Connect with us
nairametrics
UBA ads

Business News

These stocks could benefit from the reopening of Apapa port roads

Businesses operating in the Apapa axis may witness some relief.

Published

on

Businesses operating in the Apapa axis may witness some relief soon as the Managing Director of the Nigerian Ports Authority (NPA), Hadiza Usman recently disclosed that the Apapa Wharf road will be reopened next month.

The road leads to the Apapa port, the busiest in the country. She also stated that rehabilitation of the roads leading to the Tin Can port would commence soon.

UBA ADS

The reconstruction is worth N4.3 billion and is being funded by the Dangote Group, NPA and Flour Mills of Nigeria (FMN) Plc.

The following stocks may witness improved performance following the reopening of the road.

Dangote Sugar

Dangote Sugar could witness a rebound in its operations for the remaining quarter of the year. The company had blamed the poor state of roads leading to the Apapa ports as one of the factors behind its poor H1 2018 performance.

GTBank 728 x 90

Revenue dropped from N118 billion in 2017 to N84 billion in 2018. Profit before tax dropped from N25.2 billion in 2017 to N19.9 billion in 2018. Profit after tax also fell from N17.1 billion in 2017 to N12.7 billion in 2018.

The company refines its sugar at its Apapa facility and then distributes to the rest of the country. Difficulty accessing the port limited the volume of goods that could be evacuated.

Dangote Sugar is currently trading at N15.15 in today’s trading session on the NSE, down 0.33%.

Deal book 300 x 250

Dangote Flour Mills

Dangote Flour Mills also operates its facilities out of the Apapa port. The company also had a drop in revenues. Revenue for the half year ended June 2018 show revenue slipped from N64.8 billion in 2017 to N56.8 billion in 2018. Profit before tax also dropped from N8.7 billion in 2017 to N4.3 billion in 2018. Profit after tax also fell from N5.7 billion in 2017 to N3.2 billion in 2018.

Dangote Flour is currently trading at N8.00 in today’s trading session, unchanged from the prior day.

app

Flour Mills of Nigeria Plc

Flour Mills alongside the Dangote Group and the Nigerian Ports Authority jointly funded the project to the tune of N4 billion. The company would not have done so if the bad roads did not have an adverse effect on its operations.

devland

The company’s results for the three months ended June 2018 show revenue from the port operations and logistics increased from N265 million in 2017 to N288 million in 2018. Profit after tax, however, declined from N255 million in 2017 to N245 million in 2018.

Flour Mills is currently trading at N21.50, in today’s trading session down 2.27%.

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

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business News

IMF advises banks to suspend dividend payment

However, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income.

Published

on

IMF discloses immediate priority , Reduce funding oil subsidy - IMF to Nigeria , IMF: 40% of African countries can't pay back their debts , Nigeria among countries that pushed Global debt to $188 trillion - IMF , Coronavirus: World Bank, IMF to support Nigeria and other member countries affected, IMF, World Bank to hold meetings via conference call over Coronavirus epidemic, IMF advises banks to suspend dividend payment

In an article published on its website, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, advised banks to halt dividend payment for now. According to her, with the expectation of a deep recession in 2020 and partial recovery in 2021, banks’ resilience will be tested. Therefore, having in place strong capital and liquidity positions to support fresh credit will be essential.

According to the article, one of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations which are not insignificant.

UBA ADS

IMF staff calculate that the 30 global systemically important banks distributed about US$250bn in dividends and share buybacks last year.

In a circular dated January 31, 2018, the Central Bank of Nigeria (CBN) stipulated new conditions for eligibility of Nigerian banks to pay dividend and the quantum of dividend to be paid out by banks who are eligible. Prior to the release of the circular, dividend payout policy for Nigerian banks had been spelt out in Section 16(1) of BOFIA 2004 (as amended) and Prudential Guidelines for DMBs of 2010. The circular provided guidelines and restrictions around divdidend payout for banks based on NPL ratio, CRR levels, and Capital Adequacy Ratio (CAR).

However, there were no regulatory restriction on dividend payout for banks that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%. However, it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities. Indeed, current economic realities demand caution.

GTBank 728 x 90

Current economic realities mean that banks face asset quality threats, further devaluation threat which may impact capital in some cases, and lower profits which in turn affects the quantum of capital retained. Ideally, these should reflect in NPL ratio and CAR ratio and should immediately restrict banks’ ability to pay dividend. However, there is usually a time lag before these ratios begin to reflect the new economic realities. Therefore, IMF’s advise may come in handy for many banks.

(READ MORE: Software security limitations cited as major reason for Covid-19 bank rush)

That said, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income. Banks like Zenith and Guaranty Trust have a good history of consistent dividend payment with attractive yields which is a major attraction for many shareholders.

Deal book 300 x 250

IMF advises banks to suspend dividend payment

 

app

CSL STOCKBROKERS LIMITED CSL Stockbrokers,

devland

Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State,

NIGERIA.

app

 

 

 

Continue Reading

Economy & Politics

CBN reduces MPR to 12.50%, holds other metrics

Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.

Published

on

IMF, COVID-19, CBN OMO ban could give stocks a much-needed boost , CBN’s N132.56 billion T-bills auction records oversubscription by 327% , Nigeria pays $1.09 billion to service external debt in 9 months , Implications of the new CBN stance on treasury bill sale to individuals, Digital technology and blockchain altering conventional banking models - Emefiele  , Increasing food prices might erase chances of CBN cutting interest rate   , Customer complaint against excess/unauthorized charges hits 1, 612 - CBN , CBN moves to reduce cassava derivatives import worth $600 million  , Invest in infrastructural development - CBN Governor admonishes investors , Credit to government declines, as Credit to private sector hits N25.8 trillion, CBN sets N10 billion minimum capital for Mortgage firms, CBN sets N10 billion minimum capital for Mortgage firms , Why you should be worried about the latest drop in external reserves, CBN, Alert: CBN issues N847.4 billion treasury bills for Q1 2020 , PMI: Nigeria’s manufacturing sector gains momentum in November, CBN warns high foreign credits could collapse Nigeria’s economy, predicts high poverty, MPC Member, BVN, Fitch, Foreign excchange (Forex), Overnight rates crash after CBN’s N1.4 trillion deduction

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.

Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja.  Meanwhile, other parameters such as the Cash Reserve Ratio  (CRR) remained at 27.5%, Liquidity ratio at 30%.

UBA ADS

Highlights of the Committee’s decision

  • MPC cuts MPR by 100 basis points to 12.50%
  • CRR stood at 27.5%
  • The Liquidity Ratio was also kept at 30%

According to Emefiele, the decision of the MPC to reduce the Monetary Policy Rate  was informed by the impact of the Covid-19 pandemic on the economy, increased inflationary pressure, restrictions in international trade and more.

He highlighted the decline in the nation’s GDP as well as the decline in the manufacturing and non-manufacturing purchasing index which were attributable to slower growth in production, rate of unemployment, amongst others.

GTBank 728 x 90

 

Continue Reading

Economy & Politics

Just in: Buhari seeks approval from green chamber to borrow fresh $5.5billion

FG also seek approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

Published

on

IMF, tax, rate, Buhari’s Budget of Sustaining Growth & Job Creation (Full text), Nigeria generates N1.36 trillion from corporate tax, others as oil revenue drops , Nigeria-Algeria highway gets Buhari's approval , Earnings from rich petroleum resources not enough to cater for Nigeria – Buhari , Tax: Buhari appoints Muhammad Nami as FIRS boss, Subsidy economics

President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.

This request was disclosed via the official twitter handle of the House of Representatives.

UBA ADS

The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.

In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.

Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.

GTBank 728 x 90

Details shortly…

Continue Reading