Arica focused investment bank Renaissance Capital has come out with a note this morning upgrading UBA to a buy with a target price of N9.4 per share.
That’s a whooping 91 percent upside to its closing price of N4.9 on Friday.
RenCap says it recently met with top management of UBA to discuss the rising contributions to the group from Africa (ex-Nigeria).
According to RenCap:
“Improving contribution from the rest of Africa (ex-Nigeria) has helped mask slower earnings growth in Nigeria – six years ago, UBA Africa (ex-Nigeria) was loss-making, but it turned the corner in 2011, with contribution to group PBT rising to 10% in 2012. By FY15, this had almost tripled, to 26% and we estimate this rises to c.30% in 2016 on translation effects due to Naira depreciation. On the other hand, the Nigerian operation recorded a loss in 2011, but has remained profitable (albeit volatile) since then. From an RoE standpoint, Nigeria’s RoE has been falling (FY12: 43%; FY15: 20%), due to falling RoA and gearing, but opposite trends in Africa have helped to offset some of Nigeria’s weakness (FY12: 8%; FY15: 20%).”
See report below