The Nigerian Stock Exchange (NSE) All Share Index closed down 4.21% for the month of March at 41, 504.51 basis points . Year to date however, the index is up 8.54%
Here are our BUY and SELL recommendations for April.
Stocks to buy
Seplat Petroleum Development Company Plc
Though Seplat failed to give significant price appreciation last month, we still retain it on our “buy” list for this month. Year to date, the stock is up just 6.21%, underperforming the NSE All-Share Index.
The worst is over for the company as the Niger Delta remains relatively peaceful and it successfully raised bonds to reschedule its debt. Crude oil prices also remain relatively stable and are trading much higher than last year.
Custodian and Allied Insurance Plc
Custodian last week released impressive FY 2017 results. While the stock usually traded within a tight band of N3-N4, it has since broken that ceiling and is at a year high of N4.96. It could witness further upside as investors buy in to benefit from the proposed dividend.
Ecobank alongside Stanbic IBTC Holdings are the only tier two banks to have released FY 2017 results. While investors have been largely neutral, perhaps due to the absence of a dividend payment, Q1 2018 results could provide a reason to cheer. The bank has made significant impairment in the last two years. Q1 2018 results could show an improved performance.
Stocks to sell
AXA Mansard last week released its FY 2017 statements and profits were flat. This was largely due to a sharp increase in net claims expenses.
Mansard is currently trading at a PE ratio of 12 times which is overpriced. The dividend yield of 2.2% is rather low. Year to date, the stock has gained 25%, making it one of the best-performing stocks in the insurance sector.
Highinterest rates which were a boon for firms in the financial services space have since tapered down and could drop further. Investors would be better off exiting pending the release of its Q1 2018 results.
Afriprudential Plc had a bumper FY 2017 on the back of a massive increase in investment income. This was primarily due to the high yields on treasury bills.
Interest rates have since tapered down, and possibilities of a similar bumper income this year are slim. Investors would be better off selling the stock, to re-enter depending on its Q1 2018 results.
Newrest ASL Nigeria Plc (Air Service Limited)
ASL last week released its FY 2017 results, and they were a massive decline. Revenue fell by 23% from N5 billion in 2016 to N3.9 billion in 2017. Profit before tax also fell sharply by 66% from N1.1 billion in 2016 to N386 million in 2017, largely due to the absence of revenue from its Rwandan subsidiary and a drop in FX gains. ASL last year sold its stake in its Rwandan subsidiary.
The stock is currently trading at 7 times earnings and is down 17.65% year to date. The stock could witness further downside in coming weeks in view of the poor result.
GSK Consumer Nigeria Plc
GSK Consumer Nigeria is up 57% year to date, largely on news of a special dividend. Investors would be better off cashing their gains now as the euphoria dies down, and wait for Q1 2018 results.
NPF Microfinance Bank Plc
NPF Microfinance Bank is currently trading at a year high of N2.12 and last week released its FY 2017 results. The bank has also declared a final dividend of N0.17 per share.
Year to date, the stock is up 69%. Investors at this point would be better off exiting their positions and wait for Q1 2018 results for further directions.
Fidson Healthcare Plc
Fidson last week released bumper FY 2017 results. Profit before tax was up 456% from N443 million in 2016 to N1.5 billion in 2017. The company also declared a final dividend of N0.20 per share.
Year to date, the stock is up 54%. Investors would be better off selling the stock to cash their gains, as the results appear to have factored in the current run in price over the past 12 months.