weekly stock recommendations -jan 19€¦ · 07.01.2019 · nigerian international securities...

Weekly Stock Recommendations 07-Jan-19

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Nigerian International Securities Limited: Research Unit

BRIEF ON LAST WEEK:

The Nigerian Stock Exchange All Share Index (NSEASI) declined by 1.28% WoW to close at 30,638.90 points. The equities market recorded

losses on three (3) out of four (4) trading days in the week, bringing the Year-to-Date return of the index to -2.52%. The total traded volume

and value declined by 33.57% and 29.24% WoW respectively. Also, the total number of deals consummated on The Floor of the Exchange was

14,773 deals compared to 10,394 deals last week (+42.13% WoW).

In the course of the week, Resort Savings and Loans Plc. (RESORTSAL) released its Q3’18 earnings result. The company’s Gross Revenue

advanced by 51.36% YoY to ₦529.95mn while it reported a Loss After Tax of ₦43.56mn.

WHAT TO EXPECT THIS WEEK:

We expect the continued pressure of near term risk at the equities market to be countered by fair levels of bargain hunting activities in the

week, as several blue-chip stocks continue to trade at low valuations on the Nigerian Bourse. This would lead to considerable level of volatility

in stock prices as the market would struggle to determine the short term direction of investment flows.

Overall, we anticipate that the equities market will close marginally positive for its Week-on-Week performance.

We recommend that investors should keep a well-diversified portfolio in a bid to avoid concentration risk and escape shocks that

might be sector specific. Also, we advise investments in fundamentally sound stocks with consistent dividend payment history.

NISL TOP RECOMMENDATIONS:

S/N COMPANY CURRENT PRICE (N) TARGET PRICE (N) UPSIDE (%) YtD GAIN/(LOSS) (%) RATING

1. ACCESS 5.80 13.26 128.53 (14.71) STRONG BUY

2. DANGCEM 186.00 275.00 47.85 (1.95) STRONG BUY

3. DANGFLOUR 6.00 8.50 41.67 (12.41) STRONG BUY

4. DANGSUGAR 14.60 18.87 29.25 (4.26) BUY

5. FBNH 7.45 16.08 115.77 (6.29) STRONG BUY

6. FIDELITYBK 1.92 3.07 59.64 (5.42) STRONG BUY

7. FO 29.60 33.00 11.49 3.14 HOLD

8. GUARANTY 33.50 52.02 55.28 (2.76) STRONG BUY

9. GUINNESS 72.00 122.06 69.52 0.00 STRONG BUY

10. MOBIL 184.80 216.84 17.33 (0.38) BUY

11. NB 79.50 120.06 51.01 (7.02) STRONG BUY

12. NESTLE 1,475.00 1,509.24 2.32 (0.67) HOLD

13. PRESCO 64.00 68.86 7.59 0.00 HOLD

14. SEPLAT 640.00 768.07 20.01 0.00 BUY

14. TOTAL 203.00 250.46 23.38 0.00 BUY

15. TRANSCORP 1.16 1.92 65.52 (12.12) STRONG BUY

17. UAC-PROP 1.74 1.62 (6.90) (8.90) SELL

18. UACN 9.60 15.66 63.13 (1.54) STRONG BUY

19. UNILEVER 36.30 66.07 82.00 (1.89) STRONG BUY

20. WAPCO 11.30 UR UR (9.24) UR

21. ZENITHBANK 21.70 36.66 68.94 (5.86) STRONG BUY

UR: Under Review

NSEASI

SUMMARY Most Recent Week Previous Week

%

Change

NSEASI 30,638.90 31,037.72 (1.28)

Market Cap (₦’bn) 11,425.52 11,337.10 0.78

Market Cap ($’bn) 37.22 36.93 0.80

Total Volume (mn) 1,646.23 2,477.97 (33.57)

Total Value (₦’bn) 8,412.51 11,889.04 (29.24)

Total Value ($’bn) 27.40 38.73 (29.25)


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NISL STOCK RECOMMENDATION ANALYSIS:

ACCESS Price: ₦5.80 Target Price: (₦11.93 – ₦14.58) Rating: STRONG BUY

P/B : 0.35 P/E : 2.43 Upside: 128.53% Div. Yield: 11.21% 1 Yr Range: ₦5.80 – ₦13.45

AFRIPRUD Price: ₦3.94 Target Price: (₦4.99 – ₦6.10) Rating: STRONG BUY


Our valuation of ACCESS BANK PLC (herein referred to as “ACCESS” or “the Bank”) currently shows an upside potential

of 128.53% to its fair value, hence we maintain a STRONG BUY recommendation on the stock.

ACCESS declined by 14.71% WoW to close the YtD return of the counter at -14.71%.

In Q3’18, ACCESS posted 2.79% YoY growth in Gross Earnings from ₦365.05B to ₦375.23B and Profit After Tax

advanced by 11.55% YoY from ₦56.40B to ₦62.91B. EPS advanced by 10.66% YoY from 197kobo in Q3’17 to 218Kobo

in Q3’18. The counter’s Trailing 12M EPS holds at 239kobo.

The bank’s topline growth can be attributed to the 11.64% YoY advancement in Interest Income from ₦245.87B to

₦274.50B, as the Bank recorded a Net Foreign Exchange Loss of ₦29.58B from a gain position of ₦116.46B in Q3’17.

Net Fees and Commission Income advanced by 12.38% YoY to ₦43.19B.

More so, Net Interest Income for ACCESS advanced by 1.22% YoY to ₦122.95B while its Loan Impairment Charges

declined by 34.86% YoY to ₦8.35B from ₦12.82B in Q3’17. Its Fee and Commission Income grew by 12.38% YoY to

₦43.19B (vs ₦38.43B in Q3’17) while its Operating Income declined by 7.05% YoY to ₦223.34B (vs ₦240.29B in Q3’17).

Profit Before Tax declined by 3.62% YoY to ₦70.27B while Profit After Tax advanced by 11.55% YoY to ₦62.91B.

For FY’17, ACCESS posted a 20.39% growth in Gross Earnings from ₦381.32B to ₦459.08B whilst Profit After Tax declined by

13.23% from ₦71.44B to ₦61.99B. EPS declined by 12.80% YoY from 250kobo to 218kobo.

The bank declared an Interim dividend of 25kobo/share for H1’18 (vs 65kobo/share declared as Final dividend for its FY’17).

Ex-Div. Date: 11-Sep-2018; Payment Date: 21-Sep-18. (Interim Dividend)

Our valuation of AFRICA PRUDENTIAL REGISTRARS PLC (herein referred to as “AFRIPRUD” or “the Company”) indicates

that the stock currently trades at an upside potential of 40.74% to fair value, therefore we maintain a STRONG BUY

recommendation on the stock.

AFRIPRUD pared by 0.25% WoW to settle its YtD return of the stock at 1.81%.

In Q3’18, AFRIPRUD’s Revenue advanced by 13.70% YoY from ₦2.27B to ₦2.58B, while Profit After Tax also advanced

by 2.83% YoY from ₦1.31B in Q3’17 to ₦1.35B in Q3’18. EPS settled higher by 2.83% from 65kobo to 67kobo. Trailing

12M EPS for AFRIPRUD holds at 88kobo.

AFRIPRUD’s growth in gross revenue is largely attributed to the rise in Net Investment Income, which advanced by

1.85% YoY from ₦1.61B to ₦1.64B. Fee Income advanced by 42.66% YoY from ₦660M to ₦941M in the period, while

Other Income leaped by 124.90% from ₦35M to ₦80M.

In FY’17 AFRIPRUD’s Revenue surged by 37.10% YoY from ₦2.419B to ₦3.316B, while Profit After Tax also advanced by 68.25%

YoY from ₦1.02B to ₦1.72B. EPS settled higher by 68.25% from 51kobo to 86kobo.

The Company declared a total Dividend Per Share (DPS) of 40kobo for FY’17 representing a 33.33% increase from last year’s

Dividend per share of 30kobo.

Ex-Div. Date: 13-Mar-18; Payment Date: 27-Mar-18. (Final Dividend)


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DANGOTE CEMENT Price: ₦186.00 Target Price: (₦247.50 – ₦302.49) Rating: STRONG BUY


DANGFLOUR Price: ₦6.00 Target Price: (₦7.65-₦9.35) Rating: STRONG BUY

P/B : 0.76 P/E : 5.93 Upside: 41.67% Div. Yield : 3.33% 1 Yr Range: ₦5.50 – ₦16.90

Our valuation of DANGOTE CEMENT PLC (herein referred to as “DANGCEM” or “the Company”) currently shows an

upside potential of 47.85%, hence we maintain a STRONG BUY recommendation on the stock.

DANGCEM advanced by 1.64% WoW to close its YtD return at -1.95%.

In Q3’18, DANGCEM’s Revenue grew by 13.54% YoY from ₦603.58B to ₦685.29B, while Profit After Tax advanced by

2.70% YoY from ₦154.12B to ₦158.28B. EPS also advanced by 2.66% YoY from 901kobo to 925kobo. TTM EPS holds at

1,189kobo.

The Company’s top-line was enhanced by both increased volume and sales price (approx. ₦39/kg vs. ₦36/kg in Q3’17)

of cement in the period relative to Q3’17. The company scaled up its production capacity to 44.05MMT in the period.

DANGCEM’s Cost-to-Sales ratio declined to 41.98% (vs. 43.05% in Q3’17), whilst Gross Profit advanced by 15.68% YoY

to ₦397.61B. DANGCEM’s operating expense increased by 19.18% to ₦135.26B (albeit translating to a slight increase

in OPEX Ratio at 19.74% vs. 18.80% in Q3’17), while the company’s operating profit advanced by 14.45% to ₦266.83B.

Consequently, Profit Before Tax for DANGCEM appreciated by 12.35% YoY to ₦247.36B, while Profit After Tax climbed

by 2.70% YoY from ₦154.12B in Q3’17 to ₦158.28B in Q3’18.

On 19-Jul-18, DANGCEM had its ₦150bn Commercial Paper issuance (shelf) Programme listed on the FMDQ Trading

Platform. The initial issuance of ₦50bn is for 180 and 270 days. Proceeds of the sale is to be used for the funding of

short term working capital requirements and for general purposes.

DANGCEM’s FY’17 Revenue grew by 30.97% from ₦615.10B to ₦805.58B, while Profit After Tax advanced marginally by 42.97%

from ₦142.86B to ₦204.25B. EPS also advanced by 32.69% from 878kobo to 1,165kobo.

The Company declared a Dividend Per Share (DPS) of 1050kobo for FY’17; an increase of 23.53% when compared to the

850kobo DPS paid in FY’16.

Ex-Div. Date: 16-Apr-18; Payment Date: 21-June-18 (Final Dividend).

Our valuation of DANGOTE FLOUR MILLS PLC (herein referred to as “DANGFLOUR” or “the Company”) currently shows

an upside potential of 41.67%, hence we maintain a STRONG BUY recommendation on the stock.

DANGFLOUR declined by 12.41% WoW to settle its YtD return at -12.41%.

In Q3’18, DANGFLOUR’s Revenue declined by 16.93% YoY from ₦100.28B to ₦83.30B, while Profit After Tax pared by

75.01% YoY from ₦13.05B to ₦3.26B. EPS also declined by 74.41% YoY from 255kobo to 65kobo. TTM EPS holds at

101kobo.

The decline in DANGFLOUR’s Revenue can be linked to the sustained high prices of consumer goods in the period as

month-on-month inflation figures continue to climb. The Company’s Cost-to-Sales ratio in the period increased to

85.91% (vs 76.83% in Q3’17) in light of higher import costs, while the Gross Profit declined by 49.48% YoY to ₦11.74B

from ₦23.24B in Q3’17.

DANGFLOUR’s Operating Expense declined by 4.20% YoY to ₦8.58B, while the OPEX Ratio rose to 10.30%, compared

to 8.93% in Q3’17. Operating Profit in the period settled at ₦4.33B (-77.28% YoY), while the Finance Cost declined by

5.20% YoY to ₦2.43B from ₦2.56B in Q3’17. Consequently, PBT and PAT for DANGFLOUR settled at ₦4.45B (-75.29%

YoY) and ₦3.26B (-75.01% YoY) respectively.

In FY’17, DANGFLOUR’s Revenue grew by 18.61% from ₦105.77B to ₦125.44B, while Profit After Tax surged by 43.14% from

₦10.57B to ₦15.13B. EPS also advanced by 37.26% from 212kobo to 291kobo. TTM EPS holds at 291kobo.

DANGFLOUR declared a dividend of 20kobo/share for FY’17 (vs FY’16: no dividend was declared).

Ex-Div. Date: 23-Apr-18; Payment Date: 27-Jun-18. (Final Dividend)


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DANGOTE SUGAR Price: ₦14.60 Target Price: (₦16.98 – ₦20.76) Rating: BUY


ETI Price: ₦14.00 Target Price: (₦20.78 – ₦25.40) Rating: STRONG BUY

P/B : 0.41 P/E : 5.24 Upside: 64.93% Div. Yield : - 1 Yr Range: ₦14.00 – ₦22.15

Our valuation of DANGOTE SUGAR REFINERY PLC (herein referred to as “DANGSUGAR” or “the Company”) indicates

that the stock currently trades at an upside potential of 29.25% to fair value, therefore we maintain a BUY

recommendation.

DANGSUGAR declined by 4.26% WoW to settle its YtD return at -4.26%.

In Q3’18, DANGSUGAR reported a 28.38% decline in Turnover from ₦163.03B to ₦116.76B while Profit After Tax

declined by 36.99% YoY from ₦26.52B to ₦16.71B. EPS was also pared by 1.40% YoY from 143kobo to 141kobo. The

counter’s Trailing 12M EPS holds at 329kobo.

Gross Profit Margin for DANGSUGAR (25.77% vs. 25.44% in Q3’17) was higher in Q3’18, as the Company efficiently

managed its Cost of Sales in the period in view (Cost-to-Sales moderated to 74.23% vs. 74.56% in Q3’17).

The OPEX Ratio also hiked to 5.26% as against 3.50% in Q3’17, while the Operating Profit subsequently settled at

₦24.29B (-32.47% YoY) from ₦35.96B in Q3’17. DANGSUGAR’s bottom line was further pressured by the drop in the

Fair Value Adjustments of the Company’s biological assets plus investment income, which was 37.19% lower at ₦2.08B,

compared to ₦3.32B in Q3’17. Consequently, DANGSUGAR’s PBT settled at ₦26.21B (-33.23% YoY).

DANGSUGAR reported a 20.44% increase in Turnover to ₦204.42B for FY’17 while Profit After Tax rose by 176.35% to ₦39.78B.

EPS was higher by 175.83% from 120kobo to 331kobo.

The Company declared a final Dividend Per Share (DPS) of 125kobo for FY’17 (interim; 50kobo/share) therefore a total dividend

of 175kobo/share; an advance of 191.67% YoY 60kobo DPS declared in FY’16.

Ex-Div. Date: 16-Apr-18; Payment Date: 22-Jun-18 (Final Dividend).

Our valuation of ECOBANK TRANSNATIONAL INCORPORATED PLC (herein referred to as “ETI” or “the Bank”) currently

shows an upside potential of 64.93%, hence we maintain a STRONG BUY recommendation on the stock.

ETI traded flat in the week to settle its YtD return at 0.00%.

In Q3’18, ETI reported 1.40% YoY growth in its Gross Earnings from ₦564.72B to ₦572.66B, while its PAT increased by

30.65% YoY to ₦75.72B. EPS was higher by 22.39% from 201kobo to 246kobo. The Trailing 12M EPS for the stock holds

at 267kobo.

The Bank’s Net Interest Income declined by 0.51% YoY to ₦215.22B (vs ₦216.31B in Q3’17) while its Net Fees &

Commission Income advanced by 12.47% YoY to ₦100.79B (vs ₦89.62B in Q3’17). Also, its Net Trading Income declined

by 15.90% YoY ₦85.03B (vs ₦101.11B in Q3’17).

Furthermore, ETI recorded Operating Profit before Impairment to the tune of ₦162.69B (+2.55% YoY), while the Bank

recorded a decline of 25.61% YoY on Impairment Loss on Financial Assets to the tune of ₦66.43B, ETI’s Operating Profit

After Impairment was ₦96.25B (+38.81% YoY), while the Profit Before Tax came in at ₦96.32B (+38.78% YoY) in Q3’18.

After accounting for Tax charges, ETI recorded Profits from Continuing Operations worth ₦75.51B (+30.74% YoY) and

Discontinued Operations ₦203M (+3.73% YoY), to bring the Profit After Tax to ₦75.72B (+30.65 YoY).

FY’17 saw ETI post a 14.83% growth in Gross Revenue from ₦665.0B to ₦763.63B, while Profit After Tax was recorded at ₦69.99B

from a Loss after Tax of ₦25.60B in FY’16. EPS was higher by 185.71% from -259kobo (FY’16) to -222kobo (FY’17).

The Bank did not declare any dividend for FY’17 as it was for FY’16 (FY’15: 40kobo Dividend Per Share).


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FBNH Price: ₦7.45 Target Price: (₦14.47 – ₦17.68) Rating: STRONG BUY


FIDELITYBK Price: ₦1.92 Target Price: (₦2.93 – ₦3.20) Rating: STRONG BUY

P/B : 0.29 P/E : 2.49 Upside: 59.64% Div. Yield : 5.73% 1 Yr Range: ₦1.51– ₦3.99

Our valuation of FBN HOLDINGS PLC (herein referred to as “FBNH” or “the Bank”) currently shows an upside potential

of 115.77%, hence we maintain a STRONG BUY recommendation on the stock.

FBNH declined by 1.32% WoW to settle its YtD return of the stock at -6.29%.

For its Q3’18, FBNH reported its Gross Earnings advanced by 0.58% YoY from ₦438.93B to ₦441.45B while Its Profit

After Tax declined by 0.23% YoY from ₦45.00B to ₦44.90B. EPS remained static at 122kobo. The Trailing 12M EPS for

the counter holds at 121kobo.

FBNH’s topline growth was enhanced due to growth in several revenue generating segments. Net gains on FX advanced

by 325.78% YoY to ₦23.85B (vs ₦5.60B in Q3’17). FBNH’s Net Fees and Commission Income increased by 15.00% YoY

to ₦51.97B. Its Net Insurance Premium Revenue advanced by 29.69% YoY to ₦10.44B (vs ₦8.05B in Q3’17). Loan

impairment charges in the period declined by 21.93% YoY to ₦76.19B. Also the Bank’s Interest Income declined by

5.20% YoY to ₦337.56B. The Bank’s Operating Income settled at ₦314.73B (-4.08% YoY), while Total Operating Expense

advanced by 6.78% YoY to ₦187.24B. FBNH’s PBT declined by 7.38% YoY to ₦51.34B, while overall PAT settled at

₦44.90B (-0.23% YoY) for Q3’18.

On 6-Jul-18, FBNH announced the intention of First Bank Nigeria Limited (“the Bank”) to redeem the fixed rate subordinated Notes

held by FBN Finance Company B.V. Accordingly, $300mn 8.25% subordinated Notes raised from the international debt markets

and due in August 2020 was called at the next callable date of 07-Aug-18.

For FY’17 the Bank registered a 2.34% appreciation in Gross Earnings from ₦581.08B to ₦595.44B. Also its overall Profit After

Tax advanced by 226.81% from ₦12.24B to ₦40.01B. EPS also advanced by 210.26% to 121kobo (FY’16: 39kobo).

The Bank declared a 25kobo Dividend per share (DPS) for FY’17; 25% increase from the 20kobo DPS declared for FY’16.

Ex-Div. Date: 07-May-2018; Payment Date: 16-May-18.

Our valuation of FIDELITY BANK PLC (herein referred to as “FIDELITYBK” or “the Bank”) currently shows an upside

potential of 59.64%, hence we maintain a STRONG BUY recommendation on the stock.

FIDELITYBK declined by 4.00% WoW to peg the YtD return at -5.42%.

In its Q3’18, FIDELITY reported 6.85% YoY increase in Gross Earnings from ₦130.09B to ₦139.00B, while Profit After

Tax increased by 23.58% YoY from ₦14.45B to ₦17.86B. EPS also settled higher at 62kobo (Q3’17: 50kobo). The Trailing

12M EPS for the stock settled at 77kobo.

The Bank’s growth in gross earnings was on the back of a 12.10% increase in Net Fee and Commission Income from

₦11.11B in Q3’17 to ₦12.46B in Q3’18. The bank’s Net Interest Income After Impairment Charge advanced by 18.08%

₦54.88B in Q3’18 (vs ₦46.48B in Q3’17), as Loan Impairment Charges declined significantly by 55.14% YoY to ₦3.29B

in Q3’18 (vs. ₦7.32B in Q3’17). FIDELITYBK recorded Net Trading Loss of ₦256M compared to the gain of ₦186M in

Q3’17, while Other Income dropped by 40.52% YoY to ₦3.54B vs. ₦5.94B in Q3’17.

The Bank’s Operating Expense advanced by 6.47% YoY to ₦50.56B, while Operating Income settled at ₦70.62B vs.

₦63.72B in Q3’17. Consequently, Profit Before Tax and Profit After Tax for the Bank advanced by 23.58% YoY each to

₦20.06B and ₦17.86B respectively.

For FY’17 FIDELITY posted an 18.34% YoY advance in Revenue from ₦152.02B to ₦179.90B while Profit After Tax advanced by

93.72% from ₦9.73B to ₦18.86B. EPS also advanced to 65kobo (FY’16: 34kobo).

The Bank declared an 11kobo Dividend per share (DPS) for FY’17; a 21.43% decrease from the 14kobo DPS declared for FY’16.

Ex-Div. Date: 14-May-18; Payment Date: 25-May-18.


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FIDSON Price: ₦4.95 Target Price: (₦5.43 – ₦6.63) Rating: BUY

P/B : 0.92 P/E : 6.69 Upside: 21.82% Div. Yield : 1.01% 1Yr Range: ₦4.38 – ₦6.24

FLOURMILL Price: ₦21.85 Target Price: (₦31.09 – ₦37.99) Rating: STRONG BUY


Our valuation of FIDSON HEALTHCARE PLC (herein referred to as “FIDSON” or “the Company”) shows an upside

potential of 21.82%, hence we maintain a BUY recommendation on the stock.

FIDSON traded flat in the week to settle the YtD return of the stock at 0.00%.

In Q3’18, FIDSON recorded 11.10% YoY growth in Revenue from ₦10.30B to ₦11.45B and Profit After Tax rose by 6.89%

YoY from ₦730M to ₦781M. EPS also increased by 6.89% YoY from 49kobo to 52kobo. The Trailing 12M EPS settled at

74kobo.

Advance in overall Revenue was due to the growth in the Ethical goods sales to ₦6.82B (vs ₦4.11B in Q3’17) while the

Over-The-Counter drug sales dipped to ₦4.55B (vs ₦6.12B in Q3’17). We attribute the topline performance to the

improved FX liquidity in the economy (due to the Investors/Exporters FX window) amongst other instances. This we

note has enhanced product supplies as against the situation that was obtainable through FY17.

FIDSON’s Gross Profit was recorded at ₦5.32B (+1.85% YoY), while the Operating Expense of the Company pared by

2.36% YoY from ₦3.59B to ₦3.51B. Consequent on this, FIDSON’s Operating Profit increased by 16.01% YoY from

₦1.65B to ₦1.91B, while the Profit Before Tax and Profit After Tax also advanced by 6.89% and 6.89% to settle at ₦1.12B

and ₦781M respectively.

In FY’17 the Company recorded an 83.64% advance in Revenue from ₦7.66B to ₦14.06B and Profit After Tax advanced by 57.45%

from ₦744.38M to ₦316.76M. EPS also decreased by 58.00% YoY from 50kobo to 21kobo.

The Company declared a 20kobo Dividend per share (DPS) for FY’17; a 300% increase from 5kobo DPS declared for FY’16.

Ex-Div. Date: 31-Aug-18; Payment Date: 26-Sep-18.

Our valuation of FLOURMILLS OF NIGERIA PLC (herein referred to as “FLOURMILL” or “the Company”) currently

indicates an upside potential of 58.08% to fair value, therefore we maintain a STRONG BUY recommendation on the

stock.

FLOURMILL pared by 0.46% WoW to settle the YtD return of the counter at -5.41%.

In Q2’19 (6M ended 30-Sep-18), FLOURMILL recorded a decline of 9.62% YoY in its Revenue from ₦298.44B to

₦269.74B, while Profit After Tax declined by 45.81% YoY to ₦5.07B. EPS declined by 60.57% from 317kobo in Q2’18

(6M ended 30-Sep-17) to 125kobo. The Trailing 12M EPS settled at 291kobo.

Sustained price hikes of goods (which has translated to persistent month-on-month hike in the Consumer Price Index)

remains a major drag to the Revenue drive of several consumer goods companies. FLOURMILL’s Gross Profit Margin

advanced marginally to 11.91% from 11.90% in Q2’18 (6M ended 30-Sep-17), as its Cost-to-Sales declined to 88.09%

as against 88.10% in Q2’18 (6M ended 30-Sep-17). OPEX in the period increased by 25.71% YoY to ₦13.98B, while it

recorded Net Operating Gains to the tune of ₦1.10B (-78.33% YoY). FLOURMILL’s operating profit declined by 34.71%

YoY from ₦29.47B to ₦19.24B and the Company’s Finance Cost pared by 30.97% YoY to ₦11.23B.

PBT and PAT for the Company waned by 38.40% and 45.81% YoY to ₦8.30B and ₦5.07B respectively.

In FY’17 (FY ended 30-Mar-17), FLOURMILL recorded a 53.09% YoY rise in Revenue to ₦524.46B, whilst PAT plunged by 38.72%

YoY to ₦8.84B. EPS fell by 45.60% YoY to 303kobo. The poor bottom-line performance was due to the one-off effect of the gain

on disposal of asset (₦23.73B) in the prior year. Discounting this gain, the company’s PAT advanced by c.172% YoY.

For FY’18 the Company declared a Dividend Per Share of 100kobo. (FY’17: 100kobo).

Ex-div Date: 6-Aug-18. Payment Date: 3-Sep-18.


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FO Price: ₦29.60 Target Price: (₦29.70 – ₦36.30) Rating: HOLD

P/B : 0.61 P/E : 8.76 Upside: 11.49% Div. Yield: 0.00% 1Yr Range: ₦17.30 – ₦52.62

GUARANTY Price: ₦33.50 Target Price: (₦46.82 – ₦57.22) Rating: STRONG BUY


Our valuation of GUARANTY TRUST BANK PLC (herein referred to as “GUARANTY” or “the Bank”) currently indicates an

upside potential of 55.28%, hence we maintain a STRONG BUY rating on the stock.

GUARANTY declined by 2.33% WoW to settle its YtD return at -2.76%.

GUARANTY reported an 8.83% YoY increase in Gross Earnings from ₦309.91B in Q3’17 to ₦337.27B in Q3’18 and its Profit

after Tax was higher at ₦142.22B (+13.26% YoY). EPS settled higher at 503kobo, increasing by 13.29% YoY from 444kobo in

Q3’17. The Trailing 12M EPS settled at 662kobo.

GUARANTY’s topline performance was buoyed by the 119.21% YoY surge in Other Income (largely due to FX revaluation

gains) from ₦17.93B in Q3’17 to ₦39.31B in Q3’18. Net Interest Income for the bank declined by 9.98% YoY to ₦170.64B in

Q3’18 (vs ₦189.57B in Q3’17). Also, Loan Impairment charges plunged by 79.22% YoY to ₦1.74B (vs. ₦8.36B in Q3’17). Net

Fee & Commission Income for the bank advanced by 17.99% to ₦37.84B, while GUARANTY’s Net Trading Income leaped by

101.89% YoY to ₦20.07B in Q3’18 (vs ₦9.94B in Q3’17).

In Q3’18, the bank’s Operating Income advanced by 10.68% YoY to ₦266.07B from ₦240.39B in Q3’17 with the total Operating

Expense advancing by 12.69% to ₦101.83B from ₦90.36B in Q3’17. Consequently, Profit-Before-Tax for the bank rose by

9.47% YoY to ₦164.25B in Q3’18 from ₦150.03B in Q3’17, while Profit-After-Tax appreciated by 13.26% YoY to ₦142.22B

from ₦125.58B in Q3’17.

GUARANTY reported a 1.11% increase in Gross Earnings in FY’17 from ₦414.60B to ₦419.20B and Profit After Tax was higher by 28.87%

from ₦132.28B to ₦170.47B. EPS settled higher at 603kobo increasing by 29.12% from 467kobo in FY’16.

The bank declared an interim dividend of 30kobo in H1’18. Total dividend for FY’17 was 270kobo/share indicating a 35.00% YoY

increase from its FY’16 total dividend of 200 kobo/share.

Ex-Div. Date: 15-Aug-18; Payment Date: 30-Aug-18. (Interim Dividend)

Our valuation of FORTE OIL PLC (herein referred to as “FO” or “the Company”) currently indicates an upside potential

of 11.49%, hence we place a HOLD rating on the stock.

FO declined by 7.06% WoW to settle its YtD return at 3.14%.

In Q3’18 FO’s Revenue grew by 39.37% YoY to ₦94.81B from ₦68.03B recorded in Q3’17. The Profit After Tax (PAT)

also surged significantly by 80.11% YoY to ₦9.14B (vs. ₦5.07B in Q3’17). EPS moved to 172kobo from 50kobo in Q3’17,

while the Trailing 12M EPS settled at 411kobo.

The gross profit margin for the period saw a contraction, as it reduced to 8.92% in contrast to 10.86% in Q3’17 due to

the 42.40% YoY rise in Cost of Sales to ₦86.35B.

FO’s OPEX increased by 7.67% YoY to ₦7.04B, while the Operating Profit advanced from ₦1.44B to ₦2.56B. PBT from

continuing operations settled at ₦375.89mn (+179.20%), while PAT from discontinued operations was ₦9.06B

(+58.95% YoY). Consequently, PAT in the period settled at ₦9.14B compared to ₦5.07B in Q3’17.

On 23-Apr-18, FO notified the NSE that the company had obtained exclusive right for the distribution of Chevron’s Havoline

Motor Oils. The company further announced that they shall commence the marketing of the product from 25-Apr-18.

Also, reports are rife on the ongoing bid process for part sales of the core investor’s (Femi Otedola) shares. We expect

that the handling of the firm will receive renewed professional management in the medium term (given the major Oil

& Gas companies that are associated with the bid process) once the bid process is over and buyers ascertained.

FO’s Revenue in FY’17 dropped by 12.89% from ₦148.61B to ₦129.44B while Profit After Tax on the other hand increased by

323.00% to settle at ₦12.23B (FY’16: ₦2.89B). EPS inched by 45.23% from 199kobo to 289kobo.

For FY’17 the Company did not declare any dividend.

Ex-Div. Date: ; Payment Date:


Page | 8


GUINNESS Price: ₦72.00 Target Price: (₦109.85 – ₦134.26) Rating: STRONG BUY

P/B : 1.78 P/E : 15.00 Upside: 69.52% Div. Yield: 2.56% 1 Yr Range: ₦72.00– ₦120.25

INTBREW Price: ₦31.50 Target Price: (₦30.76 – ₦37.59) Rating: HOLD

P/B : 7.68 P/E : - Upside: 8.49% Div. Yield : - 1 Yr Range: ₦29.45 – ₦64.00

Our valuation of GUINNESS NIGERIA PLC (herein referred to as “GUINNESS” or “the Company”) currently indicates an

upside potential of 69.52%, hence we maintain a STRONG BUY rating on the stock.

GUINNESS traded flat in the week to maintain its YtD return at 0.00%.

In Q1’19 (3M ended 30-Sep-18), Revenue for GUINNESS declined by 6.05% YoY from ₦29.90B to ₦28.09B and its Profit After

Tax surged by 1,918.69% YoY from ₦41.40M to ₦835.66M. EPS also surged by 1,166.67% to 380kobo from 3kobo in Q1’18

(3M ended 30-Sep-17). Trailing 12M EPS holds at 480kobo.

The topline drop recorded in the period in our opinion is not unconnected to pressured consumer discretionary income in

the period, as costs of basic necessities remain relatively high. The Company’s Cost of Sales in the period pared by 2.80% YoY

to ₦18.99B, whilst its Gross Profit declined by 12.18% YoY to ₦9.11B in Q1’18.

Operating Expense for GUINNESS pared by 3.22% YoY to ₦7.64B, while Finance Cost declined by 84.54% YoY to ₦593.11M.

Operating Profit in the period declined by 37.34% YoY to ₦1.66B from ₦2.65B in Q1’17. Subsequent on the massive drop in

Finance Cost in the period, PBT and PAT for GUINNESS surged by 2,868.66% and 1,918.69% YoY to ₦1.23B and ₦835.66M

respectively.

In FY’18 (12M ended 30-Jun-18), Revenue for GUINNESS advanced by 13.55% YoY from ₦125.92B to ₦142.98B and its Profit

After Tax advanced by 249.20% YoY from ₦1.92B to ₦6.72B. EPS also advanced by 157.81% to 330kobo. Trailing 12M EPS holds

at 330kobo.

The Company declared a dividend of 184kobo per share for FY’18 compared to 64kobo in FY’17.

Ex-Div. Date: 21-Sep-18; Payment Date: 24-Sep-18.

Our valuation of INTERNATIONAL BREWERIES PLC (herein referred to as “INTBREW” or “the Company”) currently

shows an upside potential of 8.49%, hence we maintain a HOLD recommendation on the stock.

INTBREW advanced by 3.28% WoW to close its YtD return at 3.28%.

INTBREW’s Q3’18 Revenue grew by 128.17% YoY to ₦83.35B while the Company recorded a Loss After Tax of ₦7.14B,

from a Profit After Tax position of ₦1.43B in Q3’17. EPS settled at a loss position of 83kobo from a profit position of

17kobo in Q3’17, while the Trailing 12M EPS settled at a loss of 83kobo.

The Company’s impressive topline performance is a reflection of the merger it undertook with Intafact Beverages

Limited and Pabod Breweries Limited, vis-à-vis improved FX availability in the economy stemming from increased FX

earnings to the FGN and the implementation of the Investors/Exporters window. Finance Cost for INTBREW advanced

by 61.65% YoY to ₦11.20B from ₦6.93B in Q3’17, while the Operating Expense surged by 110.39% YoY to ₦25.73B on

the back of large one-off costs during the merger.

Consequent on the jump in operating expense and finance cost relative to the topline growth, INTBREW recorded Loss

Before Tax and Loss After Tax positions to the tune of ₦9.19B and ₦7.14B, as against Loss Before Tax and Profit After

Tax positions of ₦3.20B and ₦1.43B in Q3’17.

Due to the concluded merger between Anheuser-Busch InBev-International Breweries Plc, Intafact Beverages Limited and

Pabod Breweries Limited, the total issued and fully paid up shares of International Breweries moved to 8.596bn ordinary shares

from 3.294bn.

In FY’17 (FY ended 31-Mar-17), INTBREW’s Revenue grew by 40.58% YoY to ₦32.71B, while PAT declined by 61.01% to ₦1.03B

due to the 203.95% spike in Finance Cost (FX related issues). EPS was also down at 31kobo from 81kobo (FY’16).

The Company did not declare a dividend for YE’18 (Dividend Per Share of 35kobo was declared for FY’16).


Page | 9


JBERGER Price: ₦23.25 Target Price: (₦32.79-40.07) Rating: STRONG BUY


MOBIL Price: ₦184.80 Target Price: (₦195.15 – ₦238.52) Rating: BUY


Our valuation of JULIUS BERGER NIGERIA PLC (herein referred to as “JULIUS BERGER” or the “Company”) currently shows

an upside potential of 56.69%, hence we recommend a STRONG BUY on this stock

JBERGER advanced by 15.67% WoW to settle its YtD return at 15.67%.

In Q3’18, JBERGER’s Revenue advanced by 12.31% YoY to ₦118.47B, while it recorded Profit After Tax of ₦3.40B compared

to a loss position of ₦350M in Q3’17. EPS advanced by 12,500.00% to 504kobo from 4kobo. The Trailing 12M EPS of the

stock holds at 861kobo.

The Company’s Gross Profit settled at ₦24.36B (-8.89% YoY) from ₦26.74B in Q3’17 due to the 19.51% YoY rise of its Cost-

of-Sales to ₦94.11B (vs ₦78.74B in Q3’17).

Operating Expense declined by 14.63% YoY to ₦19.41B vs ₦22.73B in Q3’17, translating to an advance in Operating Profit

(+29.20% YoY) to ₦8.52B, while it recorded Other Gains of ₦3.56B (+37.76% YoY). The Company’s PBT advanced by

6,098.95% YoY to ₦5.06B from ₦81.56M in Q3’17. Consequently, JBERGER recorded a Profit After Tax of ₦3.40B compared

to a Loss After Tax of ₦350M in Q3’17.

In FY’17, JBERGER’s Revenue advanced by 2.08% YoY to ₦141.89B, while it recorded Profit After Tax of ₦2.57B compared to a loss

position of ₦2.40B in FY’16. EPS advanced by 7.44% up at 361kobo. The Trailing 12M EPS of the stock holds at 361kobo.

In Jun-17, JBERGER announced that it has entered into a strategic partnership and joint investment agreement with Petrolan Energy

Limited. In a notification to the NSE, JBERGER said the partnership is for the acquisition and development of oil fields in Nigeria.

According to the Company, the alliance is in line with its strategic goal to diversify into the oil and gas sector.

The Company declared a dividend of 100Kobo/Share for FY’17 (no dividend was declared for FY’16).

Ex-Div. Date 06-Jun-2018 and Payment Date 22-Jun-18. (Final Dividend)

Our valuation of MOBIL NIGERIA PLC (DOUBLE ONE PLC: 11 Plc) (herein referred to as “MOBIL” or “the Company”)

currently indicates an upside potential of 17.33%, hence we place a BUY rating on the stock.

MOBIL declined by 0.38% WoW to peg its YtD return at -0.38%.

In Q3’18 MOBIL’s Revenue advanced by 41.70% YoY to ₦125.04B, while PAT surged by 71.35% YoY to settle at ₦7.87B

(vs Q3’17: ₦4.59B). EPS also advanced by 71.35% from 1,274kobo to 2,183kobo. The Trailing 12M EPS settled at

2,994kobo.

The rise in Revenue is attributed to the Company’s ability to push relatively higher sales volume of petroleum products

locally, as there were no export sales in the period. The Company’s Gross Profit Margin was lower (10.22% vs. 11.95%

in Q3’17) in the period due to the 44.48% YoY increase in Cost of Sales to ₦112.26B.

MOBIL recorded a 20.61% YoY growth in Other Income to ₦6.58B, largely due to the increase in rental income from

its Real Estate business to ₦6.14B. Consequently, MOBIL’s Operating Profit advanced by 26.48% YoY up to ₦11.25B

(vs ₦8.89B in Q3’17). MOBIL’s PBT and PAT settled at ₦11.65B (+70.60% YoY) and ₦7.87B (+71.35% YoY) respectively.

On 13-Jun-18, MOBIL announced its re-entry into retailing of Liquefied Petroleum Gas popularly called domestic cooking gas

after 20 years of exit from the line of business. Also on 23-Nov-18, MOBIL announced its re-entry (after 5 years) into the sale

and marketing of aviation jet fuel (ATK) at the Muritala Mohammed International Airport and General Aviation Terminal (GAT-

Domestic) in collaboration with Air BP after the construction of a new 20 million liter aviation jet fuel (ATK) tank and pipelines

at Apapa. We expect a positive long term benefit to the topline growth of 11 Plc from these reactivated business lines.

MOBIL’s Revenue in FY’17 increased by 33.10% from ₦94.11B to ₦125.26B while Profit After Tax declined by 7.79% settling at

₦7.52B (FY’16: ₦8.15B). EPS was lower by 7.79% from 2,261kobo to 2,085kobo.

For FY’17 the Company declared a dividend of 800kobo/share (same as FY’16).

Ex-Div. Date: 28-May-18; Payment Date: 02-Jul-18.


Page | 10


NB Price: ₦79.50 Target Price: (₦108.05-132.06) Rating: STRONG BUY


NESTLE Price: ₦1,475.00 Target Price: (₦1,358.31-₦1,660.16) Rating: HOLD

P/B : 20.78 P/E : 26.65 Upside: 2.32% Div. Yield : 2.92% 1Yr Range: ₦1,317.00 – ₦1,615.00

Our valuation of NIGERIAN BREWERIES PLC (herein referred to as “NB” or “the Company”) currently indicates an upside

potential of 51.01%, hence we place a STRONG BUY rating on the stock.

NB depreciated by 3.05% WoW to settle its YtD return at -7.02%.

In Q3’18 NB’s Revenue declined by 5.63% YoY to ₦255.00B and PAT declined by 38.40% YoY from ₦24.01B in Q3’17 to

₦14.79B. EPS also declined by 38.40% from 300kobo to 185kobo. The Trailing 12M EPS for NB currently holds at 298kobo.

Just like its brewery counterpart (GUINNESS) in the period, NB’s Revenue was mainly pressured by weak consumer

sentiments, as consumer “free-cash” become stifled. The Company’s Cost of Sales declined by 3.01% YoY to ₦143.35B and

its OPEX in the period advanced by 1.53% YoY to ₦67.63B. Operating Profit settled at ₦27.74B. NB’s Finance Cost declined

by 31.12% YoY to ₦5.51B, while PBT declined by 34.72% YoY to ₦22.47B from ₦34.43B in Q3’17.

We expect that companies in the sector will further engage improved cost-cutting measures in a bid to improve their bottom-

line positions by FYE.

In FY’17 NB’s Revenue increased by 9.82% from ₦313.74B to ₦344.56B while Profit After Tax advanced by 16.30% from ₦28.42B to

₦33.05B. EPS was also advanced by 15.36% from 358kobo to 413kobo.

The Company declared an interim dividend of 60kobo for Q3’18 (vs 100kobo for Q3’17). FY’17 dividend for the Company was

184kobo/share.

Ex-Div. Date: 22-Nov-18; Payment Date: 10-Dec-18. (Interim Dividend)

Our valuation of NESTLE NIGERIA PLC (herein referred to as “NESTLE” or “the Company”) indicates that the stock

currently trades at an upside potential of 2.32% to fair value, therefore we maintain a HOLD recommendation.

NESTLE pared by 0.34% WoW to settle its YtD return at -0.67%.

In Q3’18, NESTLE’s Revenue increased by 9.66% YoY to ₦203.14B while PAT increased by 44.12% YoY to ₦33.12B. EPS

was also higher by 44.12% YoY from 2,899kobo to 4,178kobo. The Trailing 12M EPS for Nestle currently holds at

5,534kobo.

NESTLE’s Cost of Sales advanced by 6.97% YoY to settle at ₦116.99B, while Gross Profit increased by 13.53% YoY to

₦86.15B. OPEX in the period increased by 12.18% YoY to ₦36.79B, whereas Operating Profit increased by 14.56% YoY

to ₦49.36B. Also, NESTLE recorded a 39.47% YoY advance in PBT from ₦34.48B to ₦48.09B. On the other hand Finance

Cost declined by 82.12% YoY from ₦14.89B to ₦2.66B in the period (exacerbated by improved FX sourcing modalities).

In FY’17 NESTLE’s Revenue increased by 34.12% from ₦181.91B to ₦244.15B while Profit After Tax Advanced by 325.54% YoY

from ₦7.93B to ₦33.72B. EPS was also advanced by 325.54% from 1,000kobo to 4,255kobo.

The Company declared an interim dividend of 2,000kobo/share (vs 1,500kobo per share in Q3’17). Also it declared a total

dividend of 4,250kobo/share in FY’17.



Page | 11


PRESCO Price: ₦64.00 Target Price: (₦61.97 – ₦75.74) Rating: HOLD


TOTAL Price: ₦203.00 Target Price: (₦225.41 – ₦275.50) Rating: BUY


Our valuation of PRESCO PLC (herein referred to as “PRESCO” or “the Company”) currently indicates an upside

potential of 7.59%, hence we maintain a HOLD rating on the stock.

PRESCO traded flat in the week to maintain its YtD return of the counter at 0.00%.

In Q3’18, PRESCO’s Revenue declined by 4.07% YoY from ₦16.92B in Q3’17 to ₦16.24B and Profit After Tax declined

by 1.48% YoY from ₦5.36B to ₦5.28B. EPS also declined by 1.48% YoY from 536Kobo to 528Kobo. The Trailing 12M

EPS settled at 2,528kobo.

PRESCO’s Revenue moderated in the current period due to reduced volume sales relative to the corresponding period

in the prior year. The Company’s Cost-to-Sales ratio declined to 24.29% from 29.25% in Q3’17 on the basis of improved

cost management, translating to PRESCO’s Gross Profit Margin increase to 75.71% from 70.75% in Q3’17.

OPEX for PRESCO jumped by 36.09% YoY to ₦4.58B, while the impact of this on its operating profit was minimized by

the 234.24% YoY advance in Gains on Biological Asset Revaluation to ₦370M from a Loss Position of ₦280M in Q3’17.

PRESCO’s Operating Profit declined by 2.14% YoY to ₦8.40B, while its Finance Cost settled at ₦929M compared to

₦636M in Q3’17. Profit Before Tax for PRESCO declined by 6.00% YoY to ₦7.47B (vs ₦7.95B in Q3’17) while its Profit

After Tax declined by 1.48% YoY to ₦5.28B (vs ₦5.36B in Q3’17).

PRESCO posted a 42.31% increase in FY’17 Revenue from ₦15.72B to ₦22.37B and Profit After Tax grew by 16.88% from

₦21.74B to ₦25.40B. EPS also settled higher at 2,536kobo (FY’16: 2,176kobo).

For FY’17 the Company proposed a Dividend Per Share (DPS) of 200kobo (FY’16:150kobo).

Ex-Div. Date: 9-Jul-18; Payment Date: 26-Jul-18. (Final Dividend)

Our valuation of TOTAL NIGERIA PLC (herein referred to as “TOTAL” or “the Company”) currently indicates an upside

potential of 23.38%, hence we maintain a BUY rating on the stock.

TOTAL advanced by 3.57% in the week to close its YtD return at 0.00%.

In Q3’18, TOTAL’s Revenue advanced by 2.58% YoY from ₦221.20B to ₦226.91B, while the PAT advanced by 28.70%

YoY from ₦5.96B to ₦7.67B. EPS also settled at 2,258kobo representing a 28.70% advance from the 1,754kobo

recorded in Q3’17. The Trailing 12M EPS of the stock holds at 2,865kobo.

TOTAL’s Revenue was buoyed by an advance in the sale of Petroleum Products and Lubricants & Others which

advanced by 1.79% and 6.65% YoY to settle at ₦188.38B and ₦38.54B respectively.

Cost-to-Sale ratio of the company moved from 89.78% in Q3’17 to 86.35% in Q3’18 due to improved cost management

measures. Consequently, TOTAL’s Gross Profit surged by 37.02% YoY to ₦30.97B. OPEX in the period increased by

8.90% YoY to ₦17.80B. PBT for TOTAL advanced by 18.20% from ₦9.68B to ₦11.44B, also its Profit After Tax advanced

by 28.70% from ₦5.96B to ₦7.67B.

In FY’17, TOTAL reported a 0.99% decline in Turnover from ₦290.95B to ₦288.06B and a 45.80% plunge in Profit After Tax from

₦14.80B to ₦8.02B. EPS also settled at 2,362kobo representing a 45.80% plunge from the 4,358kobo in FY’16.

The Company declared an interim dividend of 300kobo for Q3’18. A total dividend of 1,700kobo/share was paid in FY’17, same

as for FY’16.



Page | 12


TRANSCORP Price: ₦1.16 Target Price: (₦1.73 – ₦2.11) Rating: STRONG BUY


UACN Price: ₦9.60 Target Price: (₦14.09-17.23) Rating: STRONG BUY


Our valuation of TRANSNATIONAL CORPORATION PLC (herein referred to as “TRANSCORP” or “the Company”) currently

reveals an upside potential of 65.52% to fair value, hence we maintain a STRONG BUY recommendation on the stock.

TRANSCORP plunged by 11.45% WoW to peg its YtD return at -12.12%.

TRANSCORP recorded a 40.71% YoY increase in Revenue from ₦56.76B to ₦79.86B in Q3’18, while PAT settled at ₦15.96B

(+95.02% YoY) compared to a Profit After Tax position of ₦8.19B in Q3’17. EPS was 17kobo (Q3’17: 8kobo). The TTM EPS

for the stock holds at 21Kobo.

The Company’s top-line positive performance was on the back of a 43.05% YoY growth in income from its Power business

to ₦67.19B, whilst it recorded a surge of 29.45% YoY income from its Hospitality business to ₦12.67B. Cost-to-Sales for

TRANSCORP settled at 53.72% (vs 54.86% in Q3’17). The Company recorded ₦36.96B (+44.25% YoY) in Gross Profit and

₦25.93B (+54.25% YoY) in Operating Profit, as the Operating Expense in the period increased by 23.01% YoY from ₦9.40B

to ₦11.56B in Q3’18.

TRANSCORP recorded an advance of 41.07% YoY in FX loss on Financing activities from ₦1.15B in Q3’17 to ₦1.62B in Q3’18,

while its Finance Cost increased by 4.11% YoY to ₦7.49B. Subsequently, PBT for TRANSCORP in Q3’18 settled at ₦17.72B

(+95.54% YoY).

TRANSCORP recorded a 35.10% increase in Gross Revenue from ₦59.42B to ₦80.28B in FY’17, while its PAT advanced by 1041% YoY

to ₦10.61B compared to a Loss After Tax of ₦1.13B in FY’16. EPS was 12kobo (FY’16: Loss of 2kobo).

TRANSCORP declared a dividend of 2Kobo/Share as final dividend for FY’17, (the Company did not declare any dividend in its FY’16).

Ex-Div. Date: 18-Apr-18; Payment Date: 02-May-18. (Final Dividend).

Our valuation of UAC OF NIGERIA PLC (herein referred to as “UACN” or “the Company”) currently shows an upside potential

of 63.13%, hence we maintain a STRONG BUY recommendation on the stock.

UACN declined by 1.54% WoW to close its YtD return at -1.54%.

UACN reported an 18.33% decline in Revenue in Q3’18 to ₦55.76B from ₦68.28B in Q3’17, while it recorded its Profit After

Tax declined by 87.22% YoY to ₦250M from ₦1.98B in Q3’17. EPS settled at 1kobo (vs 79kobo in Q3’17). The Trailing 12M

EPS for the stock stands at a Loss of 28kobo.

The Company’s earnings was thwarted by the combined 31.18% YoY decline in revenue from its subsidiaries, with Animal

Feeds, Real Estate and Other Revenue contributing ₦34.02B in total from ₦49.43B in Q3’17. The Paints segment increased

by 13.19% YoY to ₦7.43B, while Its Logistics subsidiary revenue advanced by 19.13 YoY to ₦4.48B. The Cost of Sales

declined by 20.56% YoY to ₦45.03B to settle the Gross Profit at ₦10.73B from ₦11.60B (-7.43% YoY).

Operating Profit for the Company was 69.99% lower at ₦1.70B, as Operating Expense increased by 6.58% YoY to ₦8.61B.

The Net Finance Cost declined by 47.19% from ₦3.14B to ₦1.66B while Profit Before Tax declined by 84.48% YoY to ₦480M

from ₦3.11B in Q3’17. UACN’s Profit After Tax plunged by 87.22% YoY from ₦1.98B in Q3’17 to ₦250M.

In Feb-18, a disclosure of changes in beneficial ownership of UACN Shares was released by the company to the NSE stating that STANBIC

IBTC Nominees Nig. Ltd., BLAKENEY GP111 Ltd. and THEMIS Capital Management currently hold 8%, 6% and 8% respectively of the

company’s shares outstanding.

UACN reported an 8.00% growth in Revenue in FY’17 from ₦82.57B to ₦84.61B, while Profit After Tax rose by 9.76% from ₦5.16B to

₦5.67B. EPS also settled higher by 25.81% from 155kobo to 195kobo.

For FY’17 UACN declared a Dividend Per Share (DPS) of 65kobo, (35.00% YoY drop from 100kobo declared as dividend for FY’16).

Ex-Div. Date: 15-May-18; Payment Date: 21-Jun-18 (Final Dividend).


Page | 13


UAC-PROP Price: ₦1.74 Target Price: (₦1.46 – ₦1.78) Rating: SELL

P/B : 0.16 P/E : - Downside: 6.90% Div. Yield: 0.00% 1Yr Range: ₦1.44 – ₦3.20

UBA Price: ₦7.90 Target Price: (₦11.43 – ₦13.98) Rating: STRONG BUY


Our valuation of UNITED BANK FOR AFRICA PLC (herein referred to as “UBA” or “the Bank”) currently shows an upside


UBA advanced by 0.64% WoW to settle its YtD return at 2.60%.

For its Q3’18 financial performance, UBA reported its Gross Earnings advanced by 12.26% YoY from ₦333.91B in Q3’17 to

₦374.83B. Similarly, its Profit after Tax advanced by 1.28% YoY from ₦60.92B in Q3’17 to ₦61.70B in Q3’17. However, the

Bank’s Earnings per Share (EPS) declined by 1.15% YoY to 172kobo from 174kobo in Q3’17. The Trailing 12M EPS stood at

220Kobo.

The Bank’s Net Trading and FX Income for the Bank pared by 6.02% YoY from ₦34.48B to ₦32.40B, while Other Income

advanced by 22.01% YoY to ₦4.21B from ₦4.35B in Q3’17. Fees and Commission Income grew by 19.68% YoY to ₦69.28B in

Q3’18 from ₦57.89B in Q3’17. In Q3’18, UBA’s Impairment Loss on Loans and Receivables declined by 17.31% YoY to ₦10.67B

(vs ₦12.91B in Q3’17), its Operating Income advanced by 0.62% YoY during the period to ₦238.36B from ₦236.90 in Q3’17.

UBA’s PBT rose by 1.00% YoY to ₦79.11B, while the PAT also advanced by 1.28% YoY to ₦61.70B in Q3’18.

In FY’17 UBA’s Gross Earnings advanced by 20.31% YoY to ₦461.56B. Its PBT advanced by 16.31% YoY to ₦105.26B while PAT advanced

by 8.75% YoY to ₦78.59B. EPS rose 8.82% YoY to 222Kobo.

The Bank declared an Interim Dividend of 20kobo/share for Q2’18. It also declared a Final Dividend of 85Kobo/share for its FY’17.

Ex-Div. Date: 11-Sep-18; Payment Date: 17-Sep-18. (Interim Dividend)

Our valuation of UACN PROPERTY DEVELOPMENT COMPANY PLC (herein referred to as “UAC-PROP” or “the

Company”) currently shows a downside potential of 6.90%, hence we maintain a SELL recommendation on the stock.

UAC-PROP declined by 8.90% WoW to settle its YtD return at -8.90%.

UAC-PROP’s Revenue declined by 36.57% YoY in Q3’18 to ₦1.99B, while its Loss After Tax settled at ₦4.76B (vs. Loss

After Tax of ₦2.22B in Q3’17). Its EPS recorded a loss of 183kobo in Q3’18 from a Loss position of 85Kobo in Q3’17.

The Trailing 12M EPS holds at a loss of 242kobo/share.

UAC-PROP’s Gross profit for Q3’18 settled at ₦210M as against ₦370M recorded in Q3’17. Gross profit margin however

increased to 10.33% from 11.90% recorded a year ago. OPEX in Q3’18 declined slightly by 1.06% YoY to ₦606.25M from

₦612.75M, while the Operating Loss was ₦490M (vs Operating Profit of ₦1.52B in Q3’17). The Net Finance Cost in the

period settled at ₦3.52B (vs. ₦3.94B in Q3’17). Consequent on the foregoing, Loss after tax for the company in the

current period grew to ₦4.76B from a loss position of ₦2.22B in Q3’17.

On 7-Aug-18, UACN Property Development Company PLC announced the resignation of the Chairman of the Board of Directors,

Mr. Larry Ettah from Board of the Company with effect from 23-Jul-18. The Company also announced the appointment of three

new Directors to its Board. They are Babatunde Kasali, who takes over as the Chairman of the Board of Directors, while Mr. Folasope

Aiyesimoju resumes as the Chief Executive Officer (CEO) and Mrs. Awuneba Ajumogobia as a Non-Executive Director. Mrs. Adeniun

Taiwo assumes the role the Chief Operating Officer (COO) of the company. All the appointments take effect from 6th August 2018.

UAC-PROP’s FY’17 Revenue dropped by 20.24% from ₦4.99B to ₦3.98B, while Loss After Tax of ₦2.95B was recorded in contrast

to FY’16 Loss After Tax of ₦1.55B. EPS also dropped by 63.64% from a loss position of 88kobo to a loss position of 144kobo .

For FY’17 the Company did not declare any dividend.

Ex-Div. Date: ; Payment Date:


Page | 14


SEPLAT Price: ₦640.00 Target Price: (₦691.26 – ₦844.87) Rating: BUY


UNILEVER Price: ₦36.30 Target Price: (₦59.46 - ₦72.67) Rating: STRONG BUY


Our valuation of SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC. (Herein referred to as “SEPLAT” or “the

Company”) currently reveals an upside potential of 20.01%, hence we maintain a BUY rating on the stock.

SEPLAT advanced by 8.02% in the week to close its YtD return at 0.00%.

In Q3’18, SEPLAT’s Revenue advanced by 103.91% YoY to ₦173.71B while it’s Profit After Tax surged by 1,826.42%

YoY to ₦27.97B. Its Earning Per Share jumped by 1,765.97% YoY to 4,798kobo from a Loss position of 288kobo in

Q3’17. Its Trailing 12M EPS was captured at 19,482kobo.

SEPLAT’s topline growth continues to be buoyed by the sustained high price of crude oil relative to last year, with

both crude oil and gas sales advancing by 128.84% and 47.97% YoY to ₦134.85B and ₦38.86B respectively. SEPLAT’s

Cost-to-Sales in Q3’18 dropped to 46.17% (vs. 55.30% in Q3’17) on the basis of sound cost management in the period,

as such translating to a 145.54% YoY jump in Gross Profit to ₦93.51B (Gross Profit Margin; 53.83% vs. 44.70% in

Q3’17). In Q3’18, OPEX for SEPLAT settled at ₦16.87B (vs. ₦17.17B in Q3’17), as its OPEX Ratio plunged to 9.71%

compared to 20.15% in the corresponding period of 2017. Consequently, SEPLAT’s Operating Profit advanced by

396.15% YoY to ₦80.76B, while PBT and PAT settled at ₦65.05B and ₦27.97B from Loss positions of ₦760M and ₦1.62B

correspondingly.

In FY’17 SEPLAT reported a surge in its Revenue by 118.16% YoY to ₦138.28B and its PAT jumped by 278.72% YoY to ₦81.11B.

Its EPS advanced by 280.56% YoY to 14,396kobo, compared to a loss position of 7,973kobo in FY’16.

The Company declared an interim dividend of $0.05/share for Q3’18. In Q1’18, an interim dividend of $0.05/share was also

declared. No dividend was paid in FY’17.


Our valuation of UNILEVER NIGERIA PLC (herein referred to as “UNILEVER” or “the Company”) currently shows an

upside potential of 82.00%, hence we maintain a STRONG BUY recommendation on the stock.

UNILEVER declined by 1.89% WoW to close its YtD return at -1.89%.

In Q3’18 UNILEVER reported a 10.72% YoY boost in Revenue from ₦65.30B to ₦72.31B, while PAT surged by 98.18%

YoY from ₦4.83B to ₦9.57B. The Company’s EPS rose by 30.08% YoY from 128kobo to 166kobo for the period. The

Trailing 12M EPS for the stock holds at 216kobo.

UNILEVER’s topline performance was on the back of impressive growths across all of its revenue generating segments

in spite of pressured consumer income, given that the Brand’s line addresses basic consumer needs which are somewhat

indispensable. The Food Products segment’s Turnover for Q3’18 was ₦34.15B, while the Home and Personal Care

segment Turnover for Q3’18 came to ₦38.16B. Cost of Sales in the period increased by 10.64% YoY to ₦49.45B, while

the OPEX grew by 23.24% YoY to ₦14.63B. UNILEVER’s Operating Profit increased to ₦10.47B (+19.78% YoY), while

the Finance Cost declined by 90.26% YoY to ₦274M. Overall, PBT for UNILEVER in the period advanced by 94.09% YoY

to ₦12.65B, while the PAT grew to ₦9.57B (+98.18% YoY).

In FY’17, the Company recorded Revenue growth of 30.09% YoY to ₦90.77B, while PAT surged by 142.52% YoY to ₦7.45B.

Earnings Per Share in the period settled at 178kobo (+119.75%).

Dividend proposed of 50kobo/share for FY’17 (400.00% advance from 10kobo/share for FY’16).

Ex-Div. Date: 16-Apr-18; Payment Date: 11-May-18.


Page | 15


WAPCO Price: ₦11.30 Target Price: UNDER REVIEW Rating: UR

P/B : 0.74 P/E : - Upside: UR Div. Yield : 13.27% 1Yr Range: ₦11.30 – ₦55.26

ZENITHBANK Price: ₦21.70 Target Price: (₦32.99 – ₦40.33) Rating: STRONG BUY


Our valuation of LAFARGE AFRICA PLC (herein referred to as “WAPCO” or the “the Company”) is currently UNDER REVIEW.

WAPCO pared by 9.60% WoW to settle its YtD return at -9.24%.

For its Q3’18 WAPCO’s Revenue advanced by 4.75% YoY from ₦223.67B in Q3’17 to ₦234.30B while the Loss After Tax of the

company settled at ₦10.37B (-1205.98% YoY) from a Profit After Tax position of ₦938M in Q3’17. EPS also declined by

1300.00% YoY to a loss per share of 120kobo compared to EPS of 10kobo in Q3’17. The Trailing 12M EPS for the stock holds

at a loss of 761kobo.

WAPCO’s Gross Profit pared by 3.14% YoY to ₦56.09B due to the upward movement in Cost of Sales (+7.51% YoY to

₦178.21B) in the period with the Company’s Cost-to-Sales ratio advancing to 76.06% (vs. 74.11% in Q3’17).

WAPCO’s Operating Expense grew by 15.34% YoY from ₦32.15B in Q3’17 to ₦37.08B in Q3’18, while it recorded its Operating

Profit declined by 33.29% YoY to ₦19.13B in Q3’18 (vs ₦28.68B in Q3’17). The company recorded a 21.38% YoY rise in Net

Finance Cost to ₦33.48B in the period, the Loss Before Tax settled at ₦14.36B (vs. -1413.21% YoY to ₦1.09B Profit Before

Tax in Q3’17), while the Loss After Tax held at ₦10.37B (vs -1205.98% YoY to ₦938M Profit After Tax in Q3’17).

In FY’17, WAPCO’s Revenue advanced by 36.16% YoY to ₦299.15B, while it recorded a Loss Before Tax of ₦34.03bn. Loss After Tax

settled at ₦34.60B (-304.76% YoY). EPS was at a Loss of 631kobo.

On 04-Dec-18, WAPCO announced its decision to raise ₦89.21B by way of Rights Issue at ₦12.00 per share by issuing 6 new shares

for every 7 shares held by the shareholders. The Right’s price will be a 10.45% discount on its traded closing price on 03-Dec-18. The

company declared the Qualification date is the 4-Dec-18 while the offer open and close dates are 17-Dec-18 and 23-Dec-18

respectively.

The company declared a dividend of 150kobo per share in FY’17, compared to a dividend of 105Kobo in FY’16.

Ex-Div. Date: 23-Apr-18; Payment Date: 16-May-18. (Final Dividend)

Our valuation of ZENITH BANK PLC (herein referred to as “ZENITHBANK” or “the Bank”) currently shows an upside


ZENITHBANK declined by 5.65% WoW to settle its YtD return at -5.86%.

In its Q3’18 financial performance, ZENITHBANK reported its Gross Earnings declined by 10.66% YoY from ₦531.27B

in Q3’17 to ₦474.61B while PAT advanced by 11.56% YoY from ₦129.24B to ₦144.18B. EPS also increased by 11.44%

from 411kobo to 458kobo. The counter’s Trailing 12M EPS holds at 613kobo.

The decline in the Bank’s Gross Earnings came from the drop in Interest and Similar Income to ₦339.06B (vs. ₦361.79B

in Q3’17). Fees & Commission Income in the period declined by 1.48% YoY to ₦69.97B (vs. ₦71.02B in Q3’17), while

it’s Trading Income also declined by 35.30% YoY to ₦52.93B (vs. ₦81.81B in Q3’17). The Bank recorded a significant

drop in its Impairment Loss on Financial Assets with a decline of 69.53% YoY to ₦14.34B from ₦47.05B in Q3’17.

The Bank reported a 46.69% YoY growth in Gross Revenue in FY’17 from ₦508.00B to ₦745.19B while PAT grew by 37.24%

from ₦129.65B to ₦177.93B. EPS also increased by 37.24% from 413kobo to 566kobo.

The Bank declared an interim dividend of 30kobo in the period (H1’18). A final dividend per share of 245kobo was paid for

FY’17 (total dividend per share of 270kobo) compared to the total dividend of 202kobo per share paid in FY’16.

Ex-Div. Date: 20-Aug-2018; Payment Date: 29-Aug-2018. (Interim Dividend)


Page | 16


NISL Rating System

STRONG BUY > 35% Upside

BUY 15% - 35% Upside

HOLD (5)% – 15% Upside

SELL < (5)% Downside

Metric Definition

P/E* Price to Earnings

P/B** Price to Book

Target Price One year Price Estimate

Div Yield* Dividend Yield

SHO (M)** Shares Outstanding

UR Under Review

Ex Div* Closure date

*Annualized, **Most Recent Quarter

Copyright © 2018 Nigerian International Securities Limited (“NISL”). All rights reserved. Unauthorized use, reproduction, distribution or disclosure of this document is strictly prohibited. This

material has been issued by Nigerian International Securities Limited (“NISL”), a Company regulated by the Nigerian Securities

and Exchange Commission. The analyst(s) primarily responsible for preparing this research report, in whole or in part, certifies

that with respect to each security or issuer covered; all of the views expressed accurately reflect his/her personal views about

the subject securities and issuers and no part of his/her compensation was, is, or will be, directly or indirectly, related to the

inclusion of specific recommendations or views in the report. This research report is based on information from sources that

NISL and its analysts believe to be reliable. Neither NISL nor any of its research analysts, gives any representation or warranty,

express or implied, or undertaking of any kind or assumes responsibility or liability of any kind with respect to the accuracy or

completeness of the information set out in this report or any third party’s use (or the results of such use) of such information.

This report is provided solely for informational purposes and is not to be construed as providing advice, recommendations, or

endorsements of any kind whatsoever. The investments and strategies discussed here may not be suitable for all investors;

counsel of investment advisor should be obtained with regard to such investments and or strategies. This research report is not

a replacement for advice from an accountant, lawyer, personal finance advisor or other category of investment advisor. The

investments discussed in this report may oscillate in price or value. Opinions and information provided are made as of the date

of the report issue and are subject to change without notice. This research report is not intended as an offer or solicitation for

the purchase or sale of any financial instrument. Reference herein to any specific security or financial instrument does not

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weekly stock recommendations -jan 19€¦ · 07.01.2019 · nigerian international securities...

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