 249,051,000
Net Assets 2,927,005,000 2,911,739,000 2,706,450,000 3,029,070,000 4,946,205,000
Dividend 0.30 0.30 0.30 0.30 0.25
Bonus       1;5  
Estimated Ratios  
EPS 0.82 0.61 0.50 0.53 0.25
Pay Out Ratio 36.51 48.98 59.88 46.15 100
PE/RATIO 6.43 6.24 7.62 8.23 21.35
E/YIELD 15.56 16.03 13.11 12.14 4.68
Price to Sales 0.31 0.22 0.19 0.26 0.93
BOOK VALUE 3.57 3.56 3.80 3.70 5.03
ROCE 22.99 17.23 13.19 17.00 5.04
PROFIT MARGIN 5.00 4.81 3.46 3.17 1.45
YEAR END September September September September September


Five-Year Financial Analysis.

An analysis of Vitafoam’s financials over the past five years revealed that management grew year-on-year revenue to 22.94 per cent CAGR from N13.98 billion in 2011 to N17.19 billion. Also, profitability level for the period was down by 63 per cent to N249.05 million from N673.01 million in 2011, with up and down movement for the period under review. The company’s earnings power has been inconsistent to reflect the cost headwind in its operations. When the latest figure of 2015 is compared to the reported profit, it resulted in a profit margin of 1.45 per cent. Meanwhile profit margins for the five years had nosedived on yearly basis which is an indication of increased costs cum tax during these periods.

In the same direction, shareholders’ fund for the period grew from N2.93 billion in 2011 to N4.95 billion, representing a rise of 68.94 per cent.

The growth recorded in the total equity of Vitafoam was impressive and have supported the book value which equally rose from N3.57 in 2011 to N5.03 in 2015.

The reverse is the case when the said growth is compared to investors’ response in terms of market price valuation/judgment as Vitafoam unit price on the floor of the Nigerian Stock Exchange continued to maintain up and down trending. This was however before the current rally propelled by the infusion of Vono Product, to push price above estimated fair value of N4.00 for the period. Similarly, retained earnings grew over the period, a situation that has supported the 100 percent payout ratio in dividend this years.


Estimated Performance Ratios

Vitafoam’s  earnings per share for the five-year period was on the decline to reflect the company’s earnings power, even as the additional shares arising from the bonus have  weakened Earnings Per Share (EPS) for the period under review. The amount earned per share moved from 82 kobo in 2011 to 25 kobo in 2015. The dwindling  earnings  and increase in share price within the period had elongate investors waiting period at 21.35x at the market value as at released date, after it had recorded a  P/E ratio of  6.45 times in 2011. Book value during the period grew from N3.57 to N5.03, indicating good margin of safety, considering the market price of the stock.
Other performance ratios remained relative with the up and down movement, but profit margin is still pointing at high cost of operations.  On the strength of the figures posted and dividend declared over the years, the stock is fairly priced at N4.00. The recent down-grading of its rating was due to dwindling earnings.

The charts below are the sectorial indices trading range of the NSE, representing sectors and industries for effective reading and analysing of the market’s performance on sector by sector basis. As you can see, seven of the ten sectoral indices are trading above the 50-day moving average, while others are trading below the moving averages.  The sectors below 50DMA is NSE Insurance, NSE Banking and NSE Pension. NSE Premium, NSE 30, NSE 50, NSE Industrial and NSE Consumer are above the 50 DMA at the end of last Friday trading as revealed on the chart.  The more sectors trading below the 50-day moving average is an indication of down trend and weak market.  As most sectors have entered into its overbought region it’s expected that reversal is imminent with huge upside potential when it bounces back.



Banking index has gone back below its 50 days moving average after the earning season sentiment had trigger the positive momentum due to earnings surprises that emanated from the big five banks. The chart has shown that the banking index have been trading majorly below its 50 days MA over years due to its overregulation and influence of policies.







NSE 30

NSE 30 is still trading above its 50 days MA, suggesting that the blue chips stocks that made up the index are strong but there is already a reversal in trend as the index is almost crossing down the 50 DMA as at the end of trading last Friday. It also signal that traders are exiting position




NSE 50

The 50 days moving average is forming a support level for NSE 50 as the index has signal immenint reversal as it touches the red line. Meaning that stocks that constitute the index are resisting further decline in price.



The Consumer Goods index is still trading above its 50 days moving average as more of its earnings were just released recently and market players are interpreting the numbers especially to know whether to jump into the industry stocks.






The industrial index is strongly trading above its 50 days Moving Average which by the same period in 2015 where above the 50DMA. It suggests that if you are there in the stocks that made up the sector you need to act fast and re-enter later depending on your investment goal.


Insurance index is trading far below its 50 days moving average as few earnings reports from companies that made up the sector were mixed as many are yet to release their scorecards, but forming a double bottom is a signal for reversal if only the expected numbers are impressive and investors are rewarded in relative to their par value prices.






NSE Oil and Gas is slightly trading above it 50 days Moving Average as the prices of the major companies in that industry are relative stable due to small number of share issue.


NSE LOTUS is trading above its 50 days Moving Average with reversal above the red line, this is indication that stocks in the index are still galloping.






NSE Pension index is trading slightly below the 50-DMA






Premium Index is strongly trading above its 50 days moving average, as two out-off the three stocks that constitute index had rewarded investors handsomely.



The enormous headwinds facing Nigerian banks have exposed them to high volatility in earnings and price performance, in this high risk environment of uncertainties in the financial sector and the economy at large as dwindling oil price has affected the government revenue and financial providers of this oil sector.

It is not certain how much this has affected the banks, but the banking and investing community remain skeptical, seeking to know the best and worst banks among the pack.

They are presented in this report with respect to the latest September 2015 data and the price action of the banks. Investors should become more discerning about where to invest their funds profitably in 2016 as we expect this economic slowdown to linger, in the absence of visible concrete efforts and a strategic economic blueprint to reverse the present trend.



Market Cap: N34.35 Billion;                                  Net Assets: N45.07 Billion

Current PE ratio:  8.81x;                                        Price/Book value: 0.76

Dividend Yield: nil %;                                              ROE: 2.88%.


Wema Bank, over the years have been relatively side-trending with multiple tops and bottoms to recently break down the first strongest support level of 0.90 kobo.  The seeming price ranging of the bank is a reflection of its performance for these periods as the age of the bank, restructuring and repositioning have not shown much on its numbers to support price. The bank has broken down its support level of 90 kobo, market sentiments in the next trading sessions will determine how far the downside trend would go, especially at this period when the investing community is not expecting dividend payment from the bank due to its negative retained earnings.


Market Cap: N14.04 Billion;                                  Net Assets: N158.36 Billion

Current PE ratio:  2.51x;                                        Price/Book value: 0.09

Dividend Yield: 35.21 %;                                        ROE: 1.18%

Since 2014 till date, FCMB Holdings’ share price has been on steady decline and now it appears that the stock is heading to a lower low level of its par value of 50 kobo or below. The down trending does not appear to be forming base which could mark a turning point in the fortune of the share price. It is expected that its shares would bounce back from a wider recovery throughout 2016.



Market Cap: N46.93 Billion,                                 Net Assets: N704.35 Billion

Current PE ratio:  2.07x,                                        Price/Book value: 0.07

Dividend Yield: 3.68 %,                                          ROE: 1.07%,


Sterling Bank has been relatively stable before trending down to hit lower lows of N1.60 for the past two years. It rebounded on the January 27, 2016 and later gave way to the current trend forming a descending triangle pattern that is equally a reversal and continuation, depending on market sentiment or positive market forces. This trend can only reverse during this season, if the bank, at the end of the day, is able to pay shareholders dividend.


Market Cap: N94.16 Billion,                                  Net Assets: N233.14 Billion

Current PE ratio:  3.36x,                                        Price/Book value: 0.40

Dividend Yield: nil %,                                              ROE: 4.00%,

In the last two years the stock has a mixed price action that was trendy in 2014 before down trending to recently form a symmetrical triangle pattern that signal reversal or continuation at the same time. An uptrend reversal is slim at this point and at the same time, there is the likelihood of a break down to continue the downtrend, which is highly dependent on the market sentiment especially now that the bank’s full year earnings is expected in the market and the possibility of dividend reward is zero, due to the negative retained earnings position of the bank.



Market Cap: N13.60 Billion,                                  Net Assets: N145.15 Billion

Current PE ratio:  0.38x,                                        Price/Book value: 0.09

Dividend Yield: nil %,                                              ROE: 8.26%,

Skye Bank has followed the market to trend downward making lower lows despite the acquisition of mainstream Bank that is expected to boost performance but is yet to reflect on its numbers to support price. The bank’s infractions here and there have always projected its image as unserious institution before the investing community, irrespective of dividend in form of cash or bonus shares.

The stock remains bearish, touching new low of 96 kobo before reversing to form the current descending triangle which is a reversal or continuation chart pattern. The possibility of break out is slim as positive investors sentiment to drive would be low since the likelihood of dividend payment from the expected full year result is equally slim considering the headwinds in the industry and cost of infusing the two banks together.







Market Cap: N35.44 Billion,                                  Net Assets: N224.16 Billion

Current PE ratio:  0.76x,                                        Price/Book value: 0.33

Dividend Yield: 6.54 %,                                          ROE: 7.11%,

Diamond Bank from 2014 till date has clearly been affected by the fears of a slowdown in the economy and the general market. The share price have been on steady decline and now appears to have found some support at the 2016 lows of N1.36. It appears to have found some consolidation on the charts, as it forms cup and handle, looking at things from a daily perspective. The base forming could mark a turning point in the fortune of the share price.  It has done a lot of cost cutting over the last few years and has positioned itself well for a recovery with strong IT banking products. It is expected that the bank’s share price would bounce back from a wider recovery throughout 2016, if the economy improves.



FBN Holdings

Market Cap: N125.63 Billion,                               Net Assets: N576.65 Billion

Current PE ratio:  0.83x,                                        Price/Book value: 0.22

Dividend Yield: 2.86 %,                                          ROE: 8.72%,

2014 till date  has been years  shareholders of the bank would not forget easily as their investment were eroded due to steady decline in the bank’s share price which has not signaled any form of reversal due to falling fundamental of the bank that could not support the price. The recent profit warning that the expected result will be lower compared to the previous year has confirmed the fear among the investing public that trigger the dumping of the group share.  It appears to be no consolidation on the charts, certainly looking at things from a daily perspective. It is expected that the share price would bounce back from a wider recovery throughout 2016 if its strategic risk policy is reviewed to navigate in harsh   environment to boost performance and turn the fortune of the bank again to rebuild investors’ confidence in the bank.


Market Cap: N7.36 Billion,                                 Net Assets: N86.12 Billion

Current PE ratio:  0.26x,                                        Price/Book value: 0.09

Dividend Yield: nil %,                                             ROE: 10.81%,

This bank for a long time have been struggling with performance that will drive its share price with enlarged share issue, which was reconstructed in April 2015 at share price of N5, since then the bank’s price action has been on the down trend due to weak earnings power to support the price still making lower lows towards the price before the reconstruction, meaning multiple loss for the investors. The reversal of the bank share price is not insight at this season since the investing community are not expecting any form of dividend due to negative retained earning position of the bank.


Traders and investors should trade cautiously on these stocks and any position should be for long term with gaze on the numbers emanating from the banks to guide your stay. Invest wisely.

























The global financial market crisis that was propelled in recent years by the crash of crude price in the international market, added to the ongoing currency war are today crippling the banking system of many countries.

This has resulted primarily from the exposure of the banks to financing of oil business at a time the earnings power of the industry is declining helplessly due to low prices of crude.

Without doubt, the banking industry of any economy remains its engine room for growth and development. For this reason, every nation keeps tabs on the health of its banking institutions as any fundamental defects in this strategic sector could destabilize the entire economy, system and in fact, the government.

This is one major consideration that informed the periodic consolidation exercise in the banking industry of any nation to make it robust and healthy as approved by the central bank and other regulatory bodies. In our own case, such agencies also include the Nigeria Deposit Insurance Corporation (NDIC) and the Securities & Exchange Commission (SEC) which help to ensure the banks remain healthy and sound enough perform their obligations to the economy, besides protecting the banking public.

The banking reforms that took place between 2009 and 2011 to save banks in Nigeria from systemic failure helped to solidify the industry’s fundamentals, besides boosting the confidence of stakeholders, including local and foreign investors as banks earnings power were improved.

To underscore the importance of the health of banks, one only needs to x-ray the recent financial emergencies that engulfed Greece, China and the United States, leading to a battle of whether to hike or cut interest rate to avoid another deflation. The economic pressure on these countries was blown into the open as the leading indicator of any economy the stock market had become volatile when the prices of many listed companies continued to nose-dive, an indication that some of these big economy  had been under pressure. As would be expected, this suddenly gave way to what we are seeing in the global financial market today.  Added to this is the ongoing transition in the global and domestic economies, which has resulted in serious challenges in the monetary and fiscal policies of many nations.

Investors had lost huge amounts of money investing in banking stocks while depositors are now building tents with only banks they have confidence in. This is in their bid to avoid being caught in the web of what appears another global financial crisis that might lead to a great depression which also will affect the political and economic activities of many countries.

Already too, many industrialized nation of the world that were affected are being dictated by the circumstances surrounding their financial crisis and currency war. Banks’ health can be that important.

In Nigeria, our banks have remained resilient and healthy, such that the central bank has vouched for their soundness. That notwithstanding however, some informed persons and institutions, including international agencies, have voiced concern. Their worry, despite the regulatory assurance remains that just like the stress-testing of 2009 revealed, many of the nation’s banks todat are highly exposed to oil and gas businesses which might affect their fundamentals. Foe instance, it is argued that there were only two stocks that recorded dividend increment in the banking sector, one was flat and others either suffered a cut in their payout or did not pay at all for the year ended December 2014.

But where do the banks really stand today? It is the bid to unravel this mystery that has kept many investors on their toes, while our research team embarked on this. special report to highlight the strengths of those banks that stand out as fundamentally sound players to be published soon.

For depositors and investors, especially those with long-term objectives, certain areas of strength or fundamentals of a bank are very critical for consideration. They need to know such before taking investment decisions or lodging their money in banks. Some of these include the banks’ financial strength as can be gathered from: their shareholders’ funds, size of deposits, gross income, asset base, and profit after tax. No less important are factors like management style and risk management, among others.

All the consolidation exercises in the industry had helped to strengthen Nigerian Banks, making it possible for them to withstand the harsh effect of the global meltdown. Even then, the enormous headwinds facing the banks  have exposed them to  high volatility in earnings and price performance, in this  high risk environment of uncertainties in the financial sector and the  economy at large.

It is not certain how much this has affected the banks but the banking and investing public remain skeptical, seeking to know the best banks and the worst obanks among the pack.

They are presented in this report with respect to the latest September 2015 data and the price action of the banks. Investors should become more discerning about where to invest their funds profitably in 2016 as we expect this economic slow down to linger, in the absence of visible concrete efforts and a strategic economic blueprint to  reverse the present trend.

Banking Sector Quick Data

Banking Sector Q3 2015 Data
Gross Earnings PAT Net Assets EPS(N) Bad Loans (Prov) Retained Earnings
Unity Bank 49,200,862,000 9,313,054,000 86,124,033,000 0.19 nil -47,121,428,000
FBN Holdings 390.896,000,000 50,217,000,000 576,524,000,000 1.47 46,638,000,000 153,983,000,000
ETI 411,833,393,000 60,416,836,000 528,178,039,000 3.29 34,673,926,000  N/A
Diamond Bank 122,695,460,000 15,967,300,000 224,613,721,000 0.68 19,490,387,000 48,780,004,000
FCMB Holdings 109,294,240,000 1,865,624,000 158,358,166,000 0.13 15,287,296,000 N/A
Stanbic Holdings 104,418,000,000 13,562,000,000 117,754,000,000 1.10 12,489,000,000 42,908,000,000
Access Bank 257,590,000,000 48,093,000,000 351,962,000,000 2.01 11,551,000,000 N/A
Zenith Bank 336,853,000,000 83,087,000,000 571,501,000,000 2.64 9,725,000,000 203,891,000,000
GTBank 229,372,453,000 75,160,044,000 400,669,203,000 2.55 8,515,604,000 N/A
Skye Bank 129,238,000,000 11,983,000,000 145,153,000,000 0.86 6,398,000,000 N/A
UBA 247,205,000,000 48,557,000,000 322,558,000,000 1.43 5,395,000,000 116,623,000,000
Sterling Bank 81,811,576,000 7,547,592,000 704,346,226,000 0.34 5,237,873,000 N/A
UBN 84,719,000,000 9,337,000,000 233,143,000,000 0.55 4,454,000,000 -249,671,000,000
Fidelity Bank 106,570,000,000 11,445,000,000 180,339,000,000 0.40 3,940,000,000 17,953,000,000
Wema Bank 26,580,610,000 1,299,202,000 45,067,851,000 0.04 228,955,000 -33,884,222,000
Total 2,297,381,594,000 447,850,652,000 4,646,291,239,000 17.78 184,024,041,000
Average 153,158,772,933 29,856,710,133 309,752,749,267 1.19 12,268,269,400






Market Cap: N292.86 Billion;                                   Net Assets: N528.18 Billion

Current PE ratio:  1.62x;                                            Price/Book value: 0.55

Dividend Yield: %;                                                       ROE: 11.44%.

ETI has a multiple bottom looking at the price action of the group, but recently formed a cup and handle pattern which is a strong  reversal signal that need to be watched, especially at this time when the market is expecting its earnings any moment from now.


Market Cap: N356.35 Billion;                                   Net Assets: N571.50Billion

Current PE ratio:  1.43x;                                            Price/Book value: 0.62

Dividend Yield: 15.67 %;                                          ROE: 14.54%.

Zenith Bank has been trending over the years, making highs and lows for traders to make money on the strong fundamental and price performance. In recent time it’s price hit a four-year low of N8.56 before rebounding and now forming a symmetrical triangle that confirms reversals and continuation. The possibility of a break out is high, especially now that the market is expecting its 2015 financials.



Market Cap: N467.96 Billion;                                  Net Assets: N400.67 Billion

Current PE ratio:  2.08x;                                           Price/Book value: 1.17

Dividend Yield: 9.68 %;                                             ROE: 18.76%.

In the last two years the stock has been trending to recently form a symmetrical triangle pattern that signal reversal and continuation at the same time. An uptrend reversal is possibly at this point and at the same time, there is the likelihood of a break down to continue the downtrend, which is high depending on the market sentiment  especially now that the bank’s full year earnings is expected in the market any time this week.


Market Cap: N116.29 Billion;                                  Net Assets: N351.96 Billion

Current PE ratio:  0.81x;                                           Price/Book value: 0.33

Dividend Yield: 8.96 %;                                             ROE: 13.66%.

Access Bank has been trending down, hitting lower lows for the past two years to touch low of  N3.56 before moving up a little to find a strong support level of N4.00. At the same time it formed a descending triangle pattern that equally confirms a reversal and continuation that depend on  market sentiment or positive market forces.



Market Cap: N105.57 Billion;                                  Net Assets: N322.56 Billion

Current PE ratio:  0.72x;                                           Price/Book value: 0.33

Dividend Yield: 3.64 %;                                             ROE: 15.05%.

UBA over the years have been trending down with multiple bottoms to recently form a descending triangle which is either a reversal and continuation pattern. The bank has N2.70 as its strong support level. Market sentiments in the next trading session will determine how far the upside trend would go, especially at this period when the investing community is expecting its full year earnings report.



Market Cap: N142.50 Billion;                                  Net Assets: N117.75 Billion

Current PE ratio:  3.35x;                                           Price/Book value: 1.21

Dividend Yield: 1.95 %;                                             ROE: 11.52%.


Stanbic IBTC Bank has followed the market to trend downward after hitting its all-time high of N35.60 in October 2014. The stock remained bearish, touching a low of N12.32 before reversing to form the current symmetrical triangle which is either a reversal or continuation chart pattern. The possibility of break out is slim as the bank had paid a higher dividend as interim, the full year earnings numbers or reward might not make much impact.


Market Cap: N33.03 Billion;                                   Net Assets: N180.34 Billion

Current PE ratio:  0.96x;                                          Price/Book value: 0.18

Dividend Yield: 15.79 %;                                          ROE: 6.35%.

This stock continues to trend, making higher lows and lower lows to have multiple bottoms to break down  its strong support levels at N1.16 to a low of N1.14 in the last two years.  There were no signald of a reversal at the last trading day of last week. The expected 2015 financials of the bank may reverse the current down trend if the numbers beat market expectation.


Analysis on the banks continued next week. For comments and questions, contact the writer on 08032055467 (SMS only).









Nestle Nigeria Plc’s consistency and in compliance with best international practice, good track record of  continuous improvement of  its earnings power by expanding and breaking into new markets within and outside the shores of Nigeria with products innovation added to effective cost management, all of which have supported performance.

The nature of the company’s products reflected on it top line in the year ended December 31, 2015, despite the falling purchasing power of many Nigerians. Its array of nutritional products that  target a wide range of the market from infancy to adulthood. This product lines had over the years ensured the company posted positive figures of which  2015 was not exceptional with the marginal growth. The company’s full year financial scorecard is the basis for valuation in the market, compared to the 2014 numbers which reveal that the market price dropped by 17.48 percent to N680 per unit from N824.01 in 2014. This market price is at the released date of the company results.

Meanwhile, the company recorded a slowdown in sales revenue despite the marginal increase of 6 percent from N143.33 billion to N151.27 billion. Total earnings after considering all interest and tax equally inched north at N23.74 billion as against the previous N22.24 billion. On the other hand, Net Assets was also up by 6 percent to stand at N38.01 billion from N35.94 billion.

Audited Full Year  December 31, 2015
COY 2014 2015 % Chg
(N) (N)
Date Released 25-Febunary-15 16-March-2016  
Price at Released Date 824.01 680.00 -17.48
Turnover                     143,328,982,000                    151,271,526,000 6.00
Profit After Tax                    22,235,640,000                    23,736,777,,000     7.00
Shareholders’ Fund                    35,939,643,000                       38,007,074,,000 6.00
Dividend  17.50  19.00  
Earnings Per Share 28.05 29.95 7.00
PE Ratio 29.37                                    22.71 -22.68
Earnings Yield 3.40                                     4.40 29.41
Book Value 45.34 47.95 6.00
ROE                             61.87 62.45 0.94
Profit Margin 15.51 15.69      1.16
Year End Dec Dec  



Though Nestle’s share price may be said to be on the high side by most valuation tools, investor sentiments, financial consistency, frequency of dividend payments in form of interim and full year, these had made the stock the toast of income investors. The leading role played by the equity in its industry remains a very strong factor in the sustenance of its share price.

Traders are not expected to venture into this stock, as it does not hold tradable characteristics for now. But any drop in the share price to below N600 per share would make it more attractive for short term players.

Investors at various levels may consider positioning in the equity for its sure dividend incentives and its defensive nature, especially now that the company has declared a final dividend of N19 for 2015. Income investors that want to protect their capital with regular income should jump in on the stock now. But the fact that company continues paying all its earnings as dividend is not healthy as shown in the total payout ratio of 97 percent is high.

It should however be noted that history dating back to 1999 confirms that this equity has experienced various heavy price drops from which it has always recovered, due to consistent growth in earnings and expansion. Therefore, even if the price suffers short, medium or long-term pull back, changing your investment strategies to long term remains the best investment decision for Investors, especially income investors.

Nestle Price Action


Despite the marginal growth in the company’s earnings and the total N29 dividend declared recently, the share price is still trending down, looking for a support level. As mentioned above, anything below the bottom yellow line is a good time for traders to position.



Summary and valuation  

Nestle is one of the mutil-nationals in Nigeria with the best management teams in the beverage industry. The company’s mild performance is a response to the decline in the value of the Naira, which has combined with the harsh business environment. Analysts recently argued that the market’s instability will hit Nestle’s momentum. This is because the disposable income of consumers will influence demand as the economy continues to slow down but the nature of it products has always attract sales.

However, the export of some of Nestle’s products to UK and USA helped sales up and may have contributed significantly to the six percent sales growth.

The company’s softer input and finance costs management with the impact of it backward integration have also reflected on its bottom line regardless of the nation’s economic stagnation that has hampered the performance of many companies, as seen in the number of those (particularly the banks) that have so far issued profit warning.

It does show, though, that Nestle has managed to wade through an unfriendly business environment. The overall strategy of the company remains sound as it focuses on products that are essential to human living. This helps to improve its pricing power.

Consumer staple companies like Nestle look expensive against near-term valuation metrics. However, the sector has been resilient and delivered strong long-term results for investors.


Nestle’s P/E ratio currently stand at 22.71x earnings and then it is expected to fall to 18.98X by 2017. Paying for quality makes sense in our view and Nestle is one of the best quality companies listed on the exchange. Its profit margin of 15.69 percent is good and above the 15 percent international standard, just as the return on equity of 62.45 is impressive, being a pointer to the fact that shareholders’ funds have been effectively utilized by the company’s management.


In 1957, Nestle began trading and distributing its products in the central and West African region, starting in Ghana under the name Nestlé Products Limited. The company then made a strong foothold in Nigeria and in Cote d’ivoire in 1959, followed by Senegal in 1961, before spreading to other neighbouring countries.
The simple trading operation that commenced in Nigeria back then, has today grown into a leading food manufacturing and marketing company.
Nestle, which was listed on the Nigerian stock Exchange on April 20, 1979 has Nestle S.A. of Switzerland and Nestle CAW Limited, Ghana as the major shareholders, controlling 3.17 and 59.13 per cent respectively. The head office of the Nestle Central and West Africa region (Nestle CWAR) is based in Accra from where it oversees the management of the company’s operations across the 22 countries in the region.


Nestle Nigeria PLC
Share Holding Structure
Nigerians 37.24%
Nestle S.A., Switzerland 3.17%
Nestle CWA Ltd, Ghana 59.59%
Other Statistics
 Shares Outstanding (MN) 792,656,252
Open Price (2015) N995.60
Close Price (2015) N860.00
Current Price as at (Mar 18  2016) N680.00
Date Listed 20th April, 1979
Year End 31st December






Since Mr. David C. Ifezulike and Mr. Dharnesh Gordhon started to oversee the board and management of Nestle Nigeria Plc in 2013, performance has continued to oscillate reflecting the challenging business environment facing the industry and the economy at large. Despite this harsh climate the company has continued to create value for all stakeholders in its shared valued principle that had kept it ahead of others in its industry and the market.


Nestle Nigeria Plc. manufactures, markets and distributes food products throughout Nigeria and outside the nation’s shores. The company also manufactures Hydrolysed plant protein mix and other food products based on its local agricultural raw materials under its backward integration program. Among other products of Nestle Foods are: cereals baby food, food seasoning and beverages, Range of the Maggi brand of food seasoning, Nestle Nutrient, Cerelac, Nan- Baby food, Nestle Golden Morn – Cereal, Nestle Nido, Carnation – Milk and Nestle Milo, Nescafe brand of beverages. The company has a general license agreement with Societe Des Produits Nestle S.A., Nestec S.A and Nestle S.A for the provision of technical and other support services.


The sector faces many challenges caused by the environment in Nigeria such as poor infrastructure, poor standards of education (in some areas), insurgency, bad roads, erratic power supply, high level of corruption, high Dependency Ratio and a generally low level of disposable income of the population. The industry is generally characterized by wholesalers and distributors. This happens to be the popular method of selling over 70% of total sales within the industry.

Notable players in the industry include Cadbury Nigeria Plc, Nestlé Nigeria Plc, UAC Foods, and Wamco Nigeria Plc, four of which are listed on Nigerian Stock Exchange. Wampco is currently traded on NASD.

In most cases, in order to present products to Nigerians at cheaper cost, large international companies often form alliances with Nigerian companies, to repackage and/or market their products in the country. The essence of this is to reduce the risk of market entry, as well as enable the international partner benefit from the existing marketing and distribution capabilities of the Nigerian entity.

Five-Year Financial Analysis

The company has been noted for its consistence in the release of its financials during the period under review, not withstanding this year’s slight delay. One must fail to acknowledge that is was still within approved timeframe. This adds up to its valuation status as it stands sure in portfolio management effectiveness. The market price as at released dates on the other hand experienced an outstanding growth from the N441.00 of 2011 to all high of N1071.00 in 2013 to close at N680 in 2015, the price when 2015 audited   result hit the market last week. Looking at the company’s performance critically between 2011 and 2015, it is evident that there has been a stable up trend performance with positive numbers that reveal the competence of the company’s management.
Its sales revenue for the period has grown by 54.42 per cent from N97.96 billion in 2011 to N151.27 billion in 2015; while the profitability level for the same period was up by 41.23 per cent to N23.74 billion, from N16.81 billion recorded in 2011 as earnings remain almost flat for the period three years within the years under consideration. Within the same period, the economy moved from its gloomy state to a recovery stage due to positive reforms before pulling back to the another depressed economic situation that had befallen the nation.

Meanwhile, Net Assets stands at N38.01 billion as against the N23.49 billion posted in 2011 after recording a high of N40.59 billion in 2013. Dividend grew through the period from N12.55 in 2011 to the latest dividend of N29 representing 131.08 percent increased. Please note that dividend reward grew more than the revenue and earnings for that same period which is not too good. Such high payout ratio does not support future payments and expansion.

YEAR 2011 2012 2013 2014 2015
Ticker (N) (N) (N) (N) (N)
Date Released 22-Feb-12 20-Feb-13 26-Feb-14 25-Feb-15 16-Mar-16
Price At Released 441.00 981.00 1071.00 820.00 680.00
Turnover         97,961,000,000     116,707,394,000              133,084,076,000              143,329,000,000 151,271,526,000
PAT         16,808,000,000        21,137,275,000                22,238,279,000                22,236,000,000 23,736,777,000
Net Assets         23,492,000,000        34,185,562,000                40,594,801,000                35,939,640,000 38,007,074,000
DIVIDEND                             12.55                            20.00                                     24.00                                     27.50. 29.00


Five Years Estimated Ratios

The earnings per share of Nestle stands at N29.95 as against the N21.20 in 2011. In other words, the growth in earnings power has reduced the investment periods over the years as PE ratio stood at 22.71x from high of 38.17x in 2013 as observed, this is because  the rate of growth in market price has not been same with the growth in Earnings, even while share outstanding remain relative the same over time. The Book Value of the equity at the end of 2015 stands at N47.95 as against the market price of N680 this simply shows that Nestle share price is grossly overpriced but supported by it consistent dividend payment. Long term investors over the years have recouped their investment and enjoy relative capital protection in this stock.







2014 2015
EPS(N) 21.20 26.67 28.06 28.05 29.95
PE Ratio 20.80 36.79 38.17 35.49 22.71
Earnings Yield 4.81 2.72 2.62 3.68 4.40
Book Value 29.64 43.13 51.21 45.34 47.95
Return on Equity 0.72 0.62 0.55 0.48 0.62
Profit Margin 17.16 18.11 16.71 15.51 15.69
Year End Dec Dec Dec Dec Dec


Vitafoam Plc Sept.30, 2015 N0.25 nil Final 1/7/2016 2/15/2016 3/14/2016 3/2/2016 Sheraton Hotel, Ikeja nil
Forte Oil Dec.31, 2015 N3.45 nil Final 1/28/2016 4/18/2016 4/29/2016 4/22/2016 N/A nil
NB Dec.31, 2015 N3.60 nil Final 2/11/2016 3/3/2016 5/12/2016 5/11/2016 Shell Hall, Muson Onikan, Lagos nil
Dangote Cem Dec.31, 2015 N8.00 nil Final 3/1/2016 4/14/2016 4/21/2016 4/19/2016 Civic Centre V/I nil
GREIF Nig Oct.30, 2015 N0.60 nil Final 2/29/2016 3/22/2016 5/6/2016 4/28/2016 Neni Hall Rock View, Apapa nil
Africa Prude Dec.31, 2015 N0.43 nil Final 3/3/2016 3/23/2016 4/13/2016 4/12/2016 To be advised nil
Wapic Ins Dec.31, 2015 N0.03 nil Final 3/10/2016 3/23/2016 4/5/2016 4/5/2016
GSK Dec.31, 2015 N0.30 nil Final 3/17/2016 5/25/2016 6/24/2016 6/23/2016 Muson Centre Onikan nil
AXA Mansard Dec.31, 2015 N0.02 nil Final 3/17/2016 4/29/2017 5/13/2016 5/13/2016 Lagos Oriental Hotel V/I nil
Nestle Dec.31, 2015 N19.00 nil Final 3/17/2016 5/9/2016 5/24/2016 5/23/2016 Civic Centre V/I nil
Zenith Bank Dec.31, 2015 N1.55 nil Final 3/15/2016 3/29/2016 4/6/2016 4/6/2016 Civic Centre V/I nil
UBA Dec.31, 2015 N0.40 nil Final 3/14/2016 3/30/2016 4/12/2016 4/8/2016 Eko Hotel & Suities V/I nil
GTBank Dec.31, 2015 N1.52 nil Final 3/14/2016 3/29/2016 4/5/2016 4/5/2016 Lagos Oriental Hotel V/I nil
Access Bank Dec.31, 2015 N0.30 nil Final 3/17/2016 4/13/2016 4/27/2016 4/27/2016 To be advised
Dangote Sug Dec.31, 2015 N0.50 nil Final 3/17/2016 4/4/2016 4/20/2016 4/20/2016 Civic Centre V/I nil
Lafarge Afric Dec.31, 2015 N3.00 nil Final 3/17/2016 4/25/2017 5/12/2016 5/12/2016 Lagos Oriental Hotel V/I nil
United Capital Dec.31, 2015 N0.35 nil Final 3/18/2016 3/31/2016 4/18/2016 4/14/2016 Civic Centre V/I nil
Ashaka Cem Dec.31, 2015 N0.15 nil Final 3/18/2016 4/26/2016 5/11/2016 5/10/2016 Transcorp Hotel Abuja nil
Sterling Bank Dec.31, 2015 N0.09 nil Final 3/21/2016 4/4/2016 4/19/2016 4/19/2016 Eko Hotel & Suities V/I nil
Transnationwide Dec.31, 2015 N0.10 nil Final 3/24/2016 4/25/2017 8/5/2016 7/21/2016 To be advised nil
Transcorp Hotel Dec.31, 2015 N0.4085K nil Final 3/24/2016 4/5/2016 4/18/2016 4/15/2016 Transcorp Hotel Abuja nil
Unilever Dec.31, 2015 N0.05 nil Final 3/24/2016 4/11/2016 Later Later To be advised nil

Dangote Cement: Afro-Centric Investment Drive Pushes Performance, Support Dividend

The recurrent expansion of Dangote Cement’s manufacturing capacity in its plants based in Nigeria and across Africa to meet the increasing demand for its products continues to reflect in its top and bottom lines. This is despite the high cost associated with investment in capacity building to sustain future growth by increasing market share beyond the shores of Nigeria.

The company’s track record of strong earnings and share price has helped it to outperform the whole market in terms of relative price stability and as the most capitalised equity on the floor of the Nigerian Stock Exchange.

Its current share price can be considered cheap and attractive at 13.99 times of earnings as at the released date of the 2015 full year result. On the strength of its recent earnings report, DCP’s full year earnings per share stands at N10.86 per share, representing a 16 percent improvement over the 2014 earnings.

Our updates on Dangote Cement’s 2015 interim results were pointers to the actual full year numbers made available to the investing community on Tuesday, March 1, 2016, earlier than the release date of its 2014 figures.

As summarized in the table and chart below, Dangote Cement delivered a solid underlying full year result, with net income increasing by 25.56 percent to N491.73 billion. The year on year change in earnings per share was commensurate with net earnings and positive operating cash flow that indicates strong earnings power of the company.

The company’s numbers revealed improved performances, compared to the previous year, as the top and bottom line were up, despite the harsh business environment as seen in the high financing and operating cost which increased by 64.8 per cent and 32.2 percent respectively to N54.35 billion and   N86.05 billion.

Its capacity expansion and operations outside Nigeria has   started impacting on profitability, as shown in the numbers posted. Revenue stands tall over the corresponding period by 25.56 per cent from N391.64 billion in 2014 to N491.71 billion. Profit after tax growth for the period was slower at 16 percent to N181.32 billion, from N159.50 billion in 2014.

Its investment in capacity building and high cost of operation did not hamper its profit for the period as reduction in tax supported its earnings power. Net assets soared to N644.72 billion from N591.89 billion in 2014 representing a 9 percent growth. Its earnings per share for the period grew to N10.86 from N9.36 in 2014. The EPS for the full year is a replica of price at 13.99x, which we consider more attractive, especially considering the fact that it is lower than the 16.35x recorded in the corresponding periond of last year. The trailing book value for the period stood at N37.84 from N34.74 in 2014.  Profit margin of 36.87 percent is an indication that management’s cost cutting effort is yielding positive results as seen in its profitability level.

COY 2014 2015  
(N) (N) % Chg
Date Released March 26, 2015 March 1, 2016  
Price As At Released Date 152.60 148.83 -2.47
Turnover 391,639,000,000       491,725,000,000 25.56
Profit After Tax 159,501,000,000       181,323,000,000 16.02
Shareholders’ Fund           591,885,000,000       644,720,000,000 9.00
Earnings Per Share 9.36 10.86 16.02
PE Ratio 16.30 13.99 -14.17
Earnings Yield 6.13 7.15 16.65
Book Value 34.73 37.84 9.00
ROE (%) 26.95 28.12 4.34
Dividend Per Share 6.00 8.00 33.33
Profit Margin 40.73 36.87 -3.86
Year End Dec Dec  

  Source: Company Financial & Investdata Research 

Its strong influence on the market as the most capitalised stock singles it out. It may have gained the interest of the entire traders after it carried the market along with its trending pattern.

Please note that the N8 dividend reward stands relatively strong, when compared to the market price, which largely accounted for investors’ confidence and sentiments for the equity.


Technical View

Looking at the chart, price action of Dangote Cement has been trending down from its high of N250 to a lower low of N123.60 after trending sideways to resist a southward movement. It thereafter gave way at the double tops that brought the price low to where it formed a double bottom that were later supported by the impressive 2015 financials to the level of forming the current multiple tops that has now weakened the momentum.

In the last three months, the stock has also formed a cup and handle which is a bullish and reversal chart pattern.
Meanwhile, any position taking at the current market value should be for the medium and long term as the stock is still attractive.

DANGCEM closed below the upper band by 20.2%.  Bollinger Bands are 160.24% wider than normal. The large width of the bands suggest high volatility as compared to DANGCEM’s normal range. Therefore, the probability of volatility decreasing and prices entering a trading range has increased for the near-term. However, a short-term pull-back inside the bands is likely, as other indicators like RSI are currently  reading 66.31, CCI, SO and Money flow are signaling SELL.

Recommendation /Analyst Opinion

Having reported what we consider another impressive full year result under this harsh business environment and backed with its expansion drive to other Africa countries, the company is currently consolidating its position, while growing sales revenue with robust profitability.

We conclude that Dangote Cement remains in good shape. However, with the company currently trading at 13.99 times earnings and a dividend yield of 5.38 percent, there is value in the stock judging by its robust balance sheet, positive cash flow generation and strong brands. All of these provide positive fundamentals for the company.  The infrastructure gap to support agricultural development, manufacturing and housing by the government, especially with the rebuilding of Nigeria’s north east ravaged by the seven-old battle to dislodge the Boko Haram insurgents the company’s product would come handy. Besides, DangCem’s Chairman/Chief Executive, Alhaji Aliko Dangote is co-chair of the committee in charge of rebuilding the region. This anticipated demand for its products will drive market share and profitability in this dispensation.

We have recommended hold before now, but based on the foregoing, among others, we upgrade to BUY position for new entrants with long term investment goal.




Share Holding Structure
 Alhaji Aliko Dangote 0.17% 
 Other Nigerian Citizens & Ass. 99.83% 
Other Statistics
 Shares Outstanding (MN) 17,040,507,405
Opening Price (2015) N200
Closing Price (2015) N170
Closing Price as @ March,11 2016 N164
Date Listed 26TH October, 2010 
Year End  December 31st

Source: Company Financial & Investdata Research 

Five-Year Financial Analysis.

A look at the company’s scorecard for the five-year period, the increased capacity to satisfy Nigeria’s rising demand for cement, estate development and other infrastructure development have put an end to historical reliance on imports. Today, Nigeria has been turned into a net exporter of cement as reflected in the company’s increasing number of millions of metric tons produced per annum and earnings released.
The regular release of its financials in compliance with the post listing requirement makes DangCem’s corporate governance strong, such that investors can forecast and plan their investment.

Meanwhile, the sales revenue of the company for the period under review grew consistently from N235.91 billion a year after it was listed on the Nigeria stock exchange to N491.73 billion, an increase of 108.35 per cent. Also, its bottom line was up by 44.01 per cent to N181 billion from N125.91 billion in 2011 after it hit a profit level in excess of N200 billion in 2013.
The shareholder’s funds for the period was up by 117.94 per cent from N295.83 billion in 2011 to N644.72 billion.

In the last five years, the company has consistently rewarded shareholders with dividend, supported by improving numbers. Within the period under consideration, it had paid a total dividend of N25.25 per share, excluding the bonus of one new ordinary share for 10 given in 2011


  2011 2012 2013 2014 2015  
Date Released April 4,2012               April 22,2013 March 26, 2014 March 26, 2015 March1, 2016  
Price @ Released 103.00 116.50 230 151.00 148.34  
Turnover 235,914,000,000 298,454,068,000 386,177,220,000 391,687,060,000 491,725,000,000  
Profit After Tax 125,909,831,000 145,024,234,000 201,198,088,000 159,501,493,000 181,323,000,000  
Total Equity 295,827,810,000 404,536,401,000 550,093,270,000 591,885,155,000 644.720,000,000  
Dividend 1.25 3 7 6 8  
Bonus 1;10 Nil Nil          Nil NIL  


Estimated Performance Ratios

The company earnings power for the five-year period grew by 31.32 per cent to N10.86 from N8.13 in 2011, after the said earnings per share had recorded an all-time high of N12.99 in 2013, with the directors distributing a N7 dividend. The company had up and down trend in earnings for the period due to increased investment in its capacity building and harsh business environment.

The company recorded a Price Earnings Ratio of 13.99x in 2015, reducing investors waiting period from all time high of 17.71x in 2013 and 16.30x in 2014 respectively.  On the other hand, the said earnings per share was same as 7.32 per cent of its price at the released date.
The book value as at the last financial year was N37.84, the highest so far in the company’s existence as a quoted entity. This is however relatively low, compared to its market value. The growing net assets and robust retained earnings would further boost the company’s business to earn more and grow shareholders funds.
The estimated ratio also reveals that Dangote Cement’s profit margin for the period has consistently been above the benchmark internationally, ranging from 36.82 to 53.37 per cent. This is healthy and shows the commitment of management to reduce cost and in the process support profitability that would create value for its shareholders.

On the strength of the figures posted, the stock is fairly priced at N240 each, considering fund managers and investor’s preference for consistent dividend, competent management to drive profitability and business model of the company

  2011 2012 2013 2014 2015
Earnings Per Share 8.13 9.36 12.99 9.36 10.86
PE Ratio 12.67 12.45 17.71 16.30 13.99
Earnings Yield 7.89 8.03 5.65 6.13 7.15
Book Value 19.09 26.11 32.28 34.73 37.84
ROE      0.43 0.36 0.37 0.27 0.28
Profit Margin 53.37 48.59 52.10 40.73 36.82
Year End Dec Dec Dec Dec Dec

Source: Company Financial & Investdata Research 













Daily Market Update April 6
NSE Composite Index ASI at the point of Break down or Reverse
The nation’s equity market extended it second day rally to gained marginal 10.19 points to close at 25,464.94 from an opening figure of 25,454.75 representing 0.04 percent growth, while the market capitalization was up by N0.39 billion to close at N8.76 trillion. The market during the trading period yesterday was in red before it slightly moved into the green close above the previous close point. The composite index NSEASI year to date returns is currently standing at a negative 11.09 percent while the Market Capitalization for the same period has lost N1.09 trillion.
The market breadth remains under bear control as the number of decliners outnumbered the advancers in the ratio of 21; 14 close yesterday trading. Volume of trades stood at 202million shares in contrast to 177 million shares, representing 14 percent improvement against its previous day trading level while value recorded N885.63 million as against N1.01 billion, representing a decline of 12 percent from the previous trading level. Transactions in the shares of NEM, STERLING, GUARANTY, FIDELITY and DIAMOND topped the activity chart as most traded equities as measured by volume.
The Composite index NSEASI, NSECNSMRGDS and NSEPREMIUM were in the green while other sectorial indices closed in red. The last minutes gain in the share of NB and FBNH pushed the market into green position. Despite the expected first quarter results might not influence the market much due to the prevailing economic situation, investors should target good companies and buy in stages while traders should at the same time use their technical analysis AND other tools to position.

NSEASI is currently in a sideway trend in a bullish channel seating on the support line of the channel waiting for a break down or reversal. The symmetrical triangle chart pattern which is a continuation or reversal pattern also confirm the dicey situation of the market. Traders are said to be in an indecisive state as market forces determines break down or out, knowing that response to fundamental good or bad news is usually very sharp. NSEASI closed above the lower band by 18.3%. Bollinger Bands are 67.67% narrower than normal. The narrow width of the bands suggests low volatility as compared to NSEASI’s normal range. MACD is bearish since it is trading below its signal line. The MACD crossed below its signal line 7 period(s) ago. Since the MACD crossed its moving average, NSEASI’s price has decreased 1.06%, and has ranged from a high of 26,026.48 to a low of 25,267.62. RSI is reading 50.80 while other indicators like CCI and Stochastic Oscillator are signaling buy. Also money flow index indicates money entry the market but low at 42.88.














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