Ladi Balogun - nairametrics
Ladi Balogun, Group CEO FCMB. Source: Guardian

The current bearish trend on the Nigerian Stock Exchange offers an opportunity for investors to rebalance their portfolios — sell stocks that have over-performed and buy stocks trading at a discount.

Ladi Balogun
Ladi

Stocks to watch this week 14th May 2018(Opens in a new browser tab)

Buy/Sell/Hold is a weekly column which samples opinions on a variety of stocks that are picked from gainers and losers of the previous week, as well as analyst reports by several investment houses.

Ikeja Hotel Plc: SELL

Latest results: Results for the first quarter ended March 2018 show that revenue increased from N2.7 billion in 2017 to N3 billion in 2018. Profit before tax increased from N80 million in 2017 to N328 million in 2018. Profit after tax increased from N40 million to N220 million.

Current Share price: N2.70

PE ratio:  5.34X

Price to Book: 1.33

Year to date: 51.69%

One year: 51.69%

Latest information

A technical suspension placed on the company’s shares was lifted last week.

External View

NONE

Our view

Ikeja Hotels is a SELL in Nairametrics’ opinion.While the stock is trading at a lower PE ratio compared to its peer, Transcorp Hotel, with a PE ratio of 19.52 times earnings, the rise in the price has been largely due to the lifting of a technical suspension last week. The stock is also trading at an all time high currently. Investors would be better off waiting for a dip before entering.

AIICO Insurance Plc: BUY

Latest results: Results for the first quarter ended March 2018 show that gross premium written increased from N7 billion in 2017 to N10.7 billion in 2018. Profit before tax increased from N673 million in 2017 to N973 million in 2018. Profit after tax rose from N547 million in 2017 to N805 million in 2018.

Current Share Price: N0.57

PE Ratio: 2.86x

Price to Book: 0.46

YTD: 9.62%

One year: 20.78%

 

External view

Analysts at Afrinvest have a reduce rating on AIICO. The firm has a new target price of N0.52 per share, which is lower than its current share price of N0.57. They expect a downside of 8.8%.

Our View

AIICO is a BUY in Nairametrics’ view. The stock is currently trading 35% below its year high of N0.88. AIICO is also trading at a discount compared to peers like AXA Mansard which is trading at 12 times earnings and Continental Reinsurance with a PE ratio of 4.72 times earnings.

Flour Mills of Nigeria Plc: HOLD

Latest Results: Results for the 9 months ended December 2017 show that revenue increased from N389 billion in 2016 to N427 billion in 2017. Profit before tax also rose from N10.2 billion in 2016 to N19.5 billion in 2017. Profit after tax increased from N7.4 billion in 2016 to N13.2 billion.

Current Share Price: N30.10

PE Ratio: 6.29x

Price to Book: 0.73

YTD:   3.79%

One year: 67.73%

 

Latest information

The company last month signed a partnership agreement with Corteva Agriscience for the development of maize seedlings.

External View

Analysts  at Afrinvest have a HOLD recommendation on the stock. They have a target price of N31.57, which is 7% above the current price of N29.50 as at the date of the report.

Analysts at Morgan Capital have also placed a HOLD recommendation on the stock. They have a target price of N32.39, which translates to a 9.81% upside from its share price of N29.50 as at when the report was prepared. Their view is based on a 12 month target price.

Our View

Flour Mills is a HOLD in Nairametrics’ view. While the company’s results have shown superb improvement from the prior period, the stock is trading at 20.7% from its year high of N38. Current bearish sentiments in the market mean that it could drop even further.

FCMB Plc: BUY

Latest results: Results for the 12 months ended December 2017 show that gross earnings dropped from N176 billion in 2016 to N169 billion in 2017. Profit before tax fell from N17 billion in 2016 to N9.4 billion in 2017. Profit after tax also dropped sharply from N14.3 billion in 2016 to N9.4 billion in 2017.

Current Share Price: N2.00

Pe Ratio: 3.82x

Price to Book: 0.22

YTD: 35.14%

One year: 75.16%

External view

Analysts at Afrinvest have placed a SELL rating on FCMB. They have a target price of N1.66 which indicates a downside of 24.5% from its current price of N2.20 as at when the report was prepared.

Analysts at Morgan Capital have a BUY rating on the stock. They have a 12-month target price of N3, which indicates a likely upside of 36.54% from the price of N2.20 as at when the report was prepared.

Our View

FCMB is a BUY in Nairametrics’ view. The stock is currently trading 44% below its year high of N3.61, and also trading at PE ratio within the range of its peers such as Fidelity Bank.

This is not a buy sell or hold recommendation. Remember to consult a competent financial analyst or stockbroker if you need help with your investment decisions. 

@Nairametrics

Nairametrics

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

5 COMMENTS

  1. Pls can I know the maximum total percentage charged by stock brokers, cscs, nse, etc (altogether) for sell or buying shares. Thanks

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