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Activities in the Nigeria equities market was bearish in the past week, with the NSE ASI declining by 0.60% WoW to 30,681.50 points and market capitalization shedding about N61.8 billion over the week. The loss was driven by declines in bellwether stocks in the banking (FBNH: -1.97%, STANBIC: -2.34% and ZENITH: -2.34%), Breweries (NB: -0.63%) and Food (NESTLE: -6.39%) sectors. Top decliners during the week were MOBIL (-10.41%), CONOIL (-10.00%) and CUTIZ (-9.64%).

 Fidelity Bank Plc – BUY (FVE: N2.92). We are more optimistic on our earnings expectation over 2018 largely on the back of lower loan-loss provisioning. We have revised our FY 18E EPS higher to N0.82 (previously N0.76) which is 25% higher YoY. Our FVE of N2.92 (previously N2.82) translates to a BUY rating on the stock. Based on Friday’s closing price, our dividend expectation translates to a dividend yield of 8%.

 Nigerian Breweries Plc – SELL (FVE: N76.58): Reflecting the industry competition and further declines in volumes into Q4 18, we forecast FY 18E revenue to decline by 6.8% YoY to N321 billion. However, we envisage cost pressures due to rising barley prices. Thus, we forecast FY 18E gross margin at 40.8% (FY 17: 41.7%) and EBIT margin of 12.6% (FY 17: 17%). Having rolled forward our model, we cut our FVE on NB to N76.58, translating to a SELL.

 Unilever Nigeria Plc – STRONG BUY (FVE: N47.58). Unilever is our top pick in the consumer space with FY 18E EPS expectation of N2.11 (+18.2% YoY), based on revenue growth (+9.7% YoY) and significant moderation in interest expense (-90.1% YoY) – following the sizeable deleveraging of its balance sheet.

 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 2018 and 2019 volume growths. The revision reflects the impact of the prolonged rainy season and electioneering concerns which has now 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.

 Lafarge Africa Plc – SPECULATIVE BUY (FVE: N18.07). We have lowered our FVE on Lafarge to N18.07 as we now expect a more significant dilution from the N89 billion Rights Issue and a downward revision to our 2019 volumes growth. Based on current price, our FVE translates to a BUY. However, we are highly cautious on Lafarge and thus rate the stock a SPECULATIVE BUY.

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