greenwich stock recommendations_october 10- 14, 2011

8/3/2019 Greenwich Stock Recommendations_october 10- 14, 2011

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Greenwich Trust LimitedPlot 1698A Oyin Jolayemi StreetP.M.B. 80074Victoria IslandLagos.Tel: 234-1-2715937Fax: 234-1-2700613E-mail: [email protected]: www.greenwichtrustgroup.com

Global EconomyIn the United States (US), the Institute of Supply Manage-ment (ISM) released a report after a survey that the U.Sservice sector grew for the 22nd successive month in Sep-

tember, although with a decline in the pace of development.The Organization said the activities recorded in the service

sector fell to 53.00% in September from 53.30% recorded inAugust. Figures recorded above 50.00% indicates a sign of

growth in the sector. The report revealed a group within thebusiness sector recorded an increase to 57.10% in Septem-

ber in contrast to 55.60% recorded in August. Figures re-corded in the employment index showed a drop to 48.70%in September from 51.60% in August indicating a tightening

in employment, following three consecutive months of in-crease.

In the United Kingdom (UK) the Office for National Statistics,

disclosed an increase in the level of output from the servicesector. The service sector grew by 0.20% in the second

quarter (Q2), in contrast to 0.50% recorded in the previousmonth. The Treasury pointed to these figures as a proof that

the UK economy was still growing and said it would be main-taining its deficit reduction programme. The Bank of Englandsaid it would inject an additional 75 billion into the economy

through quantitative easing, earlier the Bank injected 200billion into the economy through the purchase of assets such

as government bonds, in an effort to stimulate lending bycommercial banks.

In another development, activity in the UK construction sec-

tor slowed to near stagnation in September, indicated by aclosely monitored survey. The Purchasing Managers Index(PMI) fell to 50.10% in September from 52.60% recorded in

August, a fraction above 50.00% no change mark whichseparates expansion from contraction.

In the Eurozone, the International Monetary Fund (IMF) ad-

vised European Union to inject 200 billion into its banks andcautioned of a freeze in lending and a subsequent recession if

the unions leaders failed to reassure anxious investors.French policy makers have been nervous by anxiety that itstop banks are too exposed to Greece, whose debt is projected

to end in 2011 at 357 billion. In addition, the recent di-lemma affecting the Franco-Belgian bank Dexia, have wors-

ened the situation affecting the region. The European Com-mission confirmed in a recent report that the level of confi-

dence in the European sector had taken a toll for the worsesince the 27-nation bloc offered more than 80 banks a clean

bill of health during the summer in tests that investors re-garded were sub-standard.

In another development in the Eurozone, manufacturingactivities declined as new orders shrank at their fastest pace

since mid-2009. Even though the regions leaders have man-aged to control the regions debt crisis which may lead to a

financial catastrophe, as recent data indicated a worseningeconomic fortune across the union.

A recent survey revealed a notable decline in Industrial pro-

duction in Greece. Industrial output in the troubled nation fellby 11.70% on a Year on Year (Y-o-Y) basis in August, signifi-cantly faster than Julys 2.60% decline. On a Month on Month

(M-o-M) basis, the level of production declined by 17.40%within the month, annulling the 13.50% growth observed in

the previous month. In the first eight months of 2011, indus-trial output dropped by an average of 8.40% from the same

period in 2010.

Executive Summary

STOCKRECOMMENDATIONSOctober 1014, 2011

Greenwich Research Team

Opeyemi Tella

[email protected]

Oladipupo Adekanmbi

[email protected]

Olukayode Aladejebi

[email protected]

Dennis Okolie

[email protected]

Awobiyi Oluyinka

[email protected]


2/19

Greenwich Stock Recommendations October 10 14, 2011

2

Executive Summary (Contd)Recent construction activities in Germany rose in September,According to Markit Economics a global data agency. The firms

index of German construction activity grew to 50.50%, whencompared with 49.80% in August. An index above 50.00% indi-

cates the number of construction companies whose businessesexpanded was higher than those whose businesses contracted.

In addition, the Economic ministry in Berlin revealed that theIndustrial output for Germany dropped than forecasted in Au-

gust . Production dipped by 1.10% when compared to a growthof 3.9% recorded in the previous month. A 2.00% decrease wasanticipated, according to a survey carried out recently.

Global rating agency (Fitch) recently cut Italys sovereign rating

by a notch, compounding to the regions existing crisis and arisk of fiscal slippage. Fitchs rating for Italy dropped to the

same rates with countries like Malta and Slovakia are rated. The

agency based its downgrade on market confidence in Italy,which had been battered by the governments initial delay torespond to the rise in yields. Analyst believe the coalition of thegovernment is feeble and divided and efforts to introduce re-

forms would be abortive. However, the agency believes thecountry is solvent, but urged Italy which is one of the slowest

growing economy in the region, to implement a more radicalapproach to maintaining a sustainable economy.

According to data released by the Federal Statistics Office the

unemployment rate of Switzerland remained the same in themonth of September. The nations jobless rate remained un-

changed at 3% throughout the month, whilst unemployed fig-ures dipped by 28,696 people from the previous level recordedin August. However, the countrys retail sales declined for the

second successive month in August. Retail sales fell by 3.90%in August compared to a 2.70% decrease recorded in July, food,

beverages and tobacco declined by 2.20 per cent, while non-food items excluding fuel fell 6.70 per cent.

In Australia the International Monetary Fund (IMF) disclosed it

anticipates the nations economy will grow by 1.80% in 2011,accelerate by 3.30 per cent in 2012 and increase by 3.4 percent in 2013, backed by a fast-growing Asia. The IMF explained

that a high demand by the Asian economies could lead to theconstruction of several large iron ore and Liquefied Natural Gas

projects (LNG), which in turn would boost the level of privatebusiness investment in the future.

Asia, activities within the non-manufacturing sector in China

witnessed an increase in September, reducing fears of a declinein the countrys economic growth. The Purchasing ManagersIndex (PMI) for the non-manufacturing sector gained 1.7points

from the previous months figure of 59.30%. A reading above50 indicates an expansion, while a reading below 50 indicates a

contraction. In addition, the Asian Development Bank (ADB)reduced its economic outlook for China, as a result of the de-

cline in demand from advanced countries along with the bat-tered level of investors confidence. The Bank now anticipates a

rise in the countrys Gross Domestic Product (GDP) by 9.30 percent in 2011 and 9.10 per cent in 2012.

The Indian Ministry of Commerce and Industry recently revealeda 42.5 per cent decline in the level of exports from previous

year to $24.31billion recorded in the second quarter (Q2), whilethe annual growth in imports came in at 41.82 per cent during

the month of August. In addition, exports and imports rose by54.21 per cent and 40.37 per cent respectively, within the

month of April to August. The ministry also stated an increase indeficit, from $10.09billion recorded last year to $14.04billion in

the second quarter (Q2).

Major World Stock Market Indices (October 4 7, 2011)

IndexCurrentValue

1 WeekChange YTD Change

Dow Jones (DJA) 3,814.42 4.71% -5.42%

S&P 500 1,150.26 4.64% -8.54%

Nikkei 225 8,605.62 0.70% -15.87%

FTSE 100 5,303.40 4.49% -10.11%

GSE CompositeIndex 1,014.15 -7.46% 1.44%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Inflation Rates Across Countries

InflationRates

96.00

98.00

100.00

102.00

104.00

4-Oct-11 5-Oct-11 6-Oct-11 7-Oct-11

Price Movement of Crude Oil (Oct 4- 7, 2011)

OPEC Basket

Country

Quaterly

GDP Growth

Rate (Q2,

2011)

Interest

Rate

(Aug/

Sep)

Inflation

Rate

(Aug/

Sep)

Current

Jobless

Rate

China 9.10% 5.65% 6.20% 6.10%

Nigeria 7.72% 13.33% 9.30% NA

Japan -2.10% 0.15% 0.20% 4.30%

Singapore NA 0.38% 5.70% 2.10%

United

States 1.00% 0.15% 3.80% 9.10%

Germany 0.50% 1.56% 2.60% 6.90%

Euro A rea 0.60% 1.56% 3.00% 10.00%

Britain 0.40% 1.00% 4.50% 7.90%


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Executive Summary (Contd)On the local scene, the Central Bank of Nigeria (CBN) has re-leased a statement that it will no longer allow oil companies buy

US dollars at the bi-weekly auctions, to fund importation ofproducts. The CBN criticized oil companies for the recent up-

ward trend in the demand pressure of the U.S. dollar, leading toa depreciation in value of the local currency. In addition, the

National Bureau of Statistics (NBS) anticipated a growth 0f 8.84per cent in the non-oil sector for 2011 compared to 8.49 re-

corded in 2010. On accumulation, the economy when measuredby the Gross Domestic Product (GDP) is projected to grow by7.98 per cent in the current year, as against 7.85 per cent re-

corded in the previous year.

The 2012 fiscal year may usher in the end of fuel subsidy, theFederal government recently re-evaluated its plans to eliminate

fuel subsidy beginning from January 2012. Research analysthave estimated that the removal of the subsidy is expected to

save the government about N1.20 trillion. A section of the fundwould be utilized for the provision of safety nets for low incomeearners.

Liquidity pressure tightened in the financial system in the week

under review, as the Nigeria Interbank Offer Rates (NIBOR)increased across all tenors. This was as a result of the outflow

of funds for FX funding at the CBN Wholesale Dutch AuctionSystem (WDAS), amidst Open Market Operations (OMO) of the

Central Bank of Nigeria (CBN).

During the week under review, average bond yields rose, justas their prices decreased. This was as a result of reduced de-mand amidst the liquidity pressure at the interbank market.

On a Week-on-Week basis, the Naira depreciated against the

dollar by 0.52 per cent at the official window and 2.91 per centat the inter-bank forex to close at N155.40/$ and $164.25/$,

respectively. In the same vein, it depreciated by 3.09 per centat the parallel window and 3.11 per cent at the Bureau de

Change to close at N166.00/$ and N167.00/$, respectively.

The Nigerian Stock Exchange (NSE) closed the last trading day

of the week on a negative note. The All-Share Index and MarketCapitalization plunged by 138 basis points (1.38 per cent) each

to close at 20,225.02 and N6.45 trillion, respectively, whencompared to their previous trading figures. Consequently, the

Year-to-Date (YTD) change in the ASI fell to 18.35 per centcompared to 17.75 per cent recorded in the preceding week.

OUTLOOKWe are of the view that equity investors may remain wary onthe floor of the NSE, on the back of the decision of the Monetary

Policy Committee (MPC) of the CBN to increase the MonetaryPolicy Rate (MPR), as investorsappetite may drift towards theMoney and Fixed Income Markets, despite the survival of the

rescued banks which drove market activities during the first twotrading days of the week under review.

19,900.00

20,000.00

20,100.00

20,200.00

20,300.00

20,400.00

20,500.00

20,600.00

20,700.00

20,800.00

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

4-Oct-11 6-Oct-11

Movement of All Share Index Against Volume

Traded (Oct 4 - 7, 2011)

V OLUME INDEX

3.00%

5.00%

7.00%

9.00%

11.00%

13.00%

15.00%

3 5 7 10 20

Nigerian FGN Bond Yield Curve

Av er ag e We ig hte d (07 /1 0/11) A ve ra ge We ig hte d ( 30/ 09 /11)

96.00

98.00

100.00

102.00

104.00

4-Oct-11 5-Oct-11 6-Oct-11 7-Oct-11

Price Movement of Crude Oil (Oct 4- 7, 2011)

OPEC Basket

Ec onomic I ndic a t or s Cur r e nt P r e v ious

YoY Inf lat ion (Aug'11) 9.30% 9.40%

MPR (Sep '11) 9.25% 8.75%

Ext ernal Reserves (October

6'11) 31.36 32.53

GDP Growt h Rat e YoY (Q2,

2011) 7.72% 7.43%


4/19


4

FORECAST PERFORMANCE FOR LAST WEEK

Security Base Price Forecast Weeks High

Forecast as aPercentage of

ActualLast Weeks Rat-

ing

ZENITHBANK 12.41 12.46 12.85 103.13% BUY

GUARANTY 12.85 12.89 12.90 100.08% BUY

FIRSTBANK 9.77 9.81 9.80 99.90% BUY

GTASSURE 1.01 1.012 1.17 115.61% BUY

ASHAKACEM 16.8 16.86 17.85 105.87% BUY

ACCESS 5.62 5.64 5.70 101.06% BUY

SKYEBANK 5.10 5.12 5.19 101.37% BUY

NAHCO 5.88 5.90 6.13 103.90% BUY

FCMB 4.25 4.26 4.60 107.98% BUY

DIAMONDBNK 3.50 3.51 3.67 104.56% BUY

DANGSUGAR 7.00 7.03 7.56 107.54% BUY

DANGFLOUR 6.81 6.84 7.19 105.12% BUY

OANDO 22.99 23.07 26.57 115.17% BUY

FIDELITYBK 2.01 2.02 2.05 101.49% HOLD

86.00% 93.00% 100.00% 107.00%

ZENITHBANK

GUARANTY

FIRSTBANK

GTASSURE

ASHAKACEM

ACCESS

SKYEBANK

NAHCO

FCMB

DIAMONDBNKDANGSUGAR

DANGFLOUR

OANDO

FIDELITYBK

Percentage Forecast Achieved

Percentage Forecast Achieved


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Recommendation using fundamentalis based on analysis of the companys financial statements.

Recommendation using technicalis based on analyzing the stock price and volume trends.CAPM Capital Asset Pricing Model. See the Appendix for definitions of the technical tools used in this report.

YTD Year-to-date.

SUMMARY

SecurityCurrentPrice (N)

OneYear Price TargetRange (N)

5-10 Trading DaysForecast (N) Rationale

Buy List

ZENITHBANK 12.10 14.30 - 19.86 12.14 Fund-Tech

GTASSURE 1.17 1.52 - 1.66 1.17 Fund-Tech

CUSTODYINS 2.31 3.14 - 4.28 2.32 Fund-Tech

GUARANTY 12.30 16.67 - 17.90 12.34 Fund-Tech

FIRSTBANK 9.07 16.01 - 18.69 9.10 Fund-Tech

ASHAKACEM 16.17 19.17 - 24.03 16.23 Fund-Tech

NAHCO 6.13 7.40 - 11.42 6.15 Fund-Tech

FCMB 4.16 8.39 - 10.88 4.17 Fund-Tech

ACCESS 5.23 8.16 - 9.53 5.25 Fund-Tech

DANGSUGAR 7.24 12.43 - 17.48 7.27 Fund-Tech

DIAMONDBNK 3.39 5.44 - 8.53 3.40 Fund-Tech

OANDO 25.50 35.10 - 60.30 25.59 Fund-Tech

Hold List

FIDELITYBK 2.01 2.34 - 3.90 2.02 Fund-Tech

Sell List

SecurityCurrentPrice (N) Fair Price (N)

OASISINS 0.50 0.50 Tech

CAPHOTEL 3.05 3.13 Tech


6/19


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ZENITH BANK PLCThe banks business location strategy and infrastructure

deployment show its commitment to customer enthusi-

asm at all times, in all business offices across Nigeria.

The uniqueness of the Banks brand of financial services

has actually made it one of the top choices in banking, to

most multinational companies in Nigeria, and this ac-

counted for its wide customer base.

As part of its vision to become a global leader in the in-

dustry, the Bank carries out its operations through a

number of subsidiaries, namely; Zenith General Insur-

ance Company Limited, Zenith Securities Limited, ZenithRegistrars Limited, Zenith Bank Ghana Limited, Zenith

Pension Limited, Zenith Bank (UK) Limited, Zenith Trust

Limited and Zenith Medicare Limited to offer a wide

range of financial services.

Zenith Banks growth and performance has continued to

earn excellent ratings from both local and international

rating agencies. The Bank was rated Aaa in Nigeria con-

secutively for six (6) years by Agusto & Co. Ltd. The

bank has consistently recorded impressive performance

on several parameters and this demonstrates the rising

customer patronage and an excellent approval and en-

dorsement all over the world.

The banks Turnover declined by 30.58 per cent from

N277 billion recorded in 2009 to N192 billion in 2010.

However, Profit After Tax (PAT) increased by 81.59 per

cent from N20.60 billion in 2009 to N37.41 billion in

2010. The bank declared a dividend per share of N0.85k.

The banks half year result for 2011 saw PAT stand at

N30.67 billion, from N21.31 billion recorded in the same

period in 2010.

Our technical analysis seems to indicate that the stock is

attractive for long term investors, as the 200-day MA is

below the 100-day MA. The graph of the stock price

against the NSE ASI at the top right corner also show

that the stock is currently below the signal line, and it

seems that the price may witness an upward movement

in the next couple of trading sessions.

The one-year Standard Deviation decreased to 2.16%

from 2.21% recorded last week. The beta of the stock

price is 1.47, which is higher than the banking sectors

beta of 1.06. The alpha of the stock which explains the

return in excess of the compensation for the risk borne is

0.04%, compared to the sectoral average of 0.02%. The

expected one year return of the stock as estimated with

the Capital Asset Pricing Model (CAPM) is 16.69%.

A weighted average of all the valuation metrics pro-

duced a reviewed final fair price of N14.30. This indi-

cates that the stock is 18.18% undervalued at the

current market price of N12.10. We therefore main-

tain our BUY recommendation on Zenith Bank. In

the medium to long term, we expect the share price

to trend towards our target price range of N14.30

N19.86.

Cur r ent P r i ce 12.10

Year H igh 16.70

Year Low 11.75

EP S 1.49

P/ E Rat i o (x) 8.12

Out standi ng Shar es 31,396,493,786

Di vi dend Yi el d 7.02%

Pr o f i t Af t er Tax '000 (Ful l Year ) 20,603,000

Year E nd December

Z E N I T H B A N K P L C

2 0 1 0 ( '0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 192,488,000 277,300,000 -30.58%

Net P r of it A f ter T ax 37,414,000 20, 603,000 81.59%

Net P of i t Mar gi n 19. 44% 7.43% 161.61%

Shar ehol der s ' Funds 363, 561,000 337,793, 000 7.63%

Total Assets 1, 895,027 1,659,703, 000 -99.89%

ROSH 10. 67% 12.20%

ROA 4. 50% 2.48%

Z E N I T H B A N K P L C

Valuation Weight Estimated Value

Earnings Basis 10 11.76

Forward Earnings Basis 30 22.90

Dividend Basis 30 15.09

Price to Book Basis 30 5.75

Estimated Fair Value 100 14.30

ZENITH BANK PLC

R = 0.0748

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All -Share Index Vs ZENITHBANK-Jan '10 -Date

N SE Reba se d Ze nit hba nk Reba se d Poly . ( Ze nit hba nk Reba se d)


7/19


7

GTBANK PLC

A weighted average of our valuation metrics gives a

fair value of N16.67. Thus, the stock is trading at a

discount of 35.53% at the current price of N12.30

We maintain our BUY recommendation on Guaranty

Trust Bank Plc. In the medium term, we expect the

share price to trend towards a target price range of

N16.67 N17.90.

Guaranty Trust Bank Plc has built up an impressive cor-

porate image for itself as a strong growth, customer

friendly, dependable and high performance institution.

The Bank is associated with high levels of professional-

ism and has a reputation for high quality service deliv-

ery. Growing at a strong pace over the years, it has es-

tablished itself among the most efficient and profitable

banks in the industry.

In 2006/2007 financial year, the Bank received a credit

line of $40million from African Development Bank, taking

total investments by international finance institutions in

the Bank to over $400million. Also in the same period,the Bank signed an asset management joint venture

agreement with Morgan Stanley Investment Management

to meet part of the requirements for managing portions

of Nigerias external reserves.

The Bank floated a $350million Eurobond issue which

recorded a substantial oversubscription. The issue has

been listed on the London Stock Exchange. Similarly, the

Bank raised $750m to fund its growth programmes,

$500m from international investors by selling Global De-

positary Receipts (GDR) and the rest from Nigerians. The

GDR, which was fully subscribed has also been listed on

the London Stock Exchange.

The Bank recently released full year result indicated that

its Turnover declined by 5.32 per cent from N162.55

billion in 2009 to N153.91 billion in 2010. However,

Profit After Tax (PAT) increased by 60.07 per cent from

N23.69 billion in 2009 to N37.92 billion in 2010. The

banks 2011 half year result saw PAT grow to N25.25

billion, from N18.22 billion recorded in the corresponding

period in 2010.

Our technical analysis seems to indicate that the stock is

attractive for long term investors, as the 200-day MA is

below the 100-day MA. The graph of the stock price

against the NSE ASI at the top right corner also showthat the stock is currently below the signal line, and it

seems that the price may witness an upward movement

in the next couple of trading sessions. The one-year

Standard Deviation marginally fell to 2.51% from 2.52%

recorded last week. The beta of the stock price is 1.05,

which is higher than the banking sectors beta of 1.06.

The alpha of the stock is 0.03%, which is higher than

the sectors 0.02%, explaining the return in excess of the

compensation for the extra risk. The expected one year

return of the stock as estimated with the Capital Asset

Pricing Model (CAPM) is 15.68%.


Income C apitalization Mode 10 26.67

Earnings Model 20 18.55

Discounted Cashflow (DCF) 20 14.66

Dividend Model 30 22.05



GUARANTY TRUST BANK PLC


Y ear Hi gh 20.50

Y ear Low 11.64

E PS 1.54

P / E Rat i o (x) 7.99

Outs tandi ng Shar es 29,431,179,226

Di v i dend Y i el d 8.13%

P r of i t Af ter Tax '000 (Ful l Year ) 23,686,000

Y ear E nd December

G U A R A N T Y T R U S T B A N K P L C

D e c . 2 0 1 0 ( '0 0 0 ) D ec . 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 153,908,000 162,550,418 -5.32%


Net P of i t Mar gi n 24. 64% 14.57% 69.06%


Total Assets 1, 152, 002,000 1,006,503, 718 14.46%

ROSH 18. 81% 13.32%

ROA 3. 51% 2.72%

G U A R A N T Y T R U S T B A N K P L C

R = 0.2494

0.00

50.00

100.00

150.00

200.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs GUARANTY- Jan '10 -Date

NS E Re base d Guarant y Re ba se d Poly . ( Guara nty Re ba se d)


8/19


8

FIRST BANK OF NIGERIA PLC

First Bank of Nigeria Plc (FBN) offers commercial banking

services and a variety of other financial services through

its subsidiaries, which include FBN Capital Limited, FBN

Mortgages Limited, First Funds Limited, First Trustees

Limited, First Pension Custodian Limited, First Registrars

Nigeria Limited, FBN Insurance Brokers Limited and FBN

Bank (UK) Limited.

It currently operates through 536 branches in Nigeria.

The branch network which cuts across all parts of Nige-

ria, gives the bank access to large market share, and

cheap funds.

The Bank has been in existence for about 115 years and

over the years, it has maintained a strong brand name,

solid capital base and high market share. Its experi-

enced, dynamic and competent management team, as

well as, its consistent dividend and bonus policy has

made it possible for the bank to distinguish itself as the

leading financial institution and a major contributor to

the economic advancement and development in Nigeria.

First Bank has international presence through its subsidi-

ary FBN Bank (UK) in London and Paris. It also has of-

fices in Johannesburg and Beijing. The Bank is quoted on

the Nigerian Stock Exchange and currently has anunlisted Global Depository Receipt (GDR) Programme.

In the banks 2010 Full Year Report, Turnover rose by

5.64 per cent from N218.29 billion in 2009 to N230.61

billion in 2010. The Profit After Tax (PAT) increased to

N33.41 billion at the end of 2010, as against N12.57

billion recorded in 2009. The banks 2011 half year result

saw PAT grow to N31.26 billion, from N25.35 billion re-

corded in the same period in 2010.

Our technical analysis shows that the stock price is at-

tractive for long term investment, as the 100-day MA is

slightly above the 200-day MA. The graph of the stock

price against the NSE ASI at the top right corner also

show that the stock price is currently below the signal

line and may experience an upward rally in the next cou-

ple of trading days. The trailing Price to Earnings (P/E)

Ratio of the company stood at 7.50x, compared to its

sectoral P/E Ratio of 11.66x. The one-year Standard

Deviation decreased to 2.41% from 2.45% recorded last

week. The beta of the stock price is 1.22, which is higher

than the banking sectors beta of 1.06. The expected one

year return of the stock as estimated with the Capital

Asset Pricing Model (CAPM) is 16.09%.

The weighted average final fair price of First bank is

N16.01 This indicates that First Bank is undervalued

by 76.52%. We therefore maintain our BUY recom-

mendation on First Bank Plc. In the medium to long

term, we expect the share price to trend towards our

target price range of N16.01 N18.69.

Cur r ent P r i ce 9. 07

Y ear H i gh 16. 12

Y ear Low 8. 50

E P S 1. 21

P / E Rat i o (x ) 7. 50

Out s tandi n g Shar es 32, 632,084, 358

D i v i dend Y i el d 6 .62%

P r of i t Af t er T ax '000 (Ful l Y ear ) 33, 411,000

Y ear E nd December

F I R S T B A N K O F N I G E R I A P L C

2 0 1 0 ( ' 0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 230,606,000 218,287,000 5.64%

N et P r of it Af ter T ax 33, 411, 000 12,569,000 165.82%

N et P of i t Mar gi n 14.49% 5. 76% 151.62%

Shar ehol der s' Funds 340,626,000 337,405,000 0.95%

T otal A ssets 2,305,258,000 2,009,914,000 14.69%

R OSH 9.86% 5. 97%

R OA 1.55% 0. 86%

F I R S T B A N K O F N I G E R I A P L C

R = 0.2731

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs FIRSTBANK- Jan '10 - Date

NS E Re ba se d F ir st ba nk Re ba sed P oly . ( Fi rst ba nk R eba se d)







FIRST BANK OF NIGERIA PLC


9/19


9

ASHAKA CEMENT PLC

A weighted average of all the valuation metrics pro-

duced a final fair price of N19.17. This indicates that

the stock is currently trading at a discount of

18.55% at the current market price of N16.17. We

therefore maintain our BUY recommendation on the

stock. In the medium term, the market price is likely

to oscillate around our target price range of N19.17

N24.03.

Ashaka Cement Plc (Ashakacem) became a subsidiary of

Lafarge Group, the world leader in building materials in

July 2001 after the acquisition of Blue Circle Industries

Plc. The companys principal activities are the manufac-

turing and marketing of cement products. The company

has maintained a reputation of consistent dividend and

bonus history. Consequently, investors expectation of

bounty returns at the end of their financial year will trig-

ger the demand for the stock.

The company believes that ongoing advances in building

materials must integrate respect for people, their differ-

ent needs and their environment. This strong convictionis reflected in a strategy that combines industrial know-

how with performance, value creation, respect for em-

ployees & local cultures, environmental protection and

conservation of natural resources & energy.

The companys full year result ended December 31,

2010, shows that Turnover increased by 11.40 per cent

from N17.19 billion in 2009 to N19.15 billion in 2010.

Profit After Tax (PAT) surged by 218.35 per cent from

N943.62 million to N3.00 billion when compared to the

same period in the preceding year. Net Profit Margin

(NPM) also increased from 5.49 per cent in the corre-

sponding period of 2009 to 15.68 per cent in the 2010,indicating an increase of 185.61 per cent.

The increase in earnings has been attributed to the rise

in cement prices during the financial year as a result of

increased public projects in terms of infrastructural de-

velopment. It was also noted that the impact of the

global financial crisis, which crippled the economy in

2008 is beginning to ease.

Meanwhile, the strength of the Company resides in its

ownership of a completed power project for production,

the advantage it derives from the technical alliance with

other leading companies in the sector, its domineering

status in some regions of the country, and its capability

to expand and take advantage of emerging opportuni-

ties.

The beta of the stock is 0.97, while the one-year Stan-

dard Deviation of the stock marginally fell to 2.63% from

2.64% recorded last week. The long term return pros-

pect of the stock estimated with the Capital Asset Pricing

Model (CAPM) is 15.49%.


Y ea r H igh 30. 00Y ea r Low 16. 00

E P S 1. 35

P / E R at i o (x ) 11. 98

Out st andi ng Shar e s 2, 239, 453, 125

Di v i dend Yi el d 1.86%

P r o f i t Af t er T ax '000 (Ful l Ye ar ) 3, 004, 000

Y ea r E nd D ecember

A S H A KA C E M E N T P L C





Price to Book Basis 40 12.95Estimated Fair Value 100 19.17

ASHAKA CEMENT PLC

2 0 1 0 ( '0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 19,153,000 17,193,000 11.40%

Net P r of it A f ter T ax 3,004,000 943,618 218.35%

Net P of i t Mar gi n 15. 68% 5.49% 185.77%


Total Assets 28, 123,249 25,618, 025 9.78%

ROSH 20. 51% 14.36%

ROA 11. 18% 7.37%

A S H A K A C E M E N T P L C

R = 0.6620.00

50.00

100.00

150.00

200.00

250.00

300.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs ASHAKACEM-J an '10 -Date

NSE Rebased Ashakacem Rebased

Pol y. (As ha ka ce mRe ba se d) P ol y. (As ha ka ce mRe ba se d)


10/19


10

ACCESS BANK PLC

The weighted average valuation of the stock is

N8.16 indicating that the stock is trading at a dis-

count of 56.02% at the current market price of

N5.23. We therefore maintain our LONG TERM BUY

rating on the stock. We expect the share price to

trend towards our target price range of N8.16

N9.53.

Access Bank operates through a network of 130 branches

located in all major commercial centers and cities across

Nigeria, and in eight other African countries, as it is

geared towards developing a world class retail banking

franchise in Nigeria.

The Bank has undergone a transformation process which

has positively impacted its every area of business and

propelled it into one of Nigeria's leading banks, with

Shareholders Funds in excess of N185billion, Assets and

Contingents in excess of N850 billion, and a deposit base

in excess of N450 billion.

The Bank is well positioned in a high growth market, withconsistent growth in all key performance indicators over

the past 7 years. It acquired Capital Bank and Marina

Bank during the 2005 Banking Reform. In 2011 and as

part of the banking sector recapitalization process,

shareholders of Access Bank and Intercontinental Bank

unanimously granted the necessary approvals for the

proposed business combination of both banks. The

emerging entity retain Access Banks name.

The Banks profitability index measured by Return on

Asset (ROA) increased to 1.50 per cent in 2010 from a

decline of 0.82 per cent in 2009, and the Return on Eq-

uity (ROE) increased to 6.54 per cent in 2010, from a

decline of 4.26% in 2009. The Banks smoothed annual-

ized return using the 5-year compound annual growth

rate (CAGR) stood at 16.14% at the end of 2010.

In the banks 2010 full year report, the banks Turnover

increased by 7.25 per cent from N84.98 billion in 2009 to

N91.14 billion in 2010. The Profit After Tax (PAT) also

surged by 368 per cent from a loss of N4.19 billion re-

corded in 2009 due to provision for bad loans in 2009 to

a profit of N11.24 billion in 2010. Total assets increased

by 16 per cent from N694 billion in 2009 to N805 billion

in 2010. The bank declared a dividend per share of

N0.30k in the year ended December 2010, recording a

dividend yield of 4.21%. The banks result for the first

quarter of 2011 saw PAT stand at N4.17 billion, from

N3.99 billion recorded in the same period of 2010.

The return prospect of the stock estimated with the one-

year Capital Asset Pricing Model (CAPM) is 15.23%. The

graph of the stock price against the NSE ASI at the top

right corner shows that the stock price is currently trad-

ing below the signal line, thus a price rally may soon be

witnessed. Also, the 100-day MA is currently below the

200-day MA. The one year standard deviation of the

stock fell to 2.41% from 2.46% recorded last week. The

beta of the stock price is 0.86, which is lower than the

banking sectors beta of 1.06. However, the alpha of the

stock is 0.08%, which is also higher than the sectors

0.02% alpha, making the stock attractive for investors.






ACCESS BANK PLC

2 0 1 0 F Y 2 0 0 9 ( 9 M O N T H S) C H .

Tur nover 91,142,064 84,980,554 7.25%

Net P r of i t A f t er T ax 11,244,563 (4,194, 582) 368.07%

Net P of i t Mar gi n 12. 34% -4.94% 349.95%

Shar ehol der s ' Equi ty 175,370,457 168,346, 048 4.17%

Total As s ets 804,823,772 693,783, 938 16.00%

ROSH 6. 54% -4.26%

ROA 1. 50% -0.82%

A C C E S S B A N K P L C


Y ear Hi gh 11.10Y ear Low 4.90

E PS 0.70

P / E Rat i o (x) 7.47



P r of i t Af ter Tax '000 (Ful l Year ) -

Y ear E nd December

A C C E S S B A N K P L C

R = 0.4276

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs ACCESS- Jan '10 - Date

Acc ess Rebased NS E Reba sed Poly. (Ac cess Rebased)


11/19


11

CUSTODIAN & ALLIED INSURANCE PLC

Custodian & Allied Insurance Plc (CAI) is a wholly owned

Nigerian Company, which arose from the combination of

Custodian and Allied Insurance Company Limited and

Signal Insurance Company Limited in a bid to meet the

stipulated capitalization requirements and provide an

inorganic growth opportunity to achieve their strategic

objective of being one of the top three insurance compa-

nies in the industry.

Custody Insurance's sole purpose is to develop, package

and deliver innovative insurance products that best sat-

isfy customer needs, whilst operating a highly profitable,

efficient, resourceful and ethical organization that will

survive into the future and be a valuable asset to its

shareholders.

The uniqueness of the companys service delivery is in

their ability to provide fast, efficient and highly profes-

sional service to the market in which it operates. This it

is able to achieve through the automation of its various

lines of operation, thereby reducing processing time and

ultimately acquiring the much desired competitive edge.

In addition, their products and operations are essentially

market-driven with emphasis on providing a wide menu

of option on policies, having paid due regard to produc-tion processes employed in various industries.

The company has emerged as one of the fastest growing

insurance companies in the Nigeria. Post consolidation,

the new entity has been able to efficiently leverage on

the unique features of the two old institutions, yielding

an attractive industry positioning and emergence as a

genuine competitor for industry leadership.

With an EPS of 0.38, the trailing P/E Ratio of the com-

pany stood at 6.08x. The company gave an interim divi-

dend of N0.60 and a final dividend of N0.17, resulting in

a dividend yield of 9.96%. The companys result for thesecond quarter of 2011 saw Profit After Tax (PAT) stand

at N1.29 billion, from N1.21 billion recorded in the corre-

sponding period in 2010.

In 2010, the Company carried out a Share Buy Back and

delisted a total number of 37,924,787 ordinary shares

from its listed shares.

Our technical analysis seems to indicate that the 100-

day MA is trending above the 200-day MA. This suggests

the stock is attractive for long term investors. The one

year return prospect of the stock as estimated with the

Capital Asset Pricing Model (CAPM) is 15.53%.

The stock is currently trading at a discount of 66.53%

at the current market price of N2.31 when compared

to the estimated fair price of N4.28. The average

weighted value of all our valuation models was

skewed towards the Forward Earnings Metric. We

therefore maintain our BUY recommendation on the

stock. In the medium term, the market price is likely

to oscillate around our target price range of N3.14

N4.28.







CUSTODIAN AND ALLIED INSURANCE PLC

2 0 1 0 ( ' 0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 13,724,000 5,277,000 160.07%

Net P r of it Af ter T ax 2, 041, 000 1,886,000 8.22%

Net P of i t Mar gi n 14.87% 35. 74% -58.39%

Shar ehol der s' Funds 15,772,000 14,159,000 11.39%

T otal Assets 15,771,850 14,157,753 11.40%

ROSH 13.64% 26. 64%

ROA 13.64% 26. 64%

C U S T O D I A N A N D A L L I E D I N S U R A N C E P L C


Y ear Hi gh 3.51

Y ear Low 2.30

E P S 0.38

P / E Rat i o (x) 6.08

Out standi ng Shar es 5, 100,846, 808


P r of i t Af t er Tax '000 (Ful l Y ear ) 1, 886,903

Y ear E nd December

C U S T O D I A N A N D A L L I E D I N S U R A N C E P L C

R = 0.2288

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs CUSTODYINS-Jan '10 -Date

NS E Re ba sed Cus tody ins Re ba sed Po ly .( Cus tod yi ns Reba se d)


12/19


12

NAHCO PLCNAHCO was incorporated on December 6, 1979 as a pri-

vate limited company and converted to a public limited

company on August 4, 2005. The company operates in

the Airline Services Sector, and is ranked as a top indus-

try player in the sector.

Despite the challenges faced in the business environ-

ment during the year under review, the companys turn-

over increased from N6.01 ibillion in the previous year to

N6.35 billion in 2010. However, Profit After Tax de-

creased by 5.61%, when compared to the same period in

2009, declinig from N1.25 billion to N1.18 billion. Net

Profit Margin also declined from 20.56% in 2009 to18.55% in 2010.

The companys result for the first quarter (Q1) of 2011

saw Turnover rise by 5.14 per cent from N1.52 billion

recorded in Q1 2010 to N1.60 billion in Q1 2011. How-

ever, PAT dipped by 51.37 per cent from N396.00 million

recorded in Q1 2010 to N192.56 million in Q1 2011.

The companys half year result for 2011 saw Turnover

increase by 12.18 per cent from N3.08 billion recorded in

Q2 2010 to N3.45 billion in Q2 2011. However, Profit

After Tax dropped by 39.90 per cent from N677.17 mil-

lion in 2010 to N484.04 million in 2011.

With an EPS of N0.80, the trailing P/E Ratio of the com-

pany stood at 7.66X. The P/E Ratio for the sector stood

at 5.74x. The company proposed a final dividend of

N0.40k and its dividend yield stood at 6.53%. The divi-

dend yield for the sector stood at 5.83%.

In order to remain solidly afloat in the midst of the

emerging competitions from new entrants into the avia-

tion ground handling sector in June 2011, the company

announced its plans to divest into power sector, which is

expected to be one of the companys new strategies to

boost its revenue base.

The Standard Deviation of the stock price increased to

2.74% from 2.71% recorded last week. This indicates

that the stock volatility increased during the week. Thebeta of the stock price is 1.33, which is higher than the

Aviation sectors beta of 0.74. The alpha of the stock is

0.13%, which is higher than the sectors 0.05%, explain-

ing the return in excess of the compensation for the risk

borne. The long term return prospect of the stock esti-

mated with the Capital Asset Pricing Model (CAPM) is

16.35%, signifying that the stock may be attractive for

long term investment.

A weighted average of the valuation models gave a

final fair price of N7.40. This seems to indicate that

NAHCO Plc is undervalued by 20.72% at the current

market price of N5.88. We therefore maintain our

LONG TERM BUY recommendation on the stock.

We also expect the share price to trend towards our

target price range of N7.40 N11.42 in the medium

term.







NAHCO PLC

C ur r ent P r i c e 6.13

Y ear H i gh 11.75

Y ear Low 5.40

E P S 0.80

P / E Rat i o ( x) 7.66


D i v i dend Y i e l d 6.53%

P r of i t A f te r T ax '000 (Fu l l Y ear ) 1 ,247,334

Y ear E nd Dec ember

N A H C O P L C

2 0 1 0 ( '0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 6,345,000 6,066,000 4.60%

Net P r of it A f ter T ax 1,177,000 1, 247,000 -5.61%

Net P of i t Mar gi n 18. 55% 20.56% -9.76%

Shar ehol der s ' Funds 4,992,000 4,676, 000 6.76%

Total As s ets 7,287,800 6,761, 543 7.78%

ROSH 24. 35% 45.09%

ROA 16. 76% 28.37%

N A H C O P L C

R = 0.4822

0.00

50.00

100.00

150.00

200.00

250.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs NAHCO- Jan '10 - Date

NSE Reba sed N AH CO Rebas ed Po ly. (NAH CO Reba sed )


13/19


13

DIAMOND BANK PLC

The Dividend and Book Value Models seem to indi-

cate that the stock is underpriced. The fair value

from the weighted average of the valuation models

is N5.44 per share. We therefore maintain our LONG

TERM BUY rating on Diamond Bank Plc. In the me-

dium to long term, we expect the share price to

trend towards our target price range of N5.44

N8.53.

Diamond Bank Plc began as a private limited liability, but

became a public quoted company following a highly suc-

cessful Private Placement share offer in 2005. The Banks

shares were consequently admitted to the daily official

list of The Nigerian Stock Exchange. During the recapi-

talization exercise, the bank acquired Lion Bank and Afri-

can International Bank (AIB).

The Bank in 2008 became the first bank in Africa to be

listed on the Professional Securities Market of the London

Stock Exchange, with the admission of its Global Deposi-

tary Receipts (GDR) on the Exchange.

The Bank has developed relationships with various multi-

nationals and international financial organizations, such

as the U.S. Eximbank, The Netherlands FMO and the

World Banks International Finance Corporation (IFC).

The Bank currently partners Citibank, HSBC Bank, ANZ

Banking Group, ING BHF Bank AG, Standard Chartered

Bank, Belgolaise Bank S.A, Deutsche Bank, Commerz-

bank, and Nordea Bank Plc in order to provide a bouquet

of world class banking services to its clients.

Diamond Bank Plc is a pioneer in the use of cutting edge

information technology. The bank has a strong brandname and reputation, strategic branch network and ex-

cellent IT infrastructure, which has helped the bank in-

crease its market share in the Industry.

The banks full year (FY) result for 2010 shows a 34.38

per cent increase in Turnover from N67 billion in 2009 to

N91 billion in 2010. The Profit after tax (PAT) increased

by 615.24 per cent from a loss of -N8.17 billion in 2009

to N1.33 billion in 2010. The bank declared a dividend

per share of N0.15k. The banks 2011 half year result

saw PAT decline to N1.20 billion, from N4.60 billion re-

corded in the same period in 2010.

The 100-day MA is crossing over the 200-day MA, sug-

gesting long term investment opportunities in the stock.

The stock price is more volatile than the market, given a

beta of 1.37. The one-year Standard Deviation fell to

2.92% from 2.96% recorded as last week. The graph of

the stock price against the NSE ASI at the top right cor-

ner shows that the stock price is below the signal line,

and it seems that the price may reverse upwards in the

short term. Using the Capital Asset Pricing Model

(CAPM), the one-year return prospect of the stock is esti-

mated at 16.45%.






DIAMOND BANK PLC


Y ea r H igh 9. 27Y ea r Low 3. 39

E P S 0. 06

P / E R at i o (x ) 56. 50



P r o f i t Af t er T ax '000 (Ful l Ye ar ) -

Y ea r E nd D ecember

D I A M O N D B A N K P L C

D e c 2 0 1 0 ( '0 0 0 ) D e c 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 91,022,288 67,735,695 34.38%

N e t P ro f i t A f te r Tax 1,328,655 ( 8,174, 413) 615.24%

N e t P o f i t Ma rg in 1. 46% -12.07% 826.75%

Shar ehol der s ' Funds 107,084,863 106,093, 071 0.93%

Total Assets 594,795,137 650,395, 601 -8.55%

ROSH 1. 25% -15.41%

RO A 0. 21% -2.51%

D I A M O N D B A N K P L C

R = 0.594

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs DIAM ONDBNK- Jan '10 - Date

N SE R eba se d Di amo ndbnk Re ba se d Pol y. ( Di amondbnk Re ba se d)


14/19


14

DANGOTE SUGAR REFINERY PLCDangote Sugar Refinery (DSR) operates in two key busi-

ness areas which include: Refining Process and Market-

ing & Distribution. A total of 10 billion shares of N0.50

per share were listed on the 8th of March 2007. The

company whose offer was 139.5% over subscribed, re-

turned over N20 billion, with 10% per annum interest to

investors whose application were invalid.

The company intends to diversify into the upstream seg-

ment of the sugar business by acquiring and developing

Savannah Sugar Company Limited (SSCL), a subsidiary

of Dangote Industries Limited (DIL), to create synergiesand increase overall capacity. SSCL currently produces

white sugar from own grown sugarcane.

On successful combination, the potential synergies be-

tween DSR and its intended merger partner, SSCL, will

see it become a formidable institution within the Sugar

industry in Nigeria and beyond. The company expanded

its production capacity by 75% in the first quarter of

2008, through the production of 2.55 million metric

tones per annum from 1.44 million metric tones.

DSR has relied mainly on retained earnings to support itsgrowth in the past, and this strategy accounted for the

non-payment of dividend for some years. This has

helped the company to maintain consistent growth.

Meanwhile, the Board of Directors of the company that

earlier promised quarterly dividend in 2009, resolved to

change the quarterly dividend policy of the company as a

result of difficulty in the payment process, and failure of

the policy to impact noticeably on the market valuation

of the shares of the company.

With an EPS of 0.71, the trailing P/E Ratio of the com-

pany stood at 10.20x, lower than the sectors 17.18x.

The company proposed a dividend per share of N0.60,

resulting in a dividend yield of 8.29%, compared to the

sectoral average dividend yield of 2.47%.

Our technical analysis shows that the stock price is at-

tractive for long term investment, as the 100-day MA is

slightly above the 200-day MA. The one year Return

prospect of the stock as estimated with the Capital Asset

Pricing Model (CAPM) is 16.23%. The estimated one-

year Standard Deviation of the stock price decreased to

2.56% from 2.60% recorded last week.

The fundamental value of DSR is tilted towards the

Earnings Metric, as the weighted average of all our

valuation metrics produced a final fair price of

N12.43. This indicates that the stock is trading at a

discount of 71.69%. Therefore, we maintain our

recommendation on the stock as LONG TERMBUY.

We also expect the share price to trend towards our

target price range of N12.43 N17.48 in the medium

to long term.


Y ea r H igh 16. 20

Y ea r Low 6. 99

E P S 0. 71

P / E Rat i o (x ) 10. 20



P r o f i t Af t er T ax '000 (Ful l Year ) 11, 282, 000

Y ea r E nd Dece mber

D A N G O T E S U G A R R E F I N E R Y P L C

2 0 1 0 ( '0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 89,980,000 82,395,000 9.21%

Net P rof it A f ter T ax 11,282,000 13, 185,000 -14.43%Net P of i t Mar gi n 12. 54% 16.00% -21.65%

Shar ehol der s ' Funds 40,895,000 41,612, 000 -1.72%

Total As s ets 62,291,340 77,562, 125 -19.69%

ROSH 27. 35% 39.03%

ROA 16. 13% 20.65%

D A N G O T E S U G A R R E F I N E R Y P L C




Dividend Basis 30 15.97Price to Book Basis 40 10.44


DANGOTE SUGAR REFINERY PLC

R = 0.7726

0.00

50.00

100.00

150.00

4-Jan-10

NSE All-Share Index Vs DANGSUGAR - Jan '10 - Date

N SE R eb as ed Da ng su ga r Re ba se d Po ly. (Dan gs ug ar R eb as ed )


15/19


15

OANDO PLCOando Plc (formerly Unipetrol Nigeria Plc) is the second

largest oil marketing company by revenue in Nigeria.

The Company is an integrated energy solutions provider

as its operations scale across gas, international supply,

trading and energy services to its petroleum marketing

business. The Company is currently incubating explora-

tion, production and power initiatives. The company has

an upgraded terminal operations, massive modernization

and large number of trucking fleet, significant pump de-

ployment and forecourt improvement, across the coun-

try.

Oando is the first Nigerian company to accomplish across-border listing on the Johannesburg Stock Exchange

(JSE) in South Africa. Oandos drive into the refinery

business provides an advantage for further improving

and sustaining earnings growth over the medium-term.

The company recently declared its commitment to the

completion of the 128km South East natural gas pipeline

project, which is set for first gas in August 2011.

The Company commenced the execution of its long-term

strategy with a Rights Issue of 301,694,876 Ordinary

Shares of N0.50k each at N70 per share to rank pari

passu with the existing share capital of the company.

The Companys audited result for 2010 showed an incre-

ment in Profit After Tax (PAT) by 42.37 per cent to

N14.37 billion, when compared to N10.10 billion re-

corded in the corresponding period in 2009. Turnover for

the year also grew by 12.49 per cent from N336.86 bil-

lion in 2009 to N378.93 billion in 2010. The Board of

Directors of the company proposed a dividend of N3.00k

and a bonus of one ordinary share for every four held as

at 29th of April 2011. The companys 2011 half year

result saw PAT grow to N6.68 billion, from N5.33 billion

recorded in the corresponding period in 2010.

The technical analysis of Oando indicates that the stock

has become more attractive for long term investors, as

the 100-day MA is currently trading above the 200-day

MA. The estimated one-year Standard Deviation of the

stock rose to 2.62% from 2.56% recorded in the previ-

ous week. With an EPS of 6.91, the trailing P/E Ratio of

the company stood at 3.69x, compared to its sectoral

EPS and P/E Ratio of 3.25 and 10.56x, respectively.

The stock has a relatively high long term return pros-

pect, given the one year expected return of 15.02% esti-

mated with the Capital Asset Pricing Model (CAPM).

A final fair value of N60.98 after adjustment for bo-

nus issue and dividend payment indicates that

Oando is trading at a huge discount of 136.47%. We

therefore maintain our LONG TERM BUY recom-

mendation on the stock. We also expect the share

price to trend towards our target price range of

N35.10 N60.30 in the medium term.







OANDO PLC

2 0 1 0 ( '0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Tur nover 378,930,000 336,859,000 12.49%


Net P r of i t M ar gi n 3. 79% 3.00% 26.57%

Shar eholder s' Funds

Net A ss ets 95, 004,000 53,319, 000 78.18%

ROSH

RONA 19. 38% 9.35%

O A N D O P L C

C ur r ent P r i c e 25.50

Y ear H i gh 78.97

Y ear Low 20.99

E P S 6.91

P / E Rat i o ( x) 3.69


D i v i dend Y i e l d 11.76%

P r of i t A f ter T ax '000 (Ful l Y ear ) 10,096,000

Y ear E nd D ecember

O A N D O P L C

R = 0.70190.00

50.00

100.00

150.00

200.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs OANDO- Jan '10 -Date

NSE Rebased Oando Rebased Poly . (Oando Rebased)


16/19


16

FIDELITY BANK PLC

The current enlarged Fidelity Bank was a result of the

merger with the former FSB International Bank Plc and

Manny Bank Plc (under the Fidelity brand name) in De-

cember 2005 during the consolidation era. The Bank is

ranked amongst the top 10 in the Nigerian banking in-

dustry, with presence in the major cities and commer-

cial centers of the country.

The Bank has partnership with various off-shore institu-

tions, such as ANZ London, Afri-eximbank Cairo, Egypt,

ABSA South Africa, Commerce Bank, Frankfurt, Citi-

bank, N.A. London and New York, FBN Bank, UK Ltd,SCB, London, HSBC, US Ex-im Bank, USAID, etc. The

Bank has international access to correspondent bank-

ing, confirmation lines, credit and other relationships

with multinationals and financial organizations.

The Bank has an experienced and stable management

team, reputed for integrity and professionalism. The

Bank, having operated as an investment bank for 11

years, has a leverage on its pedigree in its structures

and service offerings for a retail populace.

The audited result of the Bank for the year ended De-

cember 31, 2010 showed a turnover of N56.05 billion,

as against N34.72 billion in the previous year, indicating

a growth of 61.45 per cent. Profit After Tax surged by

292.10 per cent from N1.56 billion in 2009 to N6.11

billion in 2010. The Banks first quarter result ended

March 31, 2011 indicated a decline of 62.23 per cent in

Turnover and Profit After Tax also decreased by 5.78

per cent, when compared to the same period in 2010.

However, Net Profit Margin (NPM) rose from 10.62% to

26.50%.

Our technical analysis seems to indicate that the stock

price trend strengthened in the week under review, as

the 100-day MA is now above the 200-day MA, which

suggests that the stock is attractive for long term in-

vestment. The graph of the stock price against the NSE

ASI at the top right corner also show that the stock is

currently below the signal line, and it seems that the

price may witness an upward movement in the next

couple of trading sessions. The trailing P/E Ratio of the

company stood at 10.05x, compared to its sectoral P/E

Ratio of 11.66x.

The one year Standard Deviation of the stock price fell

marginally to 2.50% from 2.53% recorded last week.

The expected one year Return of the stock as estimated

with the Capital Asset Pricing Model (CAPM) is 16.00%.

All our fundamental valuation models seems to indi-

cate that the stock is 16.42% underpriced at a fair

value of N2.34. We therefore maintain our HOLD

recommendation on Fidelity Bank Plc. Furthermore,

the stock may likely rally within our target price

range of N2.34 N3.90 in the medium term.



Forward Earnings Basis 30 1.99Dividend Basis 30 2.77



FIDELITY BANK PLC


Y ea r H igh 3. 20

Y ea r Low 1. 67

E P S 0. 20

P / E Rat i o (x ) 10. 05



P r o f i t Af t er T ax '000 (Ful l Year ) 6, 105, 000

Y ea r E nd December

F I D E LI T Y B A N K P L C

2 0 1 0 ( '0 0 0 ) 2 0 0 9 ( ' 0 0 0 ) C H .

Turnover 56,048,000 34,716,000 61.45%


Net P of i t Mar gi n 10. 89% 4.48% 142.87%


Total Assets 481, 614,000 435,666, 000 10.55%

ROSH 4. 58% 1.94%

ROA 1. 33% 0.48%

F I D E L I T Y B A N K P L C

R = 0.148

0.00

50.00

100.00

150.00

4-Jan-10 4-Jul-10 4-Jan-11 4-Jul-11

NSE All-Share Index Vs FIDELITYBK - Jan '10 - Date

N SE Reba sed F idel ity bk Reb as ed Pol y. (F idel ity bk Reba sed)


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APPENDIX

DEFINITION OF TECHNICAL ANALYTICS TERMS

Moving Average - MAThis is an indicator frequently used to measure momentum and to define areas of possible supportand resistance. It shows the average value of a security's price over a set period. Moving averagesare used to emphasize the direction of a trend and to smooth out price and volume fluctuationsthat can confuse interpretation.

IMPORTANT DISCLOSURES

Information SourceThe data used in this report were sourced from the audited accounts of the companies for theirvarious financial year ends. Other sources included the Central Bank of Nigeria (CBN) monthly re-ports, the Nigerian Stock Exchange (NSE) Price List, Greenwich Research Database, and Nationaldailies.

Valuation Models and Methodology Applied in this Report

The equity analysis was conducted using a combination of valuation models, namely: Earnings(Historical), Forecasted Earnings, Dividends Basis, and Price to Book Basis. A weighted average ofall these valuation methods was taken as the final estimated fair value of the stock. The weightsapplied were based on our perceived applicability of the models to the different sectors of the Nige-rian economy.

The forecasted earnings were derived using CAGR as a forecast factor over a period of time. Themost recent profit after tax, which was used as the base, was forecasted five years into the futureand the average of these five years was taken as the normalized earnings in the forecasted valua-tion model after discounting for present value equivalent. A five year time horizon was used inmost cases in order to smoothen the returns as much as possible, so as to generate a realistic re-turns. Despite the five year forecast horizon, adjustments were still made where estimates seemedunrealistic. Good judgment and objectivity were displayed in deriving the estimates.

CAPM, which is the Capital Asset Pricing Model, was used in this report to derive the expected in-vestment returns for one year investment timeframe. Note that this is an expectation and that re-turns may be significantly higher or the expected returns may be achieved over a time periodmuch less than one year. The risk-free rate of return was the current yield on the 20-year FGNBond recently issued with a coupon rate of 10%, while market return is the weighted average ofthe sector returns on the Nigerian Stock Exchange. The betas of the stocks were calculated usingmarket data covering 36 months.

The price forecasts in the Report are for time horizon between 5 to 10 trading sessions. However,the forecasts may be achieved in a period less than 5 trading sessions. The forecast was based onan average of the CAGR for a 10-day trading period and the daily average growth rate of the stockprice for the corresponding period. Good judgment was exercised in determining the current mar-ket trend and adjustments were made when we felt that the observed trend might not be attain-able for the forecast horizon.


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IMPORTANT DISCLOSURES CONTD

Sector Basis of Projection

AGRICULTURE Earnings

AIRLINE SERVICES Earnings

AUTOMOBILE & TYRE Book Value

AVIATION Earnings

BANKING Historical Dividends / Book Value / Earnings

BREWERIES Historical Dividends

BUILDING MATERIALS Book Value

CHEMICAL & PAINTS Book Value

COMMERCIAL/SERVICES Book Value

COMPUTER & OFFICE EQUIPMENT Earnings

CONGLOMERATES Book Value

CONSTRUCTION Historical Dividends / Book Value

ENGINEERING TECHNOLOGY Book Value

FOOD/BEVERAGES & TOBACCO Earnings

FOOTWEAR Book Value

HEALTHCARE Earnings

HOTEL & TOURISM Book Value

INDUSTRIAL/DOMESTIC PRODUCTS Book Value

INFORMATION, COMMUNICATION & TELECOM-MUNICATIONS Book Value

INSURANCE Earnings

LEASING Earnings

MACHINERY(MARKETING) Book Value

MARITIME Earnings

MEDIA Book Value

MORTGAGE COMPANIES Earnings

OTHER FINANCIAL INSTITUTIONS Historical Dividends / Book Value

PACKAGING Book Value / Earnings

PETROLEUM(MARKETING) Historical Dividends / Earnings

PRINTING & PUBLISHING Book Value

REAL ESTATE Earnings

REAL ESTATE INVESTMENT TRUST Book Value

ROAD TRANSPORTATION Book Value

SECOND-TIER SECURITIES Earnings

TEXTILES Book Value

THE FOREIGN LISTINGS Book Value / Earnings


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Investment Timeframes

We refer to long term investment timeframe to be a period greater than one year and short terminvestment timeframe to be a period less than one year. We give a Buy recommendation when thestock has good technicals and strong fundamentals, implying that the stock can be used for specu-lating the market, and for fundamental investing where growth and income are the investment ob-jectives.

Hedge Clause

The report was prepared by Greenwich Research, and it is for information purposes only. Green-wich Trust Limited is under no obligation to accept any liabilities that may arise from the use of anypart of this report, as no representation is made on the accuracy of the sources used in preparingthe Report.

The price projections for the financial year in the report were generated based on the perceivednature of business of the respective sectors. In some cases, where more than one estimates werestated, the average of the estimates was taken as the price. Analyzed below is tabularized bases ofestimating the forecasts.

greenwich stock recommendations_october 10- 14, 2011

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