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In a twist of events, the Nigerian Bourse closed negative last week, with the NSE ASI shedding 2.05% WoW to close at 30,432.13 points, with market capitalization dropping by N449.16 billion. The bearish sentiment was spurred by losses recorded across all sectors; Banking (-0.96%), Cement (-5.13%), Construction (-5.44%), Personal care (-2.62%), Food (-1.69%), Insurance (-1.48%) and Oil & Gas (-11.90%). Dissecting the sector performance reveals selloff across various stocks such as GUARANTY: -3.80%, DANGCEM: -5.26%, PZ: -9.26%, UNILEVER: -0.16%, DANGSUGA: -12.88%, SEPLAT: -6.64% and MTN: -0.33%.

• Dangote Cement Plc – STRONG BUY (FVE: N248.14): Dangote Cement Plc (Dangcem) Q1 2019 result showed decline in group revenue by 0.8% YoY to N240 billion, largely emanating from Nigeria. However, the high base of effective tax rate in the prior year, resulted in much softer decline for EPS to N3.54 from N4.23 in Q1 18. Going into 2019, we forecast slower growth in our PBT stemming from i) downward revision of our 2019 and 2020 volume forecast; ii) downward adjustment to revenue per ton; and (iii) reduction in our gross margin estimates to 57.8% from 58.3%.

• Seplat Petroleum Development Company Plc – STRONG BUY (FVE: N782.15). Seplat recorded a decline in EPS by 53% QoQ to $0.06 over Q1 19 following drop in revenue as well as increased over lift in the period and loss on derivatives. We have reduced our FVE on the stock following moderated expectation on capital allowance and increase in our cost per boe estimates which led to a reduction in our forecast 2019 EPS to $0.33 from $0.43.

• Guaranty Trust Bank Plc – STRONG BUY (FVE: N49.66): GTB Q1 19 revealed a double-digit expansion in EPS (+16% QoQ to N1.68) on the back of lower funding cost as well as strong NIR. Although, we expect a slower growth in EPS (+4% YoY to N6.53) over 2019, our case for GUARANTY remains the resilience in NIR, improved cost management, still strong loan book with a moderate expansion in credit loss provision to 0.5%.

• Fidelity Bank Plc – BUY (FVE: N2.92): Fidelity bank kicked off the year on a good note with the bank posting EPS growth of 17.2% QoQ to N0.21 largely due to support from a higher interest income and lower OPEX. Despite an expected decline in NIR for the bank, we expect Fidelity to record a modest growth in earnings over 2019 on account of our expectation of higher loan growth as well as moderation in funding cost. We forecast a 11% increase in EPS (N0.88) over 2019 and thus maintain our BUY rating with an FVE of N2.92.

• CCNN Plc – BUY (FVE: N22.87): We had earlier noted the solid volumes reported by CCNN in its Q1 19 financials. As a result, we now see increasing volume growth on the horizon with our forecast average capacity utilization of 88% and domestic market share of 5.6% by FY 2023 (FY 18: 3.1%). Additionally, we see increased efficiency on the company’s new plant translating to improvement in margins with average estimate of 48% (previously: 43%). Consequently, we have raised our FVE to N22.87 (previous estimate of N17.31) which translates to a BUY on our rating.

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