I guess for Renaissance Capital bank analysts its better late than never.
After their last research report on FBN Holdings in December that recommended a Hold with target price of N6.6, the investment bank has updated its research on FBNH today with a Sell rating and target price of N3.3, after the company issued a profit warning.
According to Rencap:
“Our asset quality concerns have further been validated with today’s profit warning. The wording says earnings will be ‘materially lower’ than FY14 but we are unsure if this implies a loss or meagre earnings for the year. On our numbers, we currently forecast a 59-64% YoY decline in PBT and PAT for FY15 to NGN38bn and NGN30bn respectively, implying RoE of 5.7% down from 17% and 12% in FY14 and 9M15, respectively. Management’s CoR guidance post 9M15 results were 3.5%; we’re at 4%. Now, whether 2015 will be a proper kitchen sinking or just the beginning of a medium term asset quality clean-up is unclear but we will be receiving guidance from management post release of FY15 results which should be published late March.”
Rencap notes that the question investors would probably be asking is: post FCMB and FBNH profit warnings, do we expect others to follow suit?
And says; “We think the chances are high, particularly for our SELL rated names. FBNH closed trading yesterday at NGN3.63 and is currently down 4.4% in today’s trading to NGN3.47 on full offer. At current price, the stock is trading at 0.2x FY16E P/B and we maintain our SELL rating.”
Ouch!!
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Rencap Today (Feb 24)
Ticker: FBNH NL
Rating: SELL
Target price: NGN3.3
Current price: NGN3.63
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RenCap in December
Ticker: FBNH NL
Rating: HOLD
Target price: NGN6.6
Current price: NGN4.7
Jokers!!. All banks are giving sell signals.. infact almost all stocks on NSE aside from FO and BetaGlass.
You’re unfortunately drawing quite an illiterate time parallel in your analysis above, showing you don’t understand how sell side research works.