The Nigerian equity market closed the week negative, with the NSE ASI shedding 2.51% WoW to close at 30,636.36 points. The bearish performance was driven by losses in the most sectors – Banking (-2.66%), Brewers (-6.43%), Cement (-2.07%), Construction (-4.48%), Food (-2.25%) and Insurance (-0.74%). Further breakdown of the performance reveals that sell pressure prevailed across bellwether stocks (ACCESS: -6.15%, FBNH: -3.92%, UBA: -7.14%, GUINNESS: -8.45%, NB: -7.38%, DANGCEM: -2.06%, SEPLAT: -1.85% and MANSARD: -0.51%).
Dangote Cement Plc – STRONG BUY (FVE: N253.03). We have lowered our FVE on DANGCEM to N253.03 largely due to a downward revision of 2019 volume growth due to electioneering concern which has slowed ongoing infrastructure projects. However, we believe DANGCEM presents an attractive entry point in the cement sector in Nigeria given its strong and diversified margins and balanced funding structure.
Unilever Plc – STRONG BUY (FVE: N49.19). We have a STRONG BUY rating on UNILEVER with our FVE of N49.19 (+34.6% upside), supported by our expectation of strong growth from the food business over 2019, given its resilience over the last two years – having maintained a double-digit growth. In addition, given Unilever’s strong cash balance and our anticipation of slight uptick in yields, we expect the company to report a higher net finance income over the year.
PZ Cussons Plc: SELL (FVE: N10.93). We believe operating profit will come in weaker than the prior year, as competition with imported substitutes guides to weaker revenue of N76.7 billion (-4.8% YoY). We have a FVE of N10.93 on PZ, which translates to a SELL rating based on last trading price. On our numbers, PZ trades at a P/E of 42.9x, which is a premium to its Bloomberg MENA peer average of 32.2x.
Fidelity Bank Plc – OVERWEIGHT (FVE: N2.92). With our estimates suggesting a solid performance for 2018, we have rolled forward our model and maintain our TP on the stock. Beyond our modeled expansion in Net Interest Margin over 2019, we expect stronger support from NIR (+19% YoY) during the year which will be central to earnings over 2019. Our estimates put PBT at N30 billion (+16% YoY) with EPS printing at N0.95 (+17% YoY).
Okomu Oil Palm Plc – OVERWEIGHT (FVE: N97.75): Over our forecast period, we anticipate volumes growth emanating from the harvest of fresh fruit bunches from its extension 2 plantation. Based on our expectation for volumes growth, accompanied by margin expansion, we raise our FVE to N97.75.
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